Despite declining profits ,Nigerian banks remain stable

The Nigeria Deposit Insurance Corporation (NDIC) Tuesday released its 2015 report on the banking sector which gave a clean bill of health on deposit money banks.

The report said: “Overall, the banking industry remained stable and sound during the period under review (2015).”

The report indicated that the NDIC, in collaboration with the CBN, conducted the routine risk assessment of all the 24 banks while the NDIC conducted risk-based examinations of 205 micro-finance banks and six primary mortgage banks.

The examinations were with a view to providing reliable information on their financial health, particularly as it affects the quality of risk assets, adequacy of loan loss provisions, capital adequacy, their level of compliance with banking rules and regulations, risk appetite and adequacy of risk management frameworks.

Thus, based on the findings, “the banking industry total assets grew marginally by 1.36 percent, total loans and advances rose by 5.56 percent, shareholders’ funds unimpaired by losses increased by 14.02 percent while capital adequacy ratio stood at 17.66 percent,” the NDIC said.

However, the total deposit liabilities declined by 2.83 percent, unaudited profits decreased by 2.02 percent while non-performing loans increased by 82.87 percent in 2015.

It noted that the corporation sponsored several corporate and community-based events aimed at promoting its visibility and presence in the public domain.

“Some of these projects were education-support and community health care related. NDIC spent the sum of N236.15 million on eighteen (18) projects spread across the country.

“NDIC also complied with the provisions of the Fiscal Responsibility Act and remitted ₦24,185,762,000 to the Consolidated Revenue Fund of the Federation in 2015 as against N15.38 billion in the previous year.

“The NDIC’s operating surplus for 2015 stood at N30.23 billion as against N15.52 billion in 2014,’’ it stated.

It said total assets of the banking industry, total loans and advances and shareholders’ funds unimpaired by losses increased by 1.36, 5.56 and 14.02 per cent respectively.

 

The statement noted that the capital base of the banking industry remained strong and the total loans and advances to the stood at N13.33 trillion in 2015.

It said the industry operated profitably, though earnings and profitability deteriorated.

“The unaudited profit-before-tax (PBT) of the banking industry stood at ₦588.86 billion in 2015 representing a decrease of 2.02% over ₦601.02 billion reported as Dec. 2014.

“The banking industry’s liquidity position was strong as its average liquidity ratio rose slightly from 53.65% in 2014 to 58.18% in 2015.

“ All the individual DMBs had liquidity ratios above the prudential minimum threshold of 30 per cent and the industry remained sound and stable during the period under review

N95.77billion liquidation dividend paid in 2015

Nigeria Deposit Insurance Corporation (NDIC) said it paid N95.77billion liquidation dividend to depositors of Deposit Money Banks (DMBs) in 2015 compared to N94.74 billion as at Dec.31, 2014.

It said the sum included the uninsured portion of private sector depositors of 11 out of the 13 banks closed post-bank consolidation which was funded by the CBN.

“The NDIC paid liquidation dividends to creditors of DMBs-in-liquidation in 2015 while the sum of N1,728.40 million was declared as dividends to 1,308 creditors of the ten DMBs.

“Out of that amount, the NDIC paid N1,261.73 million to the 965 creditors who filed their claims as at Dec. 31, 2015 as against N1,247.77 million paid to the 889 creditors as at Dec. 31, 2014,’’ it stated.

It said NDIC paid total liquidation dividends of ₦2.41 billion to 550 shareholders of 6 DMBs-in-liquidation as at 31st Dec., 2015 as against N2.03 billion paid to 453 shareholders as at Dec. 31, 2014.

“The cumulative amount of loans recovered over the years stood at N27.41 billion as at Dec. 31, 2015 compared with N26.75 billion as at Dec. 31, 2014.

“Similarly, the cumulative risk assets recovered from closed MFBs amounted to N125.61 million as at Dec. 31, 2015 compared with N124.38 million as at Dec. 31, 2014 while the debt recoveries from the debtors of PMBs in-liquidation amounted to ₦24.73 million as at Dec. 31, 2015.

The statement said NDIC cumulatively paid ₦6.796 billion to 426,324 insured depositors of the closed DMBs as at Dec. 31, 2015 as against ₦6.795 billion to 426,320 insured depositors in 2014.

It further said ₦2.86 billion was paid to 81,328 depositors of the closed MFBs as at Dec. 31, 2015 as against N2.77 billion paid to 80,178 depositors in 2014.

It said NDIC also paid N45.05 million to 595 depositors of closed PMBs as at Dec. 31, 2015 as against N2.02 million paid to 30 depositors in 2014.

The statement said that following a study on coverage levels conducted, an upwards coverage level for depositors of PMBs from N200,000 to N500,000 was reviewed in 2015.

“The current coverage levels of N500,000 per depositor per DMB and N200,000 per depositor per MFB were found to be adequate and so remained unchanged.

“NDIC reduced the premium paid by banks by ₦9.09 billion in 2015 following the reduction of the premium base rate from 40 basis point to 35 for each DMB/NIB under the Differential Premium Assessment System (DPAS),’’ it stated.

The statement said the Corporation extended deposit insurance coverage to subscribers of mobile money operators (MMOs) via the concept of pass-through deposit insurance up to a maximum of ₦500,000.