THREE BANKS RECORD LOSSES IN 10 MONTHS

THREE BANKS RECORD LOSSES IN 10 MONTHS

Three of the 25 deposit making banks (DMBs) recorded losses in ten months, from January to October 2018, while one of them failed the liquidity ratio test of the Central Bank of Nigeria.

The above, however, represents an improvement when compared with five banks that recorded losses in 2017.

A member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Professor Mike Obadan, disclosed this in his personal statement at the last MPC meeting held in November.

He said: “Generally, there is an improvement in most financial indicators due to the high oil prices, the action of the National Assembly to ensure payment of government debt, and effectiveness of CBN’s corrective measures including enforcement of prudential regulations since the last MPC meeting.

“Of note here are improvements in the capital adequacy ratio, reduction in number of banks that failed the minimum liquidity ratio test from five a year ago to one as at October, 2018, reduction in the number of banks that recorded unaudited losses to three between January and October, 2018, from five in the corresponding period in 2017.”

Meanwhile, some members of the MPC have called for increased efforts loan recovery efforts in the banking industry in light of the marginal improvement in industry Non Performing Loans (NPL) ratio to 14.05 per cent as at October 2018 from 14.7 per cent in August 2018.

Speaking in this regard, a member of the MPC, Dr. Robert Asogwa, said, “On the financial soundness indicators, there are encouraging signs as reported in the November MPC meeting which is attributed partly to the current regulatory efforts at reducing the volume of Non-performing loans. CBN staff report shows that the NPL ratio which has risen to 14.70 per cent in August 2018 had declined to 14.05 per cent in October which signals improvement even though it is still above the allowed prudential maximum thus requiring comprehensive NPL reduction strategies from the banks and the regulators.”

On his part, Pro Obadan noted: “The non-performing loans (NPLs) ratio improved, albeit, marginally. Since it is still far above the prudential maximum, special attention would need to be paid to loan recovery from the oil and gas sector which accounts for 30 per cent of aggregate credit and about 45 per cent of NPLs.

Similarly, Deputy Governor, Operations, CBN, Mr. Ade Shonubi, called for sustained surveillance of the banking industry, noting that, “Sustained surveillance and intensified prudential monitoring, including decisive regulatory actions, will further strengthen the resilience of the industry.”