Nigeria: CBN assures investors of banks’ stability, soundness

The Central Bank of Nigeria (CBN) says all metrics and indications indicate that the Nigerian banking system remains strong, stable, and is playing a significant role in aiding Nigeria’s economic recovery.

CBN’s Deputy Governor, Financial System Stability, Mrs. Aishah Ahmad gave the assurance while speaking at the 40th anniversary summit of the Financial Institutions Training Centre (FITC) in Lagos on the banking industry’s stability.

She added, “We’re very positive about the resilience and the soundness of the banking sector. You see the reports as we give them from time to time from the MPC. Actually, the banking system has been very strategic in support of the recovery based on the impact of COVID.

“Some of the forbearances that we granted to the banking sector has helped to ensure they retain their capacity to lend and it has helped them give succour to their obligors and we are seeing some obligors come out of that forbearance now.

“The financial soundness indicators have been very strong on capital, liquidity, and we’re very proud and we just want to continue to ensure that the bank system continues to provide lending, not just wholesale or commercial lending but to small business because that will be the engine of the economy.”

Significant developments, she said, had brought discussions about Africa’s potentials back to the forefront. She stated that the financial system, just as it was in mapping the economic recovery route from COVID-19, would be critical in realising Africa’s enormous potentials.

Mrs Ahmad stated that the CBN, under the management of Governor Godwin Emefiele, was committed towards an inclusive growth and LDR policy which had been positive, adding that N7 trillion in retail loans was an unequalled record.

She said, “Over the years the CBN has tried to ensure that we drive lending to the real sector. You would agree with me that the policy under Governor Emefiele over the last few years, has really emphasised on this, not only in terms of intervention funds given but in terms of some of the policies put in place such as loan to deposit ratio (LDR) which when we instituted it in 2019 till now actually added about N7 trillion or so in loans, and which is quite unprecedented.”

Global rating agency, Moody’s investor Service had last week highlighted the improving asset quality and resilient profitability of nine Nigerian banks, and also affirmed B2 long-term local and foreign currency deposit ratings as well as senior unsecured ratings.

At the same time, the rating agency changed the outlook on all the banks’ long-term deposit ratings to stable from negative

The rating agency listed the banks as: Access Bank Plc, Zenith Bank Plc, First Bank of Nigeria Limited, United Bank for Africa Plc, Guaranty Trust Bank Plc, and Union Bank of Nigeria plc, Fidelity Bank plc, FCMB Limited and Sterling Bank Plc.

The rating action reflects the banks’ financial profiles which have been generally resilient to the difficult operating environment in Nigeria. On average, the Nigerian banks’ asset quality has remained resilient and banks’ pre-provision profitability is recovering to pre-pandemic levels while their capital and funding positions, particularly in local currency, have remained solid.