Connect with us

Finance

CBN Conducts Special Examination on Banks

Published

on

CBN-headquarters-Investors King

In order to ascertain the actual well-being of banks owing to the nation’s macroeconomic challenges and rising non-performing loans (NPLs), the Central Bank of Nigeria (CBN) is currently carrying out examination on banks.

At the end of the exercise, the banking sector regulator said, it would determine how best the industry should be supported.

The Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, disclosed this in response to enquiries.

Banking sector NPLs have been predicted to jump to 12.5 per cent of the total loans of the banks this year, up from the central bank’s target level of five per cent at the end of last year, according to Agusto & Co, Nigeria’s main rating agency.
This is even worsened by the weakening consumer confidence and slide in the country’s Gross Domestic Product (GDP).

In view of the current macro-economic challenges in the country, the CBN last week announced that it had granted a one-off forbearance to banks this year to write-off their fully provided NPLs without waiting for the mandatory one year.

The CBN had explained that it acknowledged the request by banks to amend the requirements of Section.3.21 (a) of the Prudential Guidelines, which mandates banks to retain in their records, fully provided NPLs for a period of one year before they are written off.

“The CBN has no intention of repealing the provision of the above mentioned section of the guidelines. In view of the current macro-economic challenges, however, the CBN hereby grants a one-off forbearance this year 2016 to banks, to write-off fully provided for NPLs without waiting for the mandatory one year,” Martins stated in the circular addressed to all banks.

In a related development, in view of what it described as the abuse of access to its Standing Lending Facility (SLF) by banks and other authorised dealers, the CBN has also directed all authorised dealers to refrain from accessing the discount window on the settlement date for government securities’ auctions.

The securities referred to are CBN bills, Nigerian Treasury Bills and Federal Government of Nigeria bonds. It stressed that any violation of the directive would result in the denial of access to the SLF.

Responding to question on the need to conduct special examination on the banks to mitigate systemic risk in the industry, Martins stated: “I totally agree. We are currently carrying out examinations in that regard and also conducting stress test. At the end of it, we will determine how best the industry should be supported.”

Meanwhile, as the tenure of the Chief Executive Officer of the National Bureau of Statistics (NBS), Mr. Yemi Kale, ends today, financial market analysts have commended his contribution to the transformation of the country’s data system since his appointment in 2011.

The NBS has since 2011 grown as a reliable statistics body whose data have continued to be relied on nationally and internationally for effective planning.

Speaking on the achievement of the NBS boss since his appointment, Head of Research, SCM Capital Limited, Mr. Sewa Wusu, told THISDAY: “Kale has done significantly well. In terms of statistics on the Nigerian economy, such as inflation, GDP, and others that have really helped the economy in terms of planning and understanding the level at which the economy is performing, he has done very well.

“Today, we have series of data on the macro economy and that has helped in policy formulation and planning. Before Kale came, we didn’t have the robustness of most of the reports we are seeing now. To a large extent, the NBS has been living up to its expectation under Kale. That is what you enjoy when you have a round peg in a round hole. They know what to do at every point in time.

“More can still be done and he can still do more, that is why I am advising that his tenure be renewed. Lots of foreign investments banking firms now do proper analysis on the Nigerian economy because of the structured NBS data release timetable,” he stated.

One of Kale’s greatest achievements was seeing through the rebasing of Nigeria’s GDP which, in 2014 saw Nigeria emerge as the largest economy in Africa, a position, which it lost to South Africa recently. Among several other achievements including the unveiling of the Enhanced General Data Dissemination System (e-GDDS), which would help Nigeria attract the much needed Foreign Direct Investments (FDIs) into the country.

The e-GDDS is the data standards initiatives by the International Monetary Fund (IMF) which aims at enhancing member countries’ data transparency and promoting development of sound statistical systems. The page particularly serves as a one-stop publication vehicle for essential macroeconomic data.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Finance

Government Revenue Surges to N2.07trn in January 2024, FAAC Discloses

Published

on

FAAC

The Federal Accounts Allocation Committee (FAAC) has revealed a significant surge in government revenue to N2.07 trillion in January 2024.

This substantial increase reflects the buoyancy of Nigeria’s economic activities despite various challenges faced by the nation.

According to FAAC’s communiqué issued after its monthly meeting in Abuja, the N2.07 trillion revenue was distributed to meet the financial needs of the federal, state, and local governments.

N1.15 trillion out of the total revenue was disbursed to the various tiers of government, indicating a robust financial inflow.

The breakdown of the revenue distribution showcased that the Federal Government received N407.267 billion, state governments obtained N379.407 billion while N278.041 billion was disbursed to local governments.

Also, N85.101 billion, equivalent to 13% of mineral revenue, was allocated to the states as derivation revenue.

FAAC also highlighted that the revenue composition included N463.1 billion from distributable statutory revenue, N391.8 billion from distributable Value Added Tax (VAT) revenue, N15.9 billion from Electronic Money Transfer Levy revenue, and N279.03 billion from exchange difference revenue.

Despite the impressive revenue figures, FAAC noted a decrease in VAT collection by N71.7 billion compared to the previous month.

This decrease suggests fluctuations in consumer spending and economic activities, which could be influenced by various factors such as policy changes, economic conditions, and consumer sentiment.

Furthermore, FAAC reported increases in revenue from Companies Income Tax, Import Duty, Petroleum Profit Tax, and Oil and Gas Royalties.

However, revenue from Value Added Tax, Export Duty, Electronic Money Transfer Levy, and CET Levies experienced declines during the period.

FAAC’s disclosure of the January 2024 revenue underscores the importance of prudent financial management and effective allocation of resources to drive sustainable economic growth and development in Nigeria.

Continue Reading

Finance

Private Sector Credit Hits Record High of N76.94 Trillion in January 2024 – CBN Report

Published

on

Private employers

Private sector credit in Nigeria reached a record N76.94 trillion in January 2024, according to the latest report from the Central Bank of Nigeria (CBN).

This represents a 85.2% year-on-year increase from N41.54 trillion reported in January 2023.

The CBN’s Money and Credit Statistics report unveiled that credit to the private sector experienced a substantial month-on-month surge of 23.06%, or N14.42 trillion, from N62.52 trillion in December 2023.

This surge occurred amid the implementation of the CBN’s policy to unify the naira exchange rate.

Analysts attribute the reported N76.94 trillion credit to the private sector to the recent depreciation of the naira against foreign currencies.

The naira closed at N1,356.88 per dollar in January 2024, representing a 50.87% decline or N457.49 against the dollar compared to December 2023.

This depreciation compelled banks to extend credit to major corporations to meet the CBN’s mandated Loan-to-Deposit Ratio (LDR) threshold.

The CBN’s decision to resume the enforcement of the LDR policy, effective July 31, 2023, further propelled banks to increase lending to customers, stimulating the real sector of the economy.

With the CRR mechanism updated, banks with an LDR below the prescribed level faced a 50% lending shortfall penalty.

Experts suggest that the significant increase in private sector credit underscores the growing need for businesses to secure funds amidst economic uncertainties and exchange rate volatility.

It also signifies banks’ efforts to comply with regulatory requirements and support economic growth initiatives.

As Nigeria navigates its economic landscape, stakeholders anticipate further developments in credit dynamics and monetary policies to sustain financial stability and stimulate economic expansion.

Continue Reading

Loans

Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration

Published

on

Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending