Microfinance Banks Assets Drop by 25% – CBN

BY CHINYERE OBIORA, LAGOS – The Central Bank of Nigeria (CBN) has raised an alarm that that all is not well with nation’s Microfinance Banks (MFBs) as their total assets dropped by disturbing 25.06 per cent in the second half of 2016 fiscal year.
 
The warning bell indicate that MFBs assets fell to  N341.68 billion as at December 2016 ending compared to the figure of N455.96 billion by June 2016, representing a decline of a whopping N114.28 billion during the period under review.
 
In a recent report on its website, the CBN said alarming too is the shareholders’ funds also shrunk by about 42.91 per cent from N135.09 billion to N77.12 billion as at December 2016, even as it largely attributed the unhealthy development to losses recorded by the MFBs as a result of increased provisioning for Non-Performing Loans (NPLs).
 
Similarly, the report indicate that reserves in the sector decreased by 24.39 per cent to N16.80 billion by December 2016 from the over N22.22 billion recorded at June 2016, blaming the decline in reserves on operational losses. Again, total assets of the five Direct Foreign Investments (DFIs) fell by 2.63 per cent to N964.24 billion compared with N990.24 billion at June 2016 within the period under review.
 
Of the amount, Bank of Industry (BOI), Federal Mortgage Bank of Nigeria (FMBN), Nigerian Export -Import Bank (NEXIM), Bank of Agriculture (BOA) and The Infrastructure Bank (TIB) accounts for 69.26, 20.24 per cent, 6.57 per cent, 3.15 per cent and 0.78 per cent, respectively.
 
The net loans and advances decreased by 19.49 per cent to N571.85 billion as at December 2016 from N710.27 billion at the first half of 2016 financial year due mainly to increased loan loss provisioning arising from higher rates of default. The report indicate that of the net  loans and advances totaling N571.85 billion, BOI accounted for 4.87 per cent; FMBN 19.85 per cent; NEXIM 4.62 per cent; BOA 0.16 per cent; and TIB 0.50 per cent.
 
However, CBN said the picture is a bit reassuring on the total deposit liabilities and net loans/advances which declined by 13.05 and 20.96 per cent respectively. Both sectors numbers stood at N166.29 billion and N183.96 billion by December 2016 ending as against N191.25 billion and N232.73 billion witnessed at June 2016.