CBN Mulls New Recapitalisation For Banks
The Central Bank of Nigeria (CBN) says it is planning to implement a new round of banking recapitalisation for the Deposit Money Banks (DMBs). Mr Olayemi Cardoso, the CBN Governor, announced this at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) on Friday night in Lagos. The planned recapitalisation means that DMBs will be required to raise additional capital to meet the demands of Nigeria’s economy. Cardoso noted that President Bola Ahmed Tinubu in his Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a Gross Domestic Product (GDP) of one trillion dollars by 2030, with clearly defined priority areas and strategies. According to him, it is important that banks have a role to play in the anticipated one trillion dollars economy by 2030. Cardoso said going by the huge developmental role the apex bank would want the banks to play in the next seven years, it had become imperative to demand their recapitalisation. To achieve the target, Cardoso said that Nigeria needed to experience a more rapid and inclusive economic expansion. “The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidies and the unification of the foreign exchange market rate. “Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy. “It is not just about the stability of the financial system in the present moment, as we have already established that the current assessment shows stability. “However, we need to ask ourselves: Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. “Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital,’’ he said. The CBN governor also announced the approval of another round of Open Market Operations (OMOs) to mop up excess liquidity from the banking system. OMOs are the main monetary policy instrument, through which the central bank buys or sells securities with financial institutions in the open markets, thereby influencing the amount of money in circulation and/or interest rates. Cardoso said, “An OMO auction was recently held with a stop rate of 17.5 per cent for the one-year tenor, attracting oversubscription of N350 billion. “Another round of OMO has been approved to further reduce excess liquidity. “Offering N108.1 billion worth of Treasury Bills with three tenors to the investing public, which can help reduce liquidity in the banking system and support government fundraising.’’ Cardoso said the apex bank would use its monetary policy tools to keep inflation low and stable. He said, “the Central Bank of Nigeria is committed to achieving monetary and price stability. This is not just a technical objective, but it has real-life implications for the well-being of our citizens. “Through targeted policies, transparent market operations, and coordination between monetary and fiscal authorities, we can ensure a more stable exchange rate, control inflation, and create an enabling environment for businesses and individuals to thrive.’’ He noted that the apex bank had taken steps to improve the effectiveness of its monetary policy tools and to strengthen the transmission mechanism so that its policy decisions have a greater impact on the economy Cardoso added that the ability of the monetary policy committee to influence the economy through its decisions had been weakened because the channels through which monetary policy was transmitted had become disrupted. The CBN governor said the apex bank was planning to make changes to the country’s foreign exchange regulations by developing new guidelines and legislation. He stated that banks and foreign exchange operators would be consulted before making any final decisions.
CBN Didn’t Liquidate New Banks, Clarifies NDIC
The Nigeria Deposit Insurance Corporation (NDIC) has explained its role in the 20 banks liquidated by the Central Bank of Nigeria (CBN). In a signed statement by the Director, Communication & Public AffairsBashir A. Nuhu, the Corporation stated that the report in various social media platforms was misleading. The statement reads: “The Nigeria Deposit Insurance Corporation (NDIC) wishes to address the recent misleading news reports circulating on various social media platforms under the headline “CBN Liquidates 20 Banks – NDIC (Names).” “Contrary to the misleading headline, we would like to clarify that the 20 banks mentioned in those reports were among the banks that had been previously closed due to the revocation of their operating licenses by the Central Bank of Nigeria (CBN) between 1994 and 2018. “The general public should be aware that the NDIC has fulfilled its commitment by paying the guaranteed sums owed to depositors. Additionally, the Corporation has made cumulative payments of liquidation dividends totalling N45.45 billion as of July 2023, representing amounts exceeding the guaranteed sums to depositors of the 20 banks. “In light of further recoveries from debtors of the liquidated banks, the Corporation has announced an additional N16.18 billion in liquidation dividends to be paid to depositors, creditors, and shareholders of the 20 banks in liquidation. It’s important to note that the liquidation dividend represents the amount in excess of the insured sums paid by the NDIC to depositors of a closed bank. This amount is derived from recoveries made from the realization of assets of failed financial institutions and covers payments to creditors and shareholders after the full payment to depositors of the defunct bank. The deposit insurer urge relevant stakeholders to visit any of its offices or access the claims page on our website, www.ndic.gov.ng, to download, complete, and submit the verification form along with the prescribed supporting documents. Submissions should be sent to the dedicated email: claimscomplaints@ndic.gov.ng, it said. The affected banks are; Liberty Bank, City Express Bank, Assurance Bank, Century Bank, Allied Bank, Financial Merchant Bank, Icon Merchant Bank, Progress Bank, Merchant Bank of Africa (MBA), Premier Commercial Bank, North South Bank, and Prime Merchant Bank. Others are Commercial Trust Bank, Cooperative and Commerce Bank, Rims Merchant Bank, Pan African Bank, Fortune Bank, All States Trust Bank, Nigeria Merchant Bank, and Amicable Bank in-liquidation.
