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Banks’ Capital Adequacy Ratio Rises to 15.60%



global banking
  • Banks’ Capital Adequacy Ratio Rises to 15.60%

The Capital Adequacy Ratio (CAR) of commercial banks improved from the 15.14 per cent it was as of February 2019, to 15.60 per cent in April 2019, according to data from the Central Bank of Nigeria (CBN).

This is coming as one of the global rating agencies, Moody’s Investors Service, has predicted that Non-performing Loans (NPLs) in Nigeria’s banking sector would decline to between seven and eight per cent this year, from 11.7 per cent at end of 2018.

Deputy Governor, Corporate Services, CBN, Mr. Edward Lametek Adamu, gave the update on CAR in his personal comment at last month’s Monetary Policy Committee (MPC) meeting’s communiqué, a copy of which was posted on the apex bank’s website at the weekend.

CAR is a measurement of a bank’s available capital expressed as a percentage of its risk-weighted credit exposures.

The CBN requires that banks with international subsidiaries maintain CAR of 15 per cent, while banks without international subsidiaries maintain CAR of 10 per cent.

But the minimum requirement for the systemically important banks is 16 per cent.

In addition, Adamu, said banking sector non-performing loans (NPLs) decreased to 10.95 per cent in April, from the 11.28 per cent it was as of February.

“However, the NPLs ratio is still higher than the prudential limit of five per cent.

“In the banking system, major financial soundness indicators (FSIs) further improved in April 2019 due mainly to recoveries, loan disposals and write-offs. Other vulnerabilities in the industry include high concentration and contagion risks as well as significant forex exposure,” he added.

According to him, these conditions have increased averseness to risk in the industry, leading to some form of asset substitution.

“It is especially concerning that credit to the private sector is declining and this needs to be halted and possibly reversed to strengthen economic activity and job creation,” he stated.

On her part, the Deputy Governor, Financial System Stability, CBN, Mrs. Aishah Ahmad, said while foreign exchange inflows dipped noticeably in April 2019, net flows remained positive at $4.7 billion.

This, according to her, is a reflection of strong investor confidence.

“These factors, combined with crude oil price levels, which have remained above $60 per barrel over the last six months, have supported stability and fuelled further accretion to reserves.

“Although there is some volatility in crude oil prices, along with uncertainty in global growth prospects, the naira exchange rate is expected to remain relatively stable in the medium-term even in the face of slight easing in domestic monetary conditions,” she added.

According to her, the sluggish domestic output growth environment underscored an urgency to dramatically enhance investment and expansion in the real sector via new credit.

Positive financial soundness indicators, she stressed, suggested that the banking industry is well-positioned to play a bigger role in this respect.

“Industry capital adequacy, liquidity and profitability continue to improve whilst non-performing loans (NPLs) reduced between February and April 2019. This picture of financial resilience is at odds with the current low levels of real sector lending, especially in the light of burgeoning lending to government observed in banks’ outsized subscriptions to risk-free treasury securities.

“For instance, information from bank staff reveals contraction in credit to the private sector between February and March 2019, even as income from trading activities increased vis-a-vis a reduction in non-interest income from credit activities.

“While factors such as residual low risk appetite in the light of recent high levels of NPLs and significant asset portfolio write-offs are duly noted, the industry must dramatically increase lending to the real sector to strengthen the economic recovery, bolster domestic productivity and create jobs,” the Deputy CBN governor said.

On his part, the Deputy Governor, Economic Policy, CBN, Dr. Okwu Nnanna, pointed out that economic growth in the country remains muted amidst sub-optimal credit to the private sector and commercial banks’ preference for public sector lending.

In his contribution, the Deputy Governor, Operations, CBN, Mr. Folashodun Shonubi, said sustained stability in the banking industry was reflected in improvement of banks’ prudential measures, “though conditions highlighted the need for the Bank to intensify current regulatory and supervisory measures to ensure further progress.”

Meanwhile, one of the global rating agencies, Moody’s Investors Service, has predicted that NPLs in Nigeria’s banking sector would decline to around seven and eight per cent this year, from 11.7 per cent at end of 2018.

“Higher oil prices will constrain new NPL formation while high loan-loss reserves will allow banks to write off some of their bad debts. These credit positives will be moderated by lingering risks from high loan concentrations and high delinquency levels.

“System-wide tangible common equity will be stable at 16 per cent of risk-weighted assets at year-end 2018, which will be sufficient to absorb losses under our baseline scenario. We expect subdued loan growth and prudent dividend pay-outs to support banks’ capitalisation metrics,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


CBN Freezes Another 194 Accounts of firms, BDCs, Others



Godwin Emefile

The Central Bank of Nigeria on Thursday said it got orders from the Federal High Court, Abuja division, to freeze 194 bank accounts belonging to firms and Bureaux de Change to enable it to conduct investigations into suspicious activities.

It disclosed this on Thursday in three separate documents on its website.

In one of the documents, the CBN said it got an order to freeze 60 bank accounts of Bluebeam Capital Limited.

The accounts were domiciled in 13 different banks, the CBN as the plaintiff stated.

Bluebeam, as the respondent had eight accounts each in Access Bank and Keystone Bank; seven each in First Bank and Ecobank; five each in UBA and GTBank; four each in Fidelity Bank, FCMB and Sterling Bank; three accounts in Polaris Bank; two each in Wema Bank and Heritage Bank; and one in Providus Bank.

