The total assets of the banking industry in Nigeria grew by N14.36 trillion, representing a 24.24 percent increase, rising from N59.24 trillion at the end of December 2021 to N73.59 trillion in December 2022. This information was disclosed by Aishah Ahmad, the Deputy Governor of the Financial System Stability Directorate at the Central Bank of Nigeria (CBN), during the recent Monetary Policy Committee meeting. She highlighted that key industry aggregates continued their upward trend, with total deposits increasing from N38.42 trillion to N45.50 trillion over the same period.
Additionally, total credit saw an increase of N5.14 trillion between the end of December 2021 and the end of December 2022, with notable growth in sectors such as manufacturing, general commerce, and oil and gas. This significant increase occurred alongside a decline in the non-performing loans ratio, which fell from 4.90 percent in December 2021 to 4.20 percent in December 2022. Ahmad emphasized that the financial system had provided substantial support for domestic economic resilience amidst global shocks and remained robust into 2023.
Data from the bank staff indicated stability in key soundness indicators and an unprecedented improvement in asset quality, even as credit to the private sector continued to expand. As of December 2022, the capital adequacy ratio was a strong 13.83 percent, exceeding the regulatory minimum of 10 percent by 383 basis points. Industry liquidity was also solid at 44.10 percent during the same period, bolstered by significant cash reserve requirement buffers that could provide liquidity support if needed.
Ahmad noted that the sector benefited from innovative initiatives, such as the naira redesign and revised cash withdrawal limit policies, which are expected to enhance the banking channel of monetary policy transmission. Furthermore, stress test results indicated that banks’ solvency and liquidity ratios remained resilient in the face of potential severe macroeconomic shocks. However, she cautioned that the bank must remain vigilant in managing potential macro risks to the financial system, which could arise from global headwinds and domestic vulnerabilities, given the financial system’s strategic role in fostering sustainable economic recovery.
The economy has maintained a positive growth trajectory for eight consecutive quarters, largely supported by the Bank and fiscal authority’s efforts in output-enhancing sectors. According to data from the National Bureau of Statistics, the Real Gross Domestic Product grew by 2.25 percent year-on-year in the third quarter of 2022, down from 3.54 percent in the second quarter and 4.03 percent in the same period of 2021. Staff projections suggest that output growth recovery is expected to continue reasonably into 2023, bolstered by anticipated positive performance in the fourth quarter of 2022 and a steady rebound in economic activities.
Ahmad also pointed out a marginal improvement in the composite Purchasing Manager’s Index, which rose from 49.0 index points in November 2022 to 49.4 index points in December 2022, although it remained below the 50.0 index points threshold. She stressed that continued policy support is crucial to strengthening output performance and preserving this positive growth trajectory. Kingsley Obiora, a member of the Monetary Policy Committee, echoed these sentiments, noting that the asset growth of N14.36 trillion was driven by balances with the CBN and banks, as well as credit expansion to the real sector.
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