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Nigeria’s Banking system has shown sustained resilience as at the end of June 2022, as all major financial soundness indicators (FSIs) were strong.
This is according to the latest Banking System Stability Review Report of the Central Bank of Nigeria (CBN).
Capital adequacy ratio (CAR) remained robust at 14.1 per cent; liquidity ratio stood at 42.6 percent and the ratio of non-performing loans (NPLs) slowed below the prudential limit to 4.95 percent.
A nonperforming loan (NPL) is a sum of borrowed money whose scheduled payments have not been made by the debtor for a period of time–usually 90 or 180 days.
The data shows that the banking system remain safe, sound, and resilient. Non-Performing Loans Ratios declined from 5.3% in April 2022 to 4.95% in June 2022.
Liquidity Ratio in June 2022 was still above the 30% prudential requirements.
Interest margins to total operating income rose marginally between April 2022 and June 2022, however, total operating costs to total operating income declined marginally, though at 76.5% is much higher than those for comparator countries, Turkey, 34.1%, South Africa, 61.5% and Malaysia, 37.9%.
Key industry aggregates also continued their year-on-year upward trajectory with total assets of the banking industry rising (month-on-month) by 22.07 per cent from N53.64 trillion in May 2021 to N65.48 trillion in June 2022, driven by balances with CBN/banks, OMO bills and credit to the real sector of the economy., while total deposits rose to N42.03 trillion from N33.85 trillion over the same period.
Gross credit has maintained an upward trajectory since 2019, rising by 22.78 per cent or N5.02 trillion from N22.04 trillion in June 2021 to N27.06 trillion in June 2022 to various sectors of the economy, including Oil and Gas, Manufacturing, General, Governments and General commerce. This notable increase was achieved amidst continued decline in non-performing loans ratio.
Analysis of the interest rate band reveals that 65.9% of customers borrowed a total of N4.768 trillion at interest rates of less than 15% as of June 2022, suggesting that interest rates are declining as credit to the real sector of the economy continues to increase.
As of June 2022, a total of N3.378 trillion was lent to beneficiaries at less than a 10% interest rate through the CBN intervention funds.