December 2, 2022

Banks loans to businesses stood at N28.12 trillion in the last one year, Central Bank of Nigeria (CBN) Deputy Governor, Financial System, Stability, Mrs. Aisha Ahmad, has said.

She disclosed that while the loans surged, the banks’ total assets also rose by N10.72 trillion or 19.13 per cent, within the same period.

In her note on the last Monetary Policy Committee (MPC) held in Abuja, she said the asset growth captured periods between end-August 2021 and end-August 2022.

According to her, financial soundness Indicators were also robust and met minimum regulatory requirements – non-performing loans (NPLs) ratio declined further to 4.8 per cent in August 2022, 20 basis points (bps) lower than the rate recorded in June 2022.

The banking sector’s capital adequacy and liquidity ratios remained robust at 13.4 per cent and 40.4 per cent, respectively.

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“Increased credit to growth enhancing sectors of the economy such as agriculture, manufacturing and general commerce helped support output recovery recorded in the domestic economy. Total credit increased by N5.50 trillion from N22.62 trillion to N28.12 trillion between end-August 2021 and end- August 2022 due largely to increase in the level of funding and CBN’s Loans to Deposit Ratio (LDR) policy.

She said the increase recorded in lending rates between June and August 2022 can be partly attributed to the tight monetary policy stance and requires vigilance by the banks to forestall defaults and preserve asset quality.

“Sustained implementation of the policy on Global Standing Instruction and effective credit risk management policies by banks are useful in that regard, while innovations, especially with payment systems infrastructure, are expected to deepen the financial sector and enhance resilience,” she said.

“Notwithstanding the strong financial system fundamentals and satisfactory stress test results, the bank must remain vigilant and proactively manage operational, asset quality and other risks to financial system stability, especially with the challenging global economic environment,” she stated.

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