In another document, the CBN said it got an order to freeze 84 accounts in 17 banks.

The third document revealed that the banking regulator had the court order to freeze 50 accounts domiciled in different banks.

The motions exparte which were signed on different dates sought the orders of the court to direct the banks to freeze all other bank accounts of the defendants for a period of 180 days, pending the outcome of investigation and inquiry being conducted by the CBN.

In the document signed by the Presiding Judge, A.R. Mohammed, the court empowered the CBN to direct the banks to freeze all the bank accounts for a period of 45 days only, pending the outcome of the investigation.

It added that the order may be extended upon good reasons shown.

Any person aggrieved by this order could apply to the court to have the order set aside, discharged or have the order reviewed upon good reasons without waiting for the 45 days to lapse, the document stated.

The CBN on Wednesday disclosed it got an order to freeze 11 bank accounts to enable it conduct investigations into suspicious activities.

It had listed the names of the defendants/respondents as Albert Austin Ugochukwu with two bank accounts; Belfour Energy & Allied Services; Belfour Oil and Gas Limited with three bank accounts; Circle Flow Integrated Services; Kacynaus Reality Nigeria Limited with three bank accounts; and Tasmara Integrated Services.

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Banking Sector

Insider Dealing: Henry Oroh, An Executive Director of Zenith Bank, Acquires N46.982 Million Worth of Zenith Bank Shares



Henry Oroh

Henry Oro, an executive director of Zenith Bank Plc, has dumped N46.982 million on shares of Zenith Bank, according to the latest filing with the Nigerian Stock Exchange.

The executive director purchased Zenith Bank’s shares of 724,527 on April 1st, 2021 at N22.05 each or N15.976 million.

On April 6th, Oroh added 612,573 shares at N22 a unit and another 400,000 units at N21.90 per share.

On the same day, he purchased another 400,000 units at N21.90 a share. Bringing aggregate purchase on April 6th to 1,412,573 at an average price of N21.95 a unit or N31.006 million.

Henry Oroh has spent a total of N46.982 million on Zenith shares in April.

Henry Oroh was appointed as Zenith Bank’s executive director on September 1st, 2019 and holds a Bachelor’s Degree in Accounting from the University of Benin, Edo State and an MBA from the Lagos State University as well as an LLB Degree from the University of London.

He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an honorary member of the Chartered Institute of Bankers (CIBN), Nigeria.

He has over two decades of banking experience. He began his banking career in 1992 at Citibank where he served for seven (7) years in Operations, Treasury and Marketing.

He joined Zenith Bank in February 1999 and has worked in various Groups and Departments within the Zenith Group Office. His expertise spans Operations, Information Technology, Treasury, Marketing, including the Manufacturing, Food and Beverages, Pharmaceuticals, Oil and Gas, Public Sector, Consumer, as well as Corporate Banking and Business Development.

In April 2012, he was seconded to Zenith Bank Ghana Limited as an Executive Director and became the Managing Director/ Chief Executive in February 2016, where he successfully spearheaded the phenomenal growth of the Zenith Brand both within the Ghana market and the West African sub-region.

Henry has attended several Leadership Programmes and Executive Management Courses at the Harvard Business School, Columbia Business School, New York, University of Chicago, University of Pennsylvania, HEC Paris, JP Morgan Chase, UK and the Lagos Business School.

He comes to the Board of Zenith Bank Plc with strong competencies in Credit & Marketing, Operations, Information Technology, Treasury and impressive Leadership skills.

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Banking Sector

Access Bank Lagos City Marathon Adopts Virtual Audience For 10km Runners



In a bid to ensure the health and safety of all runners and essential service workers amid the global COVID-19 pandemic, the title sponsors of the Access Bank Lagos City Marathon, Access Bank PLC, has announced that the Lagos City Marathon will be held virtually for interested 10km runners this year.

The marathon, scheduled for April 10, 2021 can only accommodate 300 runners in line with the guidelines provided by the World Health Organisation (WHO), World Athletics and the Lagos State Ministry of Health.

Speaking on the development, Access Bank’s Executive Director of Retail Banking, Victor Etuokwu said, “Our primary consideration is the health and safety of participants, attendees and staff that will be a part of the Lagos City Marathon. This is why we decided to have an exclusive virtual event – that allows participants from all over the world to run the race wherever they are.

‘’While we regret that we can’t host the live 10km race and fanfare that have become synonymous with the Access Bank Lagos City Marathon, we continue to stand with the other sponsors to preserve public health as we look forward to hosting a successful marathon. We implore all well-meaning Lagosians to please adhere to the movement guidelines put in place by the Lagos State Government to ensure that the marathon fulfills its purpose of positively placing Lagos and indeed the whole of Africa on the global map,” he concluded.

Though audience participation may have changed, the organisers have also announced that the race route will largely remain the same. Runners will begin the race from the National Stadium, Surulere, opposite Teslim Balogun Stadium and finish at the Eko Atlantic City, Victoria Island.

Now in its sixth edition, the Silver – Labelled Access Bank Lagos City Marathon has featured over 200,000 registered athletes from over 12 participating countries collectively covering a distance of 42,000 kilometers.

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