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Banks’ Non-performing Loans Hit N2tn – CBN

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Godwin Emefiele CBN - Investors King
  • Banks’ Non-performing Loans Hit N2tn – CBN

The challenging economic situation in the country made the banking industry’s non-performing loans ratio to rise from N1.678bn in June to N2.084tn in December 2016, the latest Central Bank of Nigeria’s Financial System Stability Report revealed on Wednesday.

The financial soundness indicators used to appraise the stability of the financial system included asset quality, capital and income-expense, the report stated.

The FSS report stated that the ratios of non-performing loans to gross loans increased from 11.7 per cent in June to 14 per cent in December 2016.

The report read in part, “Commercial banks in the country experienced deterioration in assets quality at end-December 2016. The deterioration in asset quality was largely attributed to the rising inflationary trend, negative GDP growth, and the depreciation of the naira.

“The ratio of regulatory capital to risk weighted assets decreased by 0.8 percentage points to 13.9 per cent at end-December 2016, compared to 14.7 per cent at end-June 2016.

“Similarly, the ratio of Tier-1 capital to risk weighted assets declined by 0.9 percentage points to 12.9 per cent at end-December 2016 from 13.8 per cent at end-June 2016. Despite the marginal decrease, the ratios remained above the Basel minimum threshold.”

It added, “The return on assets declined by 1.0 percentage points to 1.3 per cent at end-December 2016 from 2.3 per cent recorded at end-June 2016, while the ratio of non-interest expenses to gross income increased to 63.8 per cent at end-December 2016 from 54.6 per cent recorded in the preceding half of the year.”

The CBN also conducted routine and special examinations of foreign exchange activities of banks during the review period.

The examinations revealed a number of infractions which included: breaches in net open position, foreign currency trading position limits, failure to repatriate export proceeds on time, and inappropriate involvement of banks in international money transfer

The report stated that other breaches observed were non-compliance with forward trading rules, late/non-submission of foreign exchange transaction documents by importers, and non-compliance of authorised dealers with the CBN directives on the specified sectoral disbursements.

The CBN said appropriate regulatory measures, including sanctions were taken on the banks without specifying the nature of the penalties.

The report showed that the CBN recovered a total sum of N21.27bn from banks in 2016, being excess charges illegally deducted from the account of their customers.

The amount, it said, was recovered following complaints received from a total of 2,656 bank customers in the period under review.

The CBN explained that apart from the N21.27bn, the sum of $3.35m and €19,263.62 were recovered and refunded to customers during the period.

The complaints were on Automated Teller Machines and electronic payment-related issues, excess charges, dishonoured guarantees, dishonoured cheques, fraudulent withdrawals and deposit irregularities.

The CBN report said the banking sector’s credit to the private sector grew by 19.37 per cent to N22.34trn as at the end of December 2016, compared with the growth of 14.44 per cent and 3.29 per cent recorded at end of June 2016 and the corresponding period of 2015, respectively.

It said total exposure of the top 50 obligors stood at N5.59trn, representing 34 per cent of total industry credit exposure of N16.29trn.

As at the end of December 2016, loans to the oil and gas sector constituted 30.02 per cent of the gross loan portfolio of the banking system as credit to that sector grew from N4.51trn, to N4.89trn.

The CBN report said loans to state governments declined marginally to N1.37trn from N1.38trn at end of June 2016.

It said the period witnessed increased funding to the states through a Federal Government refund totalling N522bn in excess debt service deductions (Paris Club Debt Refund).

In addition, the report said a N90bn bail-out facility at nine per cent interest rate was provided to enable states reduce the backlog of salaries.

Overall, the report explained that credit risk remained tangible in 2017 as obligors remained constrained in servicing both naira and foreign currency denominated loans owing to the low level of economic activities, low international oil prices and the depreciation of the naira.

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.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Access bank

Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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