Banking Industry Total Assets Up 47.21% as NPLs Decline to 4.1%

Nume Ekeghe

The Central Bank of Nigeria (CBN) has revealed that the total Assets of the banking industry increased by 47.21 per cent to N30.92 trillion just as the industry’s Non- Performing Loans (NPLs) declined to 4.1 per cent as of June 2023.

The Acting Governor of CBN, Folashodun Shonubi, and a member of the Monetary Policy Committee (MPC) of the CBN, Adeola Adenikinju disclosed this in their personal statements at the MPC meeting held in July.

They also indicated that the Banking System, Financial Soundness Indicators (FSIs) remained stable and strong.

According to Shonubi: “In the Banking System, Financial Soundness Indicators (FSIs) remained stable and strong. The Capital Adequacy Ratio (CAR) stood at 11.2 per cent, Non-Performing Loans (NPLs) ratio of 4.1 per cent and Liquidity Ratio (LR) of 48.4 per cent, as at end June 2023.

“Broad money supply (M3) in June 2023 grew by 24.35 per cent (year-to- date), compared with 6.70 per cent in May, driven largely by the increase in both Net Foreign Assets (NFA) and Net Domestic Assets (NDA). Money market rates reflected the level of liquidity in the banking system. Consequently, the monthly weighted average Open Buyback (OBB) and Interbank Call rates decreased to 9.12 and 11.61 per cent in June 2023, from 12.60 and 12.31 per cent in May, respectively.”

On his part, Adenikinju noted that between the end of June 2022 and 2023, the banking industry witnessed a substantial increase, with Total Assets expanding by N30.92 trillion or 47.21 per cent.

He stated: “Equity and Returns on Asset increased between May 2023 and June 2023. Return on Equity (ROE) rose from 22.8 per cent to 32.2 per cent; while Return on Assets (ROA) increased from 1.7 per cent in May 2023 to 2.3 per cent by June 2023. Interest margins to total operating income declined from 59.8 per cent in May 2023 to 48.2 per cent in June 2023. Similarly, operating cost to total operating income declined from 70.7 per cent to 62.1 per cent between May and June 2023.

“As I reiterated in the last Personal Statement, the high operating cost environment of the banking sector should be concerning and needs to be addressed. Finally, all the measures of banking size, assets, deposits, and credits also rose. Total Assets of the banking industry grew by N30.92 trillion or 47.21 per cent between end-June 2022 and 2023. Industry credit increased by N10.75 trillion or 39.73 per cent between end June 2022 and end-June 2023. Gross credit has been on an upward trajectory since 2019. Total industry deposits increased by N15.92 trillion or 37.86 per cent between the end of June 2022 and 2023. The stress tests conducted on the industry show that despite the several headwinds in the economy, the banking system remains resilient.”