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Saturday, November 27, 2021

CBN gives banks clean bill of health, says level loan defaults declining

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The Central Bank of Nigeria (CBN) has given the country’s banking sector a clean bill of health, saying the industry remains stable, robust and resilient while level of loan defaults has declined in spite of the impact of COVID-19 pandemic.

According to the regulatory bank’s Director of Banking Supervision, Haruna Mustafa, the Capital Adequacy Ratio (CAR) in the industry rose to 15.21 percent as at August while Liquidity Ratio (LR) rose to 42.23 percent.

He said non-performing loan ratio improved from 6.58 percent to 5.9 percent as at August 2021, while banking system credit to the economy increased to 10.99 percent between January and August. Mustafa noted that the regulatory measures taken by CBN contributed to the growth.

He listed some interventions by the apex bank to lessen the impact of the pandemic on the economy to include reduction in interest rates to five percent.

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Others are: N50 billion target credit facility for households and Small and Medium Enterprises (SMEs) and re-enactment of Banks and Other Financial Institutions Act (BOFIA 2020) to strengthen the regulatory and resolution architecture for banks and other financial institutions.

He said that the CBN would continue to develop additional counter cyclical policy options that could be utilised in periods of stress, adding that the macro-prudential regulation and supervision was more critical now than ever.

“We expect financial services to be provided more in a digital manner.

“We will continuously update and assess our prudential rule books and policy to strengthen responses to economic and financial shocks.

“We will continue to deploy effective stress testing methodologies to detect vulnerabilities early to enable appropriate pre-emptive action,” he said.

Mustafa explained that the banking sector had also sustained the growth of key economic activities, which were impacted by the pandemic in the agriculture, manufacturing, retail, healthcare, hospitality and tourism sectors.

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