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Financial Services

CBN reviews appointment requirements for CCOs in Banks

The CBN has reviewed the appointment criteria for CCOs in Merchant Banks and Regional Banks.

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Access Bank Plc, Herbert Wigwe, CBN, interest payment on bank deposits, CBN review appointment requirements for Chief Compliance Officers in Banks

The Central Bank of Nigeria (CBN) has reviewed the appointment criteria for Chief Compliance Officers in Merchant Banks and Regional Banks (Commercial and specialized).

This is according to a circular issued by the apex bank dated October 9, 2020, and signed by its Director of Financial Policy and Regulation Department, Kevin Amugo.

READ: CBN has rolled out new anti money laundering penalties that should get any banker worried

According to the latest notice, Merchant banks and Regional banks are hereby granted dispensation to appoint CCOs on a grade not below an Assistant General Managers. However, the CCOs will report directly to the ECO of the financial institutions who have sole responsibility for compliance matters in the bank.

READ: CBN to “reduce” savings rate to 1% declare OMO bills as “Poison”

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Backstory

This latest action by the CBN is the sequel to consultations and engagement with stakeholders emanating from its earlier circular referenced FPR/DIR/GEN/CIR/06/004 of September 28, 2016, in which the tentative requirements for Executive Compliance Officers and Chief Compliance Officers of deposit money banks were mooted.

(READ MORE:CBN moves to ring-fence Disco collections)

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Meanwhile, the requirements and responsibilities of Executive Compliance Officers remain as earlier communicated in the circular dated 28 September 2016.

A part of the recent circular signed by Mr. Kevin read thus,

READ: CBN grants approval for banks to debit accounts of loan defaulters 

“Further to the circular referenced FPR/DIR/GEN/CIR/06/004 of 28 September 2016 on the appointment of Executive Compliance Officers (ECO) and Chief Compliance Officers (CCO) of deposit money banks, the CBN has, after due considerations and presentations by stakeholders on the size, structure, operation, and dynamics of classes of operators in the sectors reviewed the requirements for the appointment of Chief Compliance Officers.”

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2 Comments

2 Comments

  1. Abimbola

    October 23, 2020 at 1:25 pm

    I was taken by surprise to note that an economy as bouyany as Nigerian could be left unregulated for so long. Regulation of business environment is like building the foundation for integrity trust and confidence in the markets. Nigeria should build on this quickly to earn her deserved position in international financial sector.

  2. Fredrick forstyle

    October 25, 2020 at 8:21 pm

    Gtbank already have been doing this for o er a decade ago…..

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Financial Services

Era of backlog of unsettled claims is over – NAICOM boss

NAICOM has stated that it will monitor and sanction insurance companies who fail to settle claims as at when due.

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NAICOM

The National Insurance Commission (NAICOM) is out to seriously sanction any insurance companies with huge unsettled claims.

This disclosure was made by the Commissioner for Insurance, Mr. Sunday Thomas, at the on-going 2020 Insurance Directors’ Conference, jointly organized by NAICOM and the College of Insurance & Financial Management (CIFM), held at the Oriental Hotel in Lagos.

READ: EFCC gives reason for unspent N4 billion in 2020 budget

Mr. Thomas reiterated the need for the operators, post-pandemic, to appropriately strengthen their human and financial capital for effective participation in big-ticket risks to take advantage of the obvious gains of the domestication policy in the Nigeria Content Development Act 2010.

In his words, Mr. Thomas stated, “More businesses especially in the oil and gas and the Aviation sectors are now being reinsured abroad. Of more concern is the declining participation of life companies in the annuity business, which is the emerging business for our industry.

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READ: SEC issues pre-notice on cancellation of certificates of 157 inactive CMOs

“These are the areas where the industry can impose itself on the economy through the control of funds for national development. The industry must invest handsomely in technology, one of our key drivers for developing the market.

“The Institutions should be prepared to digitalize their processes, procedures, and systems, in order to make their operations seamless and real-time. The Commission is investing heavily in automating its processes and expects nothing less from the insurance institutions. An industry Information Technology Guideline has been issued for the operators and the Commission requires your support and cooperation for effective compliance.”

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(READ MORE: FG seeking FDI to develop Special Economic Zones – Trade Minister)

Why this matters

Prompt settlement of claims should be a top priority for the insurance operators in achieving an excellent and responsive customer service experience. Settlement of claims has been a serious nightmare for quite a number of customers, resulting to the abysmally low insurance culture in Nigeria.

READ: Fidelity Bank Plc must cover the chink in its curtains to keep rising 

Customers are more likely to patronize the insurance companies that are prompt in claims settlement and by extension improve the industry penetration in the market.

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Financial Services

Total credit to the economy rose to N19.54trillion – CBN Governor

The CBN revealed during the MPC meeting that the total credit to the economy rose to N19.54tn as of the end of November 13.

