BUSINESS
Banks’ Non-performing Loans Below 5%, First in 10 Years
*Total Credit Increases by N4.09trn
The Central Bank of Nigeria (CBN) has stated that for the first time in about a decade, the non-performing loans (NPLs) levels of commercial banks in Nigeria has fallen below the regulatory benchmark of five per cent to 4.94 per cent as at the end of December 2021.
This was highlighted in the personal statements of the members of the Monetary Policy Committee (MPC) released by CBN on its official website over weekend.
In their assessment of the Nigerian banking sector, the committee members noted that the industry has remained resilient with average non-preforming loans falling beyond regulatory requirement.
This is also as total credit also increased by N4.09 trillion between end-December 2020 and end-December 2021 with increased credit to manufacturing, general commerce and Oil & Gas sectors.
According to CBN Deputy Governor, Aishah Ahmad, non-performing loans dropped to its lowest level in over a decade despite the increased lending by banks.
She noted that total credit had increased by N4.09 trillion between end of December 2020 and December 2021 with significant growth in credit to manufacturing, general commerce and Oil & Gas sectors.
According to her, “Key industry aggregates also continued their year-on-year upward trajectory with total assets rising to N59.24trillion in December 2021 from N50.99 trillion in December 2020, while total deposits rose to N38.42 trillion from N32.21 trillion over the same period. Total credit also increased by N4.09 trillion between end- December 2020 and end-December 2021 with significant growth in credit to manufacturing, General commerce and Oil & Gas sectors. This impressive increase was achieved amidst continued decline in non-performing loans ratio from 5.10 per cent in November 2021 to 4.94 per cent in December 2021, 6 basis points below the regulatory benchmark for the first time in over a decade.
“Furthermore, results of stress tests showed resilience of banks’ solvency and liquidity ratios in response to potential severe macroeconomic shocks. However, the Bank must remain vigilant to proactively manage probable macro risks to the financial system such as lingering spillover effects of the pandemic, winding down of forbearance measures, and myriad risks to financial stability including exchange rate, operational and cyber security risks.”
Also, a member of the MPC, Akinniju Festus noted that NPLs had fallen below the five per cent prudential requirement, for the first time, after a lengthy period.
He also noted that Capital Adequacy Ratio despite its slight decline from 15.1 per cent in December 2020 to 14.53 per cent in December 2021, is still above the prudential requirement of 10 per cent.
“Liquidity ratio at 41.33 per cent was also higher than 30 per cent prudential requirement. Both Returns on Assets and Returns on Equity fell in December 2021 relative to December 2020. Operating costs to income rose from 68.2 per cent in December 2020 to 73.1 per cent in December 2021, ”he said.
Another member of the MPC, Aliyu Ahmed added that the improvement in NPLs was aided by sound regulatory oversights of the CBN during the year.
“The banking sector remained sound, safe and resilient as Financial Soundness Indicators (FSIs) were within their regulatory thresholds. Industry Capital Adequacy Ratio (CAR) at 14.53 percent at end-December 2021 remained above the 10 percent regulatory minimum. Asset quality measured by Non- Performing Loans (NPLs) improved to 4.94 percent at end-December 2021, below the regulatory threshold of 5 per cent.
“The improvement in NPLs is attributed mainly to sound regulatory oversights of the CBN during the year. Gross credit rose from N20.48 trillion in December 2020 to N24.57 trillion in December 2021 on account of increased industry funding base and CBN’s directive on Loan to Deposit Ratio, ”he said.
Akinniju noted that interest rate spread month-on-month widened to 25.3 per cent in December 2021. While prime lending rates declined to 11.68 per cent, maximum lending rates rose to 27.58 per cent. Average savings rates declined to 1.25 per cent. The administrative measures put in place by the CBN, restrained liquidity surfeit in the system. Tight liquidity conditions prevailed in the banking system as average net liquidity balance stood at N182.71 billion as at end-December 2021, below the benchmark of N313.8 billion – N450.00 billion.
Meanwhile, CBN Deputy Governor, Adamu Lamtek said the option of tightening monetary policy still remains on the table even as the decision becomes increasingly difficult to make. This is as inflation continues to rise as the country heads into electioneering year in 2023.
