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Transformation Agenda

Banking sector assets grow to N24.5trn – NDIC

Headquarters of the Central Bank of Nigeria in...

Headquarters of the Central Bank of Nigeria in Abuja, Nigeria (Photo credit: Wikipedia)

The banking industry’s total assets grew from N21.89 trillion in 2011 to N24.58 trillion in 2012, representing a 10.91 percent increase, according to the Nigeria Deposit Insurance Corporation (NDIC).

Also, of the total industry’s assets of N24.58 trillion, total loans and advances stood at N8.15 trillion, representing over 33 percent or one-third of total assets.

The industry recorded a profit before tax of N525.34 in 2012 as against a loss of N6.71 billion the previous year, a pointer to an improved industry asset quality due to the purchase of the non-performing loans of deposit money banks (DMBs) by the Asset Management Corporation of Nigeria (AMCON).

The corporation, which revealed the figures through its 2012 annual report and statement, said that the sum of N4.48 trillion or 54.97 percent was extended to the real sector of the economy in 2012 as against N3.88 trillion or 53.37 percent and N3.51 trillion or 48.95 percent in 2011 and 2010, respectively.

The report noted the rising trend in the banking industry’s credits to the agricultural sector which stood at 3.60 percent of total loans and advances in 2012 compared to 2.15 percent and 3.11 percent recorded in 2010 and 2011, respectively.

In the area of banking sector soundness, the report said that 10 banks were rated sound with nine considered satisfactory and one bank was rated marginal.

“Thus, the industry could be considered to be relatively stable in 2012. There was no unsound bank in the banking industry as at 31st December, 2012,” says the report.

Deposit money banks (DMBs) reported 3,380 fraud cases involving the sum of N17.97 billion with expected/contingent loss of about N4.52 billion in the year under review.

According to the report, “The expected/contingent loss had increased by N455 million (10.9 percent) as against N4.072 billion reported in 2011. Notwithstanding the 43.7 percent increase in the number of reported fraud cases from 2,352 in 2011 to 3,380 in 2012, the amount involved decreased by 36.4 percent from N28.40 billion in 2011 to N18.04 billion in 2012.”

As at last December, 310 out of the 323 microfinance banks (MFBs) that rendered returns met the minimum paid-up capital of N20 million, while a total of 302 MFBs had capital adequacy ratio of more than 10 percent.

The report noted that the remaining 555 did not, however, render returns and that the situation continued to be a source of concern to NDIC as it was impossible to assess their financial condition and performance on a continuous basis during the year under review.

The industry, according to the report, was adequately capitalised in the year under review with capital adequacy ratio of 18.07 percent compared to 17.71 percent recorded in 2011.

“All the DMBs also met the minimum liquidity threshold of 30 percent. The asset quality significantly improved during the year as the ratio of non-performing loans to total loans decreased from 4.95 percent in 2011 to 3.51 percent in 2012. The improvement in the banking industry’s asset quality was due to the purchase of the non-performing loans of DMBs by AMCON and the enhanced credit risk management by DMBs. The overall effect was an improvement in the industry’s profit before tax which increased from a loss of N6.71 billion in 2011 to a profit of N525.34 billion in 2012,” says the report.

The corporation continued to pay depositors of banks-in-liquidation during the year under review in spite of the long closure and unwillingness of depositors to file claims, with cumulative figure as at last December at N6.82 billion to 528,212 insured depositors of closed banks as against N6.68 billion paid to 527,942 insured depositors as at December 31, 2011.

“Similarly, a total sum of N2.505 billion was paid to 75,322 verified depositors of 95 out of 103 closed MFBs during the year as against the sum of N2.249 billion paid to 72,062 verified depositors in 2011. Also, the sum of N73.58 billion had been paid as liquidation dividend to 250,209 depositors of DMBs as at December 31, 2012.

“It is pertinent to indicate that a total of fourteen out of the thirty-four (34) banks-in-liquidation prior to 2006 had declared a final dividend of 100 percent of their total deposits, indicating that all depositors of the affected closed banks had fully recovered their deposits,” says the report.

“The NDIC, in collaboration with the Central Bank of Nigeria (CBN), conducted risk-based examination of sixteen deposit money banks (DMBs) during the year. The NDIC led the examination of six of the banks while the CBN led in ten. Furthermore, the two institutions conducted a maiden examination of the three banks acquired by AMCON, namely: Keystone Bank, Mainstreet Bank and Enterprise Bank during the year. While the CBN led the examination of Mainstreet Bank and Enterprise Bank, NDIC led the examination of Keystone Bank. The corporation in collaboration with the CBN also conducted the maiden examination of Jaiz Bank Plc and the Stanbic-IBTC non-interest window during the year under review”, NDIC said in the report.

NDIC said in 2012 it conducted routine examination of 246 microfinance banks (MFBs) out of which six were found to have closed shop, noting that it also conducted risk-based examination of forty primary mortgage banks (PMBs) in 2012 out of which three were found to have voluntarily closed shop.

The corporation further disclosed that under its corporate social responsibility (CSR), it assisted five higher institutions of learning across the nation to the tune of N99.93 million on various projects in Imo, Delta, Kebbi, Enugu and Kano states.


About TransformationWatch

TransformationWatch is an online news site founded by Henry Omoregie It is focused on keeping tabs on the Transformation Agenda set out by the Nigerian leadership in the Local, State and Federal Governments. My mission is to observe, analyze and report milestones or slowdowns in promised service delivery in all the facets of governance in Nigeria (2011 and beyond). Readership is open to all Nigerians and friends of Nigeria alike, regardless of Tribe, Religion or Political divide. We are all in this together


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