A Review of the Nigerian Energy Industry

Nigerian banks lose N5.76bn to fraud in 2013 – NDIC

ATM withdrawal03 December 2014,  Kasina — The Nigerian banking sector recorded an 11.12 per cent rise in cases of financial fraud losing N5.76 billion in 2013 of which N2.5 billion was recorded in the first quarter of the year alone.

Total fraud cases reported stood at 3,756 compared to 3,380 cases in 2012. The amount involved in the fraud incidences also grew to N21.79 billion in the period under review compared to N18.05 billion the previous year.

The marked increase in the number of fraud cases in the banking industry was tied to rising fraud cases through automated teller machine (ATM), internet banking, fraudulent transfers and withdrawals and suppression of customers’ deposits.

These figures were contained in the 2013 Annual Report and Statement of Accounts of the Nigeria Deposit Insurance Corporation (NDIC), released to journalists yesterday, at its ongoing workshop for business editors and members of the Finance Correspondents Association of Nigeria (FICAN) in Katsina.

However, the banking sector total assets grew by 17.10 per cent to N28.79 trillion in 2013 compared to N24.58 trillion in the previous year, thereby leaving the sector not only adequately capitalised but also “very liquid and profitable”.

Also, its quality of assets as reflected by the ratio of non-performing loans (NPLs) improved to 3.23 percent in 2013 compared to 3.51 percent in 2012, highlighting a favourable position when compared with the industry maximum threshold of 5 percent. Nevertheless, the industry’s volume of NPLs increased by N38.05 billion or 13.30 percent to N324.14 billion in December 2013 from N286.09 billion in 2012.

Total loans in 2013 stood at N10.04 trillion, an increased of 23.22 per cent compared to N8.15 trillion in 2012. According to the report, the sector continued to benefit from the impact of purchase of NPLs by the Asset Management Company of Nigeria (AMCON) as well as improved underwriting process. It stated that seven banks accounted for 66.10 per cent of total industry loans in the period under review compared to 80.73 percent in 2012.

The top seven banks included First Bank of Nigeria, Zenith Bank, Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Access Bank, Ecobank Nigeria and Diamond Bank while the remaining 18 banks accounted for 33.9 percent of industry loans.

Meanwhile, industry profit before tax (PBT) rose by 5.84 percent to N484.79 billion compared to N458.04 billion the previous year. The NDIC said improvement in banks’ profitability was largely as a result of growth in interest and non-interest income as well as efficient management of interest expense. Income from interest charges increased by 23.15 percent to N1.95 trillion in 2013 compared to N1.58 trillion the previous year while non-interest income also grew by 22.99 percent to N623.66 billion compared to N507.08 billion in 2012. Banks’ Average Liquidity Ratio stood at 50.63 percent-exceeding the prudential minimum threshold of 30 percent as at December 2013, although the ratio depicted a 13.28 percent decline over the 63.91 percent recorded in 2012. It added that all deposit money banks (DMBs) met the minimum liquidity ratio requirement for the period under review.

The report also showed that banks’ total operating expenses increased by 29.66 percent to N1.38 trillion in 2013 from N1.07 trillion in 2012 while return on assets (ROA), return on equity (ROE), as well as Yield on Earning Assets (YEA) declined to 19.14 percent, 2.15 percent and 12.13 percent respectively in 2013 compared to 22.20 percent, 2.62 percent, and 11.92 percent respectively in 2012.

In general, the corporation said the banking industry performance and level of soundness remained satisfactory and relatively stable in 2013 as total deposit liabilities of insured banks increased by 16.53 percent to N16.77 trillion in the period under review compared to N14.39 trillion in 2012.

Five banks accounted for 52.74 percent of market share of total deposit liabilities while 10 other banks accounted for 79.76 percent of market share, leaving other banks with 20.23 percent.
*James Emejo – Thisday

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