CBN Commends Banks For Good Performance in 2022

The Central Bank of Nigeria (CBN) has said the banking system has continued to perform well with major financial soundness indicators as it compared favourably with the prudential thresholds as of the end of October 2022.

The Central Bank of Nigeria disclosed this in statements by its Monetary Policy Committee on monetary policies.

CBN governor, Godwin Emefiele, noted that there were significant improvement in the banking sector which was achieved through the substantial overshoot of domestic claims above programmed benchmark and importantly reflected the sustained growth of banking system credits to the private sector, consistent with the CBN policy to finance high-impact sectors.

“Despite rising private sector credits and elevated uncertainties, the banking system remained resilient and stable as NPL ratio (4.81 per cent), liquidity ratio (40.14 per cent) and CAR (13.39 per cent), outperformed their prudential limits. In order to insulate our economy from adverse external developments, it remains imperative to fortify our economic base by de-risking the productive sector and diversifying completely.

“This is especially as frozen oil receipt impedes the FX market, shrinking external reserves from $37.39bn in September to $36.87bn in October, and abetting exchange rate pressures.”

Giving their thought on the performance of the banking sector, Adeola Adenikinju, member of the MPC, lauded the banks for having various Financial Soundness Indicators that showed that the banking systems remained safe, sound, and resilient.

“All measures of industry aggregates: assets, deposits and credit rose year on year. Total assets of the banking industry grew by N12.37tn between end-October 2021 and 2022.

“Similarly, industry credit increased by N5.32tn over the same period. In addition, total industry deposits rose by N6.92tn between end-October 2021 and 2022. In October 2022, a total of 125,305 new credits valued at N767.06bn were granted to various customers. There was marginal increase in lending rates in the industry in response to recent measures by the CBN.”

Another member of the committee, Robert Asogwa, said the domestic financial sector was still resilient as of October, except for observed volatilities in the stock market while Folashodun Shonubi, a memebr of the committee noted that the banking system remained strong so far in 2022, even as it continued to wrestle with the effects of a challenging macroeconomic environment on businesses.

“Of note is the sustained growth in total industry deposits, credits, and assets, reflecting positive impact of various measures by the bank. Industry capital adequacy, though lower at 13.4 per cent, was above the 10.0 per cent prudential minimum.

“Significant rise in domestic claims on private sector and the government has however pushed annualised growth of major monetary aggregate slightly above the benchmark for fiscal 2022, highlighting monetary aspect of the drivers of inflationary pressure.”