Banks’ Loans Hit N8.03trn In H1 2023 – Report
Oil and Gas, and manufacturing sectors lead other sectors in the amount of loans received from banks in the first half of 2023, accounting for 55.5 per cent of total N8.03 trillion to the economy as loans. This was revealed via data from the Sectoral Distribution of Credit by Deposit Money Banks published by the Central Bank of Nigeria (CBN) in the Statistical Bulletin for the second quarter of the year of 2023. The Oil and Gas sector got the largest share of N3.09 trillion representing 38.8 percent of fresh loans in the first half of 23, followed by the manufacturing sector which received N1.42 trillion or 17.5 per cent. The financial sector comprising the Finance, Insurance and Capital Market received the 3rd largest share of banks’ loans receiving N837 billion or 10.4 per cent of the new loans in the first half of 23. Trade and General Commerce received N670 billion representing 8.3 per cent while the Information, Communication and Technology sector received N517 billion representing 6.4 per cent of new loans in the first half 2023. General Services and Constructions received N398 billion and 348 billion respectively representing 5.0 per cent and 4.3 per cent of new loans in the first half of 23. The Power and Energy sector received N287 billion representing 3.6 per cent while the public sector (government) received N125 billion representing 1.6 per cent of new loans in the first half of 23. However, banks’ lending to the Mining & Quarrying sector declined by 16.6 per cent or N502 million in the first half of 2023, as lending to the sector dropped to N29.59 billion as the end of June from N30.09 billion at the beginning of the year. Similarly, lending to the Education sector dropped by 11 per cent to N84.19 billion at the end June from N94.4 billion at the beginning of the year.
Zenith Bank Records 114% Growth, 1.33trn In Q3 2023
Zenith Bank Plc has announced its unaudited results for the third quarter ended 30 September 2023, recording a remarkable triple-digit growth of 114% from N620.6 billion reported in Q3 2022 to N1.33 trillion in Q3 2023. According to the bank, the performance demonstrates the Group’s resilience and strong market share despite a very challenging macroeconomic environment. According to the bank’s unaudited third quarter financial results presented to the Nigerian Exchange (NGX),the triple-digit growth in the topline also enhanced the bottom line, as the Group recorded a 149% Year on Year (YoY) increase in profit before tax, growing from N202.5 billion in Q3 2022 to N505 billion in Q3 2023. Profit after tax also grew by 149% from N174.3 billion to N434.2 billion in the same period. The growth in the topline arose from both interest income and non-interest income. Interest income grew in the current period by 72% to N670.9 billion from N390.8 billion in Q3 2022, while non-interest income grew by 186% from N212 billion to N607.2 billion. The growth in profit is similarly attributable to the twin effects of the improvement in interest and non-interest income. Interest income increased because of the growth in risk assets as well as the effective pricing thereon. The non-interest income growth is largely driven by the revaluation gain due to the unification of exchange rates during the year. The cost-to-income ratio reduced from 55.8% in Q3 2022 to 37.8% in the current period. Impairment levels increased due to the deliberate incremental provisions necessitated by the conservative approach towards the heightened risk environment and the creation of a counter-cyclical buffer needed to deal with any impending volatility of exchange rates. This caused the cost of risk to deteriorate from 1.3% in Q3 2022 to 5.5% in Q3 2023, however this is an improvement from Q2 2023 where cost of risk printed at 8.8% because of prudent management of risk assets. Total assets grew by 48% from N12.3 trillion to N18.2 trillion in the period ended 30 September 2023, mainly driven by growth in customers’ deposits. Customers’ deposits grew by 49% from N8.98 trillion in December 2022 to N13.38 trillion in September 2023. The growth in customers’ deposits cuts across both corporate and retail segments with the savings portfolio (all currencies) growing from N2.7 trillion in December 2022 to N4.6 trillion in September 2023. The Group is optimistic of finishing the year 2023 strong, with focus on sustainable quick wins that would boost growth across all business segments and enhance stakeholder value.
