08 July 2015, Lagos — The Nigeria Deposit Insurance Corporation (NDIC), on Tuesday released its audited financials, where it affirmed that the nation’s banks remain healthy, even as it noted the growth in the industry’s key performance indicators (KPIs). The report however equally noted the significant increase in reported cases of fraud and forgeries in the industry, besides several others that are neither reported nor captured in official data.
According to NDIC, in the year ended December 31, 2014, Nigerian banks reported 10,612 fraud cases, as against 3,786 in the corresponding period of 2013, “representing an increase of 182.77 per cent.”
The amount involved rose by N3.81 billion or 17.5 per cent from N21.80 billion in 2013 to N25.61 billion, even as “expected/actual loss increased from N5.76 billion in 2013 to N6.19 billion.”
The report also noted that the rise in “expected/actual loss in fraud and forgeries was mainly due to the astronomical increase in the incidence of web-based (online banking)/ATM and fraudulent transfer/withdrawal of deposit frauds.”
The NDIC said the financial statement was prepared on the basis of International Financial Reporting Standard (IFRS) and in line with the requirements of the Financial Reporting Council of Nigeria (FRCN).
Within the period, the banking industry grew its asset base by 11.84 per cent, while credits to the economy rose by 25.73 per cent, and deposit liabilities by 7.45 per cent. Profit by industry operators also jumped by 11.31 per cent, just as Capital Adequacy Ratio (CAR) of banks fell by 1.26 percentage points from 17.18 per cent to 15.92 per cent. It however exceeded the minimum capital adequacy threshold of 10 per cent.
The NDIC also noted a 25.73 per cent growth in banking industry total loans and advances from N10.04 trillion in 2013 to N12.63 trillion, while non-performing loans rose by 10.26 per cent to N354.84 billion, from N321.66 billion. This translated to a 2.8 per cent ratio of toxic loans to total industry loans level, down from 3.2 per cent in 2013, which was within the regulatory threshold of 5 per cent.
“The observed improved asset quality could be explained by the improved process of loan underwriting as well as the continued purchase of non-performing loans (NPLs) by AMCON (Asset Management Corporation of Nigeria),” the NDIC said.
The banks also reported total unaudited profit-before-tax (PBT) of N601.02 billion, up by 11.31 per cent from the N539.97 billion reported in the previous year.
The industry’s liquidity risk was moderate during the period with industry average liquidity ratio rising from 50.63 per cent in 2013 to 53.65 per cent in 2014, a rise of 3.02 per cent.
“The maturity profile of the banking industry’s assets and liabilities continued to show mismatch and investor preference for short-tenored investment. Short-tenored investments maturing below 180 days accounted for 51 per cent of aggregate assets investment, while that of liabilities stood at 88 per cent.
“Also, assets maturing within one year stood at ?10.85 trillion or 55.98 per cent of the industry assets, while 8.53 trillion or 44.02 per cent would mature over one year (365 days). On the other hand, liabilities of N17.85 trillion or 91.58 per cent of industry total liabilities would mature within one year, leaving only ?1.64 trillion or 8.42 per cent to mature over a year,” the report added.
A review of the banking industry sectoral distribution of credits to the various sectors of the economy showed that the top 10 of 22 sectors accounted for 87.35 per cent of total credits, compared with 81.99 per cent in 2013. Credit to the Oil and Gas sector accounted for the lion’s share of 25.74 per cent; followed by manufacturing with 13.19 per cent.
The corporation reported paying a total of N94.74 billion as liquidation dividend to 250,592 depositors in 2014, compared to N93.51 billion to 250,497 depositors in 2013. The amount included the uninsured portion of private sector depositors of 11 out of the 13 banks closed post-consolidation which was funded by the CBN.
Within the period under review also, Deposit Insurance Fund (DIF) rose to N614.16 billion from N508.06 billion reported in 2013, representing an increase of N106