Nigerian banks ‘satisfactorily healthy and safe’: Emefiele

The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has again given banks in the country a clean bill of health.

Emefiele, in his recently published personal statement at the last Monetary Policy Committee meeting, said the key performance indicators “indicate systemic stability with the non-performing loans ratio (4.21 percent), liquidity ratio (43.06 percent), and Capital Adequacy ratio (13.67 percent) all outdoing their prudential limits”.

“Regardless of the substantial credit to the private sector and ongoing financial system upheavals abroad, the Nigerian banking sector remains satisfactorily healthy and safe,” he said.

He said the banking system turmoil in the United States and Europe brought new threats to the financial system and the entire global economy.

“These highlight the potential risks associated with rate hikes and their unintended effect on financial system stability,” Emefiele said. “The Nigerian banking system is sufficiently insulated from the spill-over of the ongoing turmoil.”

Another member of the MPC, Prof. Aliyu Sanusi, said a review of the banking system stability report showed that the banking system continued to remain safe, sound and resilient.

He said the industry’s total assets and gross credit to the economy had continued to increase, adding that total assets of the banking system grew year-on-year by N15.58 trillion or 25.12 percent in February 2023.

He said: “The upward trend in total credit to the economy has continued since 2019 following the central bank’s Loan-to-Deposit Ratio policy, standing at N29.49 trillion as of February 2023. It has increased by N4.98 trillion or 19.71 percent between February 2022 and February 2023.

“Despite the exposure of subsidiaries of some Nigerian banks to the Ghanaian government debt, stress test results show that the banks are resilient, even at the most severe default scenario of 100 percent default by the Ghanaian government.”