FBNHoldings Declares N270bn PBT In 9 Months
FBNHoldings Plc has reported gross earnings of N985.6 billion for the nine months financial year ended September 30, 2023. The amount represents an increase of 80.1 per cent compared with N547.2 billion achieved in the corresponding period of 2022. The group’s profit before tax rose to N270.3 billion from N105.5 billion in 2022, representing 156.3 per cent from N105.5 billion recorded the previous year while profit after tax grew by 159.2 per cent to N236.4 billion from N91.2 per cent posted in the preceding year. Analysis of the result showed that Interest income increased by 71.1 per cent to N633.8 billion against N370.4 billion recorded in the corresponding period of last year while net interest income went up 51.4 per cent to N377.7 billion from N249.5 billion in the preceding year. Non-interest income rose by 108.2 per cent to N326.90 billion against N157 billion in 2022. Commercial banking segment of the company within the period reported N922.2 billion growing by 79.8 per cent year on year from N512.9 billion achieved in the comparative period of last year. The bank’s profit before tax went up by 157 per cent to N248.5 billion from N96.4 billion while profit after tax stood at N221.1 billion against N85.7 billion in the preceding year, indicating 158.2 per cent growth year on year. Commenting on the financial result, the Group Managing Director, FBNHoldings, Nnamdi Okonkwo said “over the period we have delivered a strong performance and growth enabled by focused execution of our strategic plan. Gross earnings were up by 80.1 per cent while our profit before tax grew by 156 per cent year on year. At the same time, our credit risk portfolio remains healthy with an NPL ratio of 46 per cent and a coverage of 85.4 per cent. Cost of income ratio improved to N 50 per cent from 65 per cent in 2022 on the back of enhanced revenue generation as well as effective cost containment initiatives. “Despite the high inflationary environment we remain committed to leveraging technology, automation and our brand strength to enhance our value proposition, increase revenues and improve the overall operational efficiency of the group. We are confident in our continuous progress in generating sustainable value for our shareholders.” Also the Chief executive officer First Bank of Nigeria Limited, Commercial banking group) Dr Adesola Adeduntun said “in the nine months ended September 30, 2023, First Bank group reported impressive financial results, reflecting sustained growth and resilience of the franchise. “Our gross earnings at the end of the quarter were N922.2 billion, making a remarkable increase of 79.8 per cent y-o-y. The substantial increase of 49.3 per cent yoy in net interest income reflects our commitment to managing interest rate dynamics effectively and optimising our interest-earning assets, while the impressive growth of 111.6 per cent y-o-y in non-interest income underscores our success in diversifying the bank’s revenue streams and providing value added services to our customer. “Growth of 157.9 per cent and 158.2 per cent y-o- y in the profit before tax and profit after tax respectively reflect our commitment to delivering exceptional value to our shareholders and stakeholders. “This performance is a testament to the dedication and hard work of our entire team, and it reaffirms First Bank’s position as one of the leading players in the commercial banking industry. As we continue to face dynamic market conditions, our agility, risk management capabilities and strategic approach will remain pivotal in sustaining this impressive growth trajectory. Looking ahead, we are committed to sustaining this momentum exploring new growth opportunities through innovation and upholding our core value of customer centricity.”
2023 TII: DBN Emerges Highest-Ranked Public Institution – CeFTIW Survey
The Development Bank of Nigeria (DBN) has again emerged as the highest-ranked public institution in Nigeria in the 2023 Transparency and Integrity Index (TII). The TII index recently released by the Center for Fiscal Transparency and Integrity Watch is a collaboration between the Centre for Fiscal Transparency and Integrity Watch (CeFTIW) and the Bureau for Public Sector Reform, with support from the MacArthur Foundation. It assesses 511 MDAs and public sector institutions on their level of transparency and accountability in government processes. To retain its first position, DBN scored 73.26%, moving up from the 58.74% it scored in 2022, a testament to the bank’s commitment to promoting transparency, accountability, and proactive partnerships. Speaking at the public presentation of the index, the Secretary to the Government of the Federation, Senator George Akume, represented by the Permanent Secretary, Cabinet Office, Mr. Maurice Mbaeri pointed out that “proactive disclosure of information as enshrined in the Freedom of Information Act seeks to enable public institutions to adopt a proactive stance in disclosing information to the public”. Akume noted that while access to information is a powerful tool that empowers citizens to request and access government-held information, these “tools are essential to reinforce good governance as it enhances openness and accountability”. Also speaking, the Chairman, Board of Trustees, CeFTIW, Amb. Angela Nworgu explained that the centre introduced the Transparency and Integrity Index as an annual assessment of public institutions’ compliance with national laws and international conventions that promote transparency, and accountability and minimize corruption. “The Index was developed to strengthen already existing fiscal transparency legal frameworks, institutional capacity on the requirement of these frameworks and most importantly build a well-informed citizenry that holds the government accountable”, she added. Reacting to this development, the Managing Director/CEO of DBN, Dr. Tony Okpanachi expressed delight at the report, regarding the ranking as a reflection of the company’s corporate governance, ethics and processes. Dr. Okpanachi further highlighted, “This report underscores our unwavering dedication to fulfilling our mandate, which involves addressing the financing challenges encountered by Micro, Small, and Medium Scale Enterprises (MSMEs) in Nigeria. We achieve this by offering financing, partial credit guarantees, and technical assistance to eligible financial intermediaries in a manner that aligns with market conventions and ensures complete financial sustainability.” He reassured that the organization would continue to actively promote the principles of accountability, transparency, sustainability, excellence, diversity, and innovation that are deeply embedded in its corporate philosophy.
