Deposit Money Banks (DMBs) profit increased by more than 60 percent in the last one year. The profit are mainly driven by increases in interest income.
Banking sector net interest income is the difference between the revenue that is generated from a bank’s assets and the expenses associated with paying out its liabilities.
A member of the Monetary Policy Committee (MPC), Yahaya Shehu who stated this in his personal statement at the November 2017 meeting, also noted that banks’ return on equity (ROE) and return on assets (ROA) are showing an upward trend and also higher than comparator countries.
However, total credit to the economy decreased by a little over three percent; non-performing loans (NPLs) are rising and the capital adequacy ratio, while still above the regulatory threshold, is declining.
The Deputy Governor financial System Stability, of the Central Bank of Nigeria ( CBN) Joseph Nnanna said “Banking industry profitability improved significantly, although I am not under any illusion that the challenging macroeconomic environment could have adverse effect on non-performing loans (NPLs)”
Reflecting banking system liquidity, he said the average inter-bank call rate, which opened at 12.00 per cent on October 3, 2017, closed at 5.38 per cent on November 16, 2017. The OBB rates opened at 10.41 per cent and closed lower at 6.02 per cent in the same period.
However, the average inter-bank call and Open Buy Back (OBB) rates for the period stood at 10.94 and 10.15 per cent, respectively. Credit to the private sector fell by 0.24 per cent in October 2017, while net credit to government rose by 7.60 percent.