CBN Warns On Impending Threats In The Banking Sector

• CBN Warns On Impending Threats In The Banking Sector

The Deputy Governor, Corporate Service Department of the Central Bank of Nigeria (CBN), Mr Edward Adamu in a statement made at the Monetary Policy Committee (MPC) meeting, September, cautioned commercial banks to guard against emerging risks in the financial system.

Mr Edward Adamu, also noted the rise in Non-Performing Loans (NPLs) ratio in the banking sector, which he said was propelled by the oil sector exposures.

Again, he stated that monetary policy remains the near tool for achieving price stability; the slowdown in inflation and stability in the naira exchange rate is as a result of the tight monetary policy stance.

“There is no gain saying that monetary policy cannot mitigate all of the current risks to economic stability. However, it remains the proximate tool for achieving price stability”.

“The deceleration in inflation and stability in the naira exchange rate in over a year have been mainly as a result of the tight monetary policy stance”.

“This is why the urge to further tighten the policy stance given the extent risks to price stability continues to be strong”.

Mr Adeola Adenikinju, one of the Monetary Policy Committee member, expressed concern over the lack of fiscal buffer in the midst of high oil price, as well as the continuous fall in the All-Share Index of the Nigerian Stock Exchange (NSE).

“It is not by coincidence that external reserves declined from a height of US$47.43 billion end- April 2018 to US$43.91 billion on September 2018″.

“I am also not unmindful of cloud of uncertainties that continues to hang over the economy which would require careful maneuvring of the fiscal authorities”. Mr Adeola added.

Also on this, Mrs Aishah Ahmad, the Deputy Governor, Financial System Stability of the Central Bank of Nigeria, said that the NPLs ratio which had earlier in the industry declined in June 2018, rose marginally in August 2018, amidst moderated returns on assets and equity.

Dahiru Hassan Balami, one of the MPC members, also revealed that the banking sector’s Capital Adequacy Ratio (CAR), declined from 12.08 in percent in June 2018, to a 10.79 percent in August 2018.