Tinubu Appoints New BOI CEO, Olasupo Olusi
President Bola Tinubu has approved the appointment of Dr Olasupo Olusi as the Managing Director and Chief Executive Officer of the Bank of Industry (BOI) for a term of four years in the first instance. The appointment was announced in a statement by Ajuri Ngelale, Special Adviser to the President on Media and Publicity, on Thursday in Abuja. The statement said the appointment of Olusi followed the voluntary resignation of the former BOI Managing Director and Chief Executive Officer, Mr Olukayode Pitan. “Olusi has served as a World Bank economist and development finance expert over the past 20 years. “Between 2011 and 2015, Olusi served as the economic adviser to then Coordinating Minister of the Economy and Minister of Finance. “He is an alumnus of Hull University, United Kingdom,” said the statement. Olusi also obtained a Masters degree in International Money, Finance, and Investment, as well as a Doctorate in Finance & Economics from Durham University, United Kingdom, in 2005. The President tasked the new BOI Chief Executive to ensure that Nigerians operating all sizes of enterprises across sectors were given fair and equitable access to much needed support. He said this would bolster employment generation and wealth creation among income groups in the country with special regard for lower and middle income enterprise operators.
NDIC Boss Urges ICAN To Integrate Deposit Insurance System Courses
The Managing Director/Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, has called upon the Institute of Chartered Accountants of Nigeria (ICAN) to incorporate courses on the Deposit Insurance System (DIS) into its educational programs and modules. Mr. Hassan made the call during a courtesy visit by the Governing Council Members of ICAN, led by the President of the Institute, Mr. Innocent Iweka Okwosa, to the Corporation’s Management in Abuja. Director, Communication & Public Affairs Department, Bashir A. Nuhu, in a statement Thursday in Abuja, quoted Mr. Hassan saying that including DIS courses within ICAN’s training programmes would enhance the understanding of DIS not only within the banking sector but also among professional accountants. He described it as critical to bridging the knowledge gap on the mandate and achievements of DIS, its critical role in protecting depositors and its contribution to financial system stability. He added that it would also address misconceptions of the benefits and limitations of the deposit insurance system. Mr. Hassan further stressed the significance of public awareness in maximizing the impact and reach of the deposit insurance system throughout the general public and the financial sector as a whole. He stated that given the novel nature of the scheme in Nigeria and globally, collaboration with ICAN and other stakeholders had become imperative to strengthen the effectiveness of the Corporation’s operations to fully implement its mandate. Mr. Bello Hassan congratulated Mr. Okwosa on his assumption of office as the 59th ICAN President. He encouraged him to ensure that chartered accountants uphold the Institute’s values of accuracy and integrity in all aspects of their work. He also reassured the Institute of the Corporation’s unwavering support and partnership in furthering the practice of accounting in the country. He also extended condolences to the Institute on the recent passing of the first chartered accountant in Nigeria, Mr. Akintola Williams who left a legacy of excellence and professionalism that has paved the way for the growth of the profession in Nigeria. Mr. Hassan commended ICAN’s commitment to maintaining zero tolerance for professional misconduct, asserting that this stance would continue to provide confidence to the Corporation and other stakeholders in relying on the work of accountants in fulfilling their mandates. In response, Mr. Innocent Iweka Okwosa praised the NDIC MD for his exemplary leadership and the professionalism he has instilled in the Corporation’s operations. He noted that under Mr. Hassan’s leadership, the Corporation has made substantial contributions to ensuring the safety and stability of the Nation’s financial system, a crucial element for the growth and prosperity of the Nigerian economy. The collaboration between NDIC and ICAN holds the promise of strengthening the knowledge base among accountants and financial professionals while fostering the growth and stability of Nigeria’s financial sector.
GTCO’s H1 profit before tax increases by 217%
Guaranty Trust Holding Company Plc, has reported a profit before tax of N327.4billion, representing an increase of 217.1 per cent over N103.2billion recorded in the corresponding period ended June 2 The group released its Audited Consolidated and Separate Financial Statements for the period ended June 30, 2023, to the Nigerian Exchange Group (NGX) and London Stock Exchange (LSE). The Group’s loan book increased by 22.8 per cent from N1.89 trillion recorded as at December 2022 to N2.32 trillion in June 2023, while deposit liabilities grew by 37.0 per cent from N4.61 trillion in December 2022 to N6.32 trillion in June 2023. The Group’s balance sheet remained well structured and resilient with total assets and shareholders’ funds closing at N8.5trillion and N1.2 trillion, respectively. Full Impact Capital Adequacy Ratio (CAR) remained very strong, closing at 24.7 per cent, while asset quality was sustained as IFRS 9 Stage 3 Loans improved to 4.6 per cent in June 2023 from 5.2 per cent December 2022, however, Cost of Risk (COR) closed at 3.7 per cent from 0.6 per cent in December 2022 owing to worsening macros which caused significant increase in ECL variables. The Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Mr. Segun Agbaje, said; “Our half year audited results reflect the strong business fundamentals underpinning the GTCO franchise, the quality of our past decisions in future proofing our balance sheet for challenging times, and the sound practices that guide our day-to-day operations. “Despite the challenges in the business environment, notably inflationary pressures and exchange rate fluctuations, we are starting to see the gains in the transformation of our businesses following our transition to a Holding Company structure. Improved profitability and a solid performance across key metrics reflect efficiencies and justify the investments we continue to make in technology, product development, and our people.” “We recognise the impact prevailing economic and market conditions have on people and livelihoods and we remain committed to seeking better outcomes for our customers by ensuring that our products and service offerings support our customers and their businesses through their evolving realities, whilst also taking every opportunity to optimise stakeholder value,” he added. Overall, the Group continues to post one of the best metrics in the Nigerian Financial Services industry in terms of key financial ratios i.e., Pre-Tax Return on Equity (ROAE) of 61.4 per cent, Pre-Tax Return on Assets (ROAA) of 8.8%, Full Impact Capital Adequacy Ratio (CAR) of 24.7 per cent and Cost to Income ratio of 27.7 per cent. GTCO is a leading financial services group with banking operations in Nigeria, West Africa, East Africa, and the United Kingdom alongside new businesses in payment, funds management and Pension Fund Administration. Its leadership in the banking industry and efforts at empowering people and communities has earned it many prestigious awards over the years.
Banks secured ₦12trn in borrowings over 8 months -CBN
Central Bank of Nigeria (CBN) data indicates that between January and August of the current year, commercial and merchant banks accessed a total of ₦12.46 trillion in borrowings. This data underscores an escalating dependence on the regulatory body for liquidity. Comparatively, this amount signifies a 79% Year-on-Year surge in borrowing when contrasted with the ₦6.96 trillion recorded during the same period in 2022. The increased reliance on borrowing was mainly triggered by the CBN’s new naira note policy, which led to a cash crunch in the economy, impacting the initial months of the year. Banks interact with the CBN through two avenues: the Standing Lending Facility (SLF) for liquidity access and the Standing Deposit Facility (SDF) for cash deposits. The growing trend of banks seeking liquidity from the SLF mirrors the expanding currency outside banks and currency in circulation (CIC) in the economy. In the initial five months of 2023, borrowing from the CBN surged to ₦7.5 trillion, marking a remarkable 276% increase from the ₦1.99 trillion recorded in the same period of 2022. This upward trajectory continued into the first half of the year (H1), reaching ₦10.25 trillion, a 138% Year-on-Year surge from the ₦4.3 trillion borrowed in H1 2022. A detailed monthly breakdown of the 2023 borrowing figures reveals that ₦528.16 billion was accessed by banks in January. The following month, February 2023, saw the figure slightly decrease to ₦453.7 billion. March 2023 experienced a substantial spike of 776.22%, soaring to ₦3.98 trillion. April 2023 witnessed banks borrowing ₦4.47 trillion from the CBN. Subsequent months reflected borrowing amounts as follows: ₦590.29 billion in May, ₦235.06 billion in June, ₦908.43 billion in July, and ₦1.3 trillion in August.