As members of the Nigerian banking public await the 2013 full year financial reports of money deposit banks, which are currently going through the Central Bank of Nigeria’s scrutiny, the apex bank, at the weekend said the unaudited total profits of the banking industry for the first half of 2013 stood at N300.5 billion, a 22.95 per cent increase over the N244.4 billion achieved in the second half of 2012.
The disclosure which was contained in the CBN’s latest Financial Stability Report posted on its website at the weekend also indicated that the industry’s interest income, which increased by 13.47 per cent, largely accounted for the higher profit level.
The report also showed that the industry’s liquidity ratio stood at 67.8 per cent compared with 68.0 per cent at end-December 2012, saying all banks met the 30 per cent minimum regulatory liquidity ratio throughout the review period.
According to the Financial Stability Report, “the Nigerian banking sector continued to record improvements in key performance indicators. For instance, capital adequacy and Tier I capital to risk-weighted assets ratios increased to 19.2 and 17.2 per cent at end-June 2013, f r o m 1 8.1 and 1 6.1 pe r c e n t, respectively, at end-December 2012.”
The improvement in the ratios was said to have been facilitated by the retained profits and the raising of additional Tier II capital by some banks.
The report showed that banks’ total loans increased to N8,814 billion, from N8,150 billion at end-December 2012, reflecting an increase of N664 billion or 8.1 per cent at end-June 2013, while non-Performing Loans (NPLs) to total loans deteriorated to 3.7 per cent at end-June 2013, from 3.5 per cent at end-December 2012. The NPL ratio, however, remained within the 5 per cent threshold at end-June 2013. The NPL coverage ratio improved to 71.2 per cent at end-June 2013, from 68.7 per cent at end-December 2012, indicating a reduction.
Similarly, total deposits increased to N15,157 billion at end-June 2013,from N14,386 billion at end-December 2012, reflecting an increase of N771 billion or 5.35 per cent.
However, the CBN disclosed that growth in money supply was sluggish in the first half of 2013.
“Broad money supply (M2), grew by 0.7 per cent to N15,593.3 billion, compared with the growth of 14.8 per cent at the end of the preceding period. On an annualised basis, M2 grew by 1.4 percent, compared with the indicative benchmark of 16.4 per cent for fiscal 2013. The growth in money supply reflected the 4.7 per cent rise in net domestic credit of the banking system, partly offsetting the decline in foreign assets (net) and other assets (net),” the report said.
Showing a marginal decline in currency outside the bank, the report said that narrow money supply (M1) fell by 6.5 per cent at the end of the review period, as currency outside banks (COB) and demand deposits (DD) declined by 11.2 and 2.3 per cent, respectively. As a ratio of total monetary assets, COB stood at 7.2 per cent, compared with 8.4 per cent recorded at the end of the preceding period. The decline in this ratio reflected improvement in financial inclusion and the increased use of alternative modes of payment.”
Meanwhile, net domestic credit, (NDC) to the economy, according to the report, grew by 4.7 per cent to N13,294.5 billion at the end of the first half of 2013, relative to the level at the end of the second half of 2012. This contrasts with the decline of 6.4 per cent at the end of the preceding period. The development reflected the growth in net claims on both the Federal Government and the private sector.
However, the nine months results of some of the banks reflected tougher operating environment in the latter part of the year. The results had mixed impacts as almost all the banks recorded positive and negative performance highlights, with the increase in the Asset Management Corporation levy, Cash Reserve Ratio, CRR, cut in Commission on Turnover, COT, among some recent policies, weighing in on their earnings and profits.
The Chief Executive Officer, Stanbic IBTC Holdings, Sola David Borha, had described the banking operating environment as unfriendly, assuring, however, that the bank would strive to achieve its already forecasted goals for the remaining part of the year.
The Managing Director/CEO, Zenith Bank, Godwin Emefiele, who spoke last year on the bank’s nine- month results, said the bank sustained improvements in its net interest margin, NIM, year-on-year as well as quarter-on-quarter as it had to respond to the regulatory environment by the re-allocation of resources and optimal pricing of asset and liabilities, to counter the effects of the new CRR regime and increased savings deposit cost on its operations.
The Group CEO, EcoBank International, Thierry Tanoh, also highlighted effects of Nigeria’s operating environment on the bank’s books, saying returns in Nigeria were affected by regulatory headwinds.
He said these effects were offset by greater profitability from other parts of the group, particularly in Ghana and the Central African cluster, which showed the benefit of the bank’s geographic diversification.