CBN Admits Banks Need Help


I do not like to sound alarmist but some Nigerian banks are particularly not in a state of good health. A recent report by Fitch on the state of the banking system also corroborates this view. Now the CBN has come out to also confirm this as well following the conclusion of its monetary committee meeting.

Here is an excerpt of their latest Monetary Committee Communique

To this end, the Committee enjoined the Management of the Bank to work with DMBs to promptly address rising NPLs, declining asset quality, credit concentration and high foreign exchange exposures.

What this means?

  • The non performing loans of commercial banks are rising despite huge “one time” impairment taken by banks in the last two years.
  • To make it worse, loans that are even performing face the risk of going bad. The economy is still in  a poor shape and the spate of shut downs are increasing. Most companies might have gone bust by the time the economy is turned around.
  • Banks have their loan exposures concentrated in a single industry. For example, reports suggest banks have about 30% of their loans in the oil and gas sector.
  • Nigerian banks also have huge exposures to foreign currency denominated loans. As at December 2016, commercial banks had about N1.3 trillion in loans and advances from banks outside Nigeria.
  • The CBN MPC has now mandated the management of the apex bank “to work” with the banks in resolving some of these concerns.  This could mean anything from asking banks to raise capital, take down more impairments, merge, or who knows, AMCON 2.0.
Ugo Obi-chukwu https://nairametrics.com

Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market. Ugo is the founder/Publisher of Nairametrics and blogs regularly on the website.

What others say about : CBN Admits Banks Need Help..


Anodebenze

Did nairametric said today that 1.3 trillion naira made by commercial banks outside nigeria or not ?it is a lots of money and again did you said comm. bank have un-performing loans.is it non-peforming loan part of those loan made abroad ?.now they are saying nigeria is in recession for what ? did godwin said the cbn made 2 trillion naira lst year.is it in blackhole or somewhere.
We hope,some well-meaning nigeria will do some research on this leading by nigerian bank when nigeria is bearing the brutality of recession and poverty,and nigeria govt wants to borrow 30 billion dollar,which i think will go to this blackhole.
Last year in germany Mr Ribadu the ex-boss of efcc said an estimated 30 billion dollar to 60 billion dollar leaves Africa.now we can see why africa is under-developed,untill today or says even nigeria.now we have scandalous senario in nigeria,where this present govt allows foreigners are allow then,to mine our natural resources,enriching those foreigners and their country at our expense and our pocket.
In london.what drive london stock exchange are natural resources companies.whose mines are located mostly in africa,and the remainder in south america.london use to have a metal exchange

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