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Total credit to the economy rose to N19.54trillion – CBN Governor, CRR debits, P-AADS, #EndSARS: CBN says funds in frozen accounts may be linked to terrorist activities, Covid-19: Court closures impacted revenue generation for courts - Emefiele, P&ID dispute: UK Court orders $200 million guarantee to FG, Leaked letter by Poultry Farmers Association triggered CBN emergency approval to import maize, nImplications of CBN's latest devaluation and FX unification, current account deficit, IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction, Nigeria’s foreign reserves hit $36.57 billion; Emefiele keeps his word on defending the naira, CBN to support maize farmers, projects 12.5 million metric tons in 18 months, BREAKING: CBN Upscales Greenwich Trust Limited, grants it's operational license for merchant banking, AGSMEIS: CBN expand beneficiaries to 14,638., CBN expands access to mortgage financing

The CBN Governor, Godwin Emefiele, has disclosed during the Monetary Policy Committee meeting that the total credit to the economy rose to N19.54tn as of the end of November 13.

According to him, the aggregate domestic credit grew by 7.6% in October 2020 compared with 7.35% Month-on-Month in September.

READ: MTN Nigeria revenues rises to over N100 billion monthly in 2020

In his words, “Total gross credit by the banking industry stood at N19.54tn as at 13th November 2020 compared with N19.33tn at end-August 2020, an increase of N290.13bn. When compared with N15.56tn at the commencement of the LDR policy in May 2019, total gross credit increased by N3.97tn.”

According to Emefiele, the composition of the loans are N738bn to Manufacturing, General commerce N874bn, Agric and forestry N301bn, Construction N291bn, ICT (N231bn), etc.

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READ: CBN urges banks to ‘support’ media, aviation industries to avert growing job losses

In the month of October 2020, he stated that 86.23% of the total loans granted to over one million customers by banks were at interest rates considerably below 20% per annum.

(READ MORE: N200 billion Unclaimed Dividend: Securities dealers reject FG’s plan to manage fund)

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Bottom line

The MPC was quite optimistic and favorably disposed about the future impact of the disbursements from agri-business/Small and Medium Enterprise Investment Scheme of the sum of N92.90bn to 24,702 beneficiaries; Anchor Borrowers Program – N164.91bn disbursed to 954,279 beneficiaries; and COVID-19 Targeted Credit Facility to household and SMEs, with the sum of N149.21bn to 316,869 beneficiaries.

READ: Nigeria imported over 55% of cooking gas consumed in October 2020

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Financial Services

Despite CRR debits, Nigerian Banks record higher net interest income

Banks are recording higher net interest income, despite the CBN’s frequent CRR debits chalking off significant amounts of their cash.

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net interest income, Nigerian Banks, Fitch, Nigerian banks tremble over Cyber attack, Most Nigerian banks are very likely to fail stress tests should the economic downturn persists and deepens

Some of the top banks in Nigeria posted a total net interest income of N403 billion in the third quarter of 2020 compared to N369.5 billion in the same period in 2019.

In the first 9 months to date, the banks have reported a combined net interest income of N1.2 trillion compared to N1.1 trillion same period last year.

READ: Aviation: Nigerian ground handling firms count revenue losses due to pandemic-induced plunge

Nairametrics collated these figures from the following banks, FBNH, UBA, GT Bank, Access Bank, Zenith Bank, Fidelity Bank, Stanbic IBTC, Sterling Bank, and Union Bank. The banks recently released their third-quarter interim results.

Deposit money banks have complained bitterly over the central bank’s frequent CRR debits chalking off significant amounts of cash that they could have earned on.

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READ: Union Bank releases Q1 2020 result, records 14% profit increase

A Nairametrics report indicates banks suffered CRR debits of over N1.9 trillion in the second quarter of 2020, taking the total amount of customer deposits held by the CBN at about N6.5 trillion.

The figure is likely higher now as more CRR debits have occurred in the third quarter of the year. Nairametrics reported banks were debited N226 billion CRR debit in a recent update provided by reliable sources.

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However, as the above report indicates, the banks still earned more this year compared to 2020. Where banks may have suffered dips is in net interest margin, a measure of the percentage of income banks earn after netting off the cost of funds.

READ: Nigerian Banks issue N3.3 trillion in new loans in June 2020

However, this has also been largely mitigated by low deposit rates even as banks maintain most of their lending rates.

Despite the rise in net interest income for the collection of banks under our review, some banks individually faired worse in 2020 compared to 2019. FBNH, Stanbic IBTC, and Access Bank all recorded lower net interest income in the first 9 months of 2020 compared to the same period in 2019. Significant gains over the prior year were however recorded with the other banks.

READ: Access Bank Plc posts N102.3 billion profit in 9M 2020, up by 15.7% YoY

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What is driving Margins

Banks are recording higher net interest income largely because interest rates on deposits are at near-record lows.

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This drive down in the cost of funds helps boost the income of banks because they are also yet to significantly drop their lending rates.

In the first 9 months of the year, the banks reported total loans and advances of N1.6 trillion, 14% higher than the N1.4 trillion reported at the end of 2019.

READ: FBN Holdings Plc posts Profit of N21.9 billion in Q3 2020

Banks have also reported generally improved pre-tax earnings, posting a combined N737 billion in the first 9 months of 20120 compared to N723 billion in the same period last year.

The better than expected results has triggered a boost to their share price. Banks have also seen their share price rally in recent weeks as investors finally recognize their low valuations amidst strong earnings.

The Banking sector index is up 14.72% year to date and only fell last week after investors embarked on cashing out their profits.

Explore Data on the Nairametrics Research Website

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