“Also the US FED has already provided a forward guidance on at least three rate hikes in 2022, a move that will affect foreign currency exposures of the federal government and private sector institutions, especially commercial banks. It may also lead to more exits of FPIs from local equity market. Against the backdrop of pressure on both output and prices, I must admit, monetary policy manoeuvres would be difficult, to say the least.
“In the circumstance, complementary fiscal actions are needed to ease the burden of adjustment on monetary policy. Obviously, policy support has been very instrumental to macroeconomic recovery in 2021. More will be needed from the fiscal side in 2022 especially in sectors like agriculture, SMEs and solid minerals. In addition, physical infrastructure and security ought to maintain their priority position on the fiscal plate in year.
“I believe, the option of tightening policy using the policy rate remains on the table as long as inflationary pressures persist. I am however hopeful that the policy headroom for supporting growth will not narrow any further by the next meeting of the MPC in March 2022,” Lamtek stated.
To end the week, the stock market rebounded from previous losses, gaining N74 billion.
Investor interest in MTN Nigeria, FBN Holdings, Guaranty Trust Holding Company (GTCO) and other equities lifted the market.
Notably, the market capitalisation opened at N56.014 trillion, adding N74 billion or 0.
13 per cent to close at N56.088 trillion.The All-Share Index also advanced by 0.
13 per cent, or 129.44 points, closing at 97,606.63, compared to 97,477.19 recorded on Thursday.As a result, the Year-To-Date (YTD) return increased by 30.54 per cent.
The market breadth closed positive, with 31 gainers and 19 losers on the floor of the Exchange.
On the gainers’ chart, Consolidated Hallmark Plc and Sterling Nigeria led by 9.
45 per cent each to close at N1.39 and N4.98 per share respectively.Mecure followed by 9.19 per cent to close at N10.10, Regency Alliance Insurance gained 9.09 per cent to close at 72k, while Fidson Healthcare Plc increased by 8.24 per cent to close at N15.10 per share.
Conversely, Deap Capital Management and Trust led the losers’ chart by 9.93 per cent to close at N1.36, NEM Insurance trailed by 9.71 per cent to close at N7.90 per share.
Daar Communications also lost 9.52 per cent to close at 57k, Tantalizers shed 9.09 per cent to close at 60k, while Dangote Sugar declined by 3.31 per cent to close at N31 per share.
Analysis of the market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 20.33 per cent.
A total of 304.43 million shares valued at N5.60 billion were exchanged in 6,950 deals, compared with 277.75 million shares valued at N4.65 billon in 7,091 deals traded in the previous session.
Meanwhile, Access Corporation led the activity chart in volume and value with 68.26 million shares valued at N1.34 billon.(NAN)
The Ministry of Petroleum Resources has inaugurated a Technical Working Group to enhance gas reticulation practices in Nigeria’s building industry.
The ministry’s Permanent Secretary, Amb. Nicholas Ella inaugurated the Technical Working Group (TWG) between the National Gas Expansion Programme (NGEP) and the Council of Registered Builders of Nigeria (CORBON) on Wednesday.
Reports= says that reticulation refers to the process of creating a network of pipes or tubes to distribute gas or other utilities to buildings or industrial sites.
The permanent secretary restated the importance of creating energy smart cities, saying that modern urban development relies on efficient gas and utility distribution systems,
“Most modern cities in developed countries have evolved to energy smart cities where energy, specifically gas and other utilities are piped to districts and estates.
“However, one of the key tools in creating energy smart city is the National Building
Code which, in essence, sets the guidelines on Building Pre-design, designs, construction and post-construction stages,” he said.
The permanent secretary reiterated the benefits of reticulated gas systems for households and businesses alike, adding that it ensured metered supply akin to water and electricity,
According to him, it eliminates the need for cumbersome refills, and also enhances safety by burying pipes and incorporating advanced safety equipments.
“The TWG is tasked with designing a comprehensive policy to implement best practices for gas reticulation using LPG, PNG, and Bio-Gas across Nigeria’s building sector.
“Key responsibilities include reviewing the current National Building Code, examining global gas distribution systems, and proposing quality standards for materials used in gas installations,” he said.
The permanent secretary emphasised the need for rigorous safety protocols and guidelines to ensure the efficient and safe use of gas in construction.
He urged the group to prioritise environmental sustainability in its recommendations, adding that the group is expected to submit its report by Nov. 15.
Earlier, Mr Samson Opaliwah, the Chairman of CORBON. expressed the council’s commitment to collaborate with the group to ensure safe uptake of gas for use in houses and housing estates in Nigeria.
“I assure you of the williness of CORBON to leverage the expertise and resources at her disposal to ensure that steps are put in place for gas infrastructure in buildings and estates.
“The gas infrastructure will be safe, sustainable and world-class.
” Our collective efforts will yield clear, standardised guidelines for safe and effective gas systems in buildings, matched with a skilled workforce to meet growing demands in Nigeria,” he said. (NAN)
The National Biotechnology Research and Development Agency (NBRDA) has urged the media to stand in the communication gap in favour of biotechnology development n Nigeria, re-affirming the safety in the consumption of genetically modified foods.
Prof. Abdullahi Mustapha, Director General/Chief Executive Officer of the agency, affirmed this during a one-day media field trip to NBRDA FARMS on Monday in Abuja.
The trip was organised by Open Forum On Agricultural Biotechnology (OFAB), an initiative of the African Agricultural Technology Foundation (AATF).
“Today, you shall be visiting our TELA Maize farms. This provides an exciting opportunity to see for yourselves what we have been doing here and equally gather your findings on what you have seen today and then take back the message to the people to quell some of the miscommunications about Genetically Modified Organisms (GMO) crops.
“TELA Maize hybrid varieties were developed to address some of the pressing challenges facing our farmers, including pests and diseases that can significantly reduce crop yields,” he said.
According to him, the production of the TELA MAIZE hybrid was done through the combined efforts of scientists at the Institute for Agricultural Research (IAR), Zaria in collaboration with stakeholders in key institutions such as NBRDA, NBMA, NASC, and the AATF Research Team.
“We are here to showcase our demonstration farms of genetically modified versions of commonly consumed crops developed by our scientists that have enjoyed rave reviews from the global world of science and the agricultural sector.
“These experts have worked tirelessly to ensure that this crop is not only high-yielding but also safe for human consumption,” he added.
He noted that the National Biosafety Management Agency (NBMA) has been instrumental in ensuring the safety and efficacy of TELA Maize which is believed to have the potential to transform the agricultural landscape in Nigeria and beyond.
Dr Jean Baptiste, the Regional Representative of the African Agricultural Technology Foundation, said that GMOs were aimed at leveraging the potential of biotechnology to develop a system that will help farmers.
He said Tella maize is a variety, developed using biotechnology methods to control insects.
“It also checks the resistance to drought and controls army worms, and stem borers in maize.
“At the end of the day, the benefits are enormous because it helps farmers increase yield and to be able to meet food security issues.
Dr. Francis Nwankwo, a TELA MAIZE developer from the African Agriculture Technology Foundation (AATF) explained the processes saying Tela maize passed through a genetic transformation that happens at the DNA level .
“They are not manufactured. What happens is we identify genes that can inhibit the infestation or reduce the infestation of some lepidoptera pests that affect some crops.
“So when we identify those genes we incorporate them into the DNA of maize thereby making it the maize, plus the genes.
“That way we increase the genes and reduce the struggles that our conventional maize go through on our farms like the stem borrower and others,” he said.
In her presentation, Dr Rose Gidado, Director, Agricultural Biotechnology Department, NBRDA, explained that many countries have derived huge benefits from TELA maize citing countries such as the U.S. and Canada.
“We actually brought you here so you could see the disparities between the TELA MAIZE and the non-TELA MAIZE species, and the environment which is far different from what we see on social media.
“We have other crops like beans that have actually been through the same gene transfers and are doing perfectly well and are safe for consumption,” she said.
She, therefore, urged the media to be on the guard in view of a lot of misinformation going round on social media and take responsibility in providing related information to the public adequately and objectively. (NAN)
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