BY CHINYERE OBIORA, LAGOS – The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele says it is kudos to Deposit Money Banks (DMBs) that customers have enjoyed loan facilities totalling over N1.16 trillion in the last six months.
Emefiele said the private sector is now reaping positives from increased loan portfolio due to CBN’s directive on the new Loan to Deposit Ratio (LDR) policy requiring banks to lend at least 65 per cent of their deposits to the productive sectors or risk sanctions.
According to him, the loans covered period from May to October 2019, even as banking sector continues to witness stability, with Capital Adequacy Ratio (CAR) rising to 15.5 per cent in September 2019 from 10.2 per cent in December 2017.
Speaking on: “Delivering Inclusive Growth: Leveraging Digital Finance,” at the 2019 Bankers’ Committee Retreat in Ogere, Ogun State, Emefiele described the theme as apt given the existing and emerging challenges facing the nation’s economy.
He also expressed happiness that the retreat is holding at a time when conscious efforts are being made by the monetary and fiscal authorities to structurally rebalance and diversify the Nigerian economy for sustainable growth.
The bank chief stated that Nigeria would make laudable strides by leveraging digital finance tools in supporting growth across key sectors of the economy, including agriculture, manufacturing and the creative industries.
Upbeat about banking sector stability, Emefiele said; “The percentage of Non-Performing Loans (NPLs) in the banking sector has declined from its high of 14.7 per cent in January 2017 to under seven per cent as at October 2019. Credit conditions in the banking system have improved supported by our new policy measures announced in June 2019 which requires banks to maintain a minimum 65 percent loan to deposit ratio.
“In addition, banks are now able to recover delinquent loans from a customer’s accounts in other banks. As a result, gross credit increased by N1.16 trillion between May and October 2019.”
Furthermore, the apex bank Chief, who noted that headline inflation dropped from over 18.7 per cent to 11.08 per cent in August 2019, said; “We recently noticed an uptick in headline inflation which stood at 11.61 per cent in October 2019 partly driven by cost-push factors such as the recent border closure.
“We believe this effect will be temporary, as efforts are currently being made to induce greater production of staple food items. However, core inflation as at October 2019 is now under 9 per cent.”
The CBN Governor gave assurances that said the Nigerian financial system is in a much stronger position following the crisis, as capital buffers and liquidity in the banking system have continued to improve.
He indicated that continued foreign exchange inflows into the Nigerian market have been aided by the positive pact from a tighter monetary policy regime; attractive yields in the money market; and the CBN’s efforts at promoting domestic productivity in the agriculture and manufacturing sectors; alongside obvious boost in oil production.
An elated Emefiele disclosed that over $60 billion worth of transaction have taken place in the Investors’ and Exporters’ Forex window since the inception of the window in April 2017, adding; “Our foreign exchange reserves are at $39 billion, relative to its low point of $23 billion in October 2016.”
Similarly, the apex bank boss said despite skepticism in some quarters, “Today, our current stock of external reserves is able to finance nine months of current import commitments.”