Friday, February 23, 2024

MPC urges tight surveillance on banks as non-performing loans improve


The Monetary Policy Committee has called on the Central Bank of Nigeria to continue to keep a close watch on the banking industry to ensure that the non-performing loans ratio maintains its current state.

The Non-Performing Loans ratio improved to 4.8 per cent in October 2022 from 4.9 per cent in the previous month, staying below its prudential benchmark of 5.0 per cent.

The MPC which commended the performance, called on the Bank to continue to maintain its tight surveillance over the banking system to ensure that the NPLs ratio remains below the prudential benchmark.

The Capital Adequacy Ratio of the banking system declined in October 2022 to 13.4 but remained within its prudential limit of 10.0 -15.0 per cent. At 40.1 per cent, the Liquidity Ratio was above its prudential limit of 30.0 per cent.

In a related development, data from the National Bureau of Statistics showed that the Financial Institutions accounted for 89.99 percent of the industry’s total contribution to GDP in the third quarter of 2022. Insurance contributed 10.01 percent in real terms to Q3 2022 GDP.

As a whole, the sector grew at 21.37 percent in nominal terms (year-on-year), with the growth rate of Financial Institutions at 20.65 percent and a 28.26 percent growth rate recorded for Insurance. The overall rate was lower than Q3 2021 by 5.09 percent points, and lower by 8.53 percent points than the preceding quarter.

The Quarter-on-Quarter growth was -9.40 percent. The sector’s contribution to the overall nominal GDP was 2.83 percent in Q3 2022, higher than the 2.70 percent it represented a year previous, and lower than the contribution of 3.63 percent it made in the preceding quarter.

Growth in this sector in real terms totaled 12.70 percent, lower by 10.53 percent points from the rate recorded in the 2021 third quarter and down by 5.78 percent points from the rate recorded in the preceding quarter.

Quarter-on-Quarter growth in real terms stood at -10.14 percent. The contribution of Finance and Insurance to real GDP totaled 3.49 percent, higher than the contribution of 3.16 percent recorded in the third quarter of 2021 by 0.32 percent points, and lower than 4.25 percent recorded in Q2 2022 by 0.77 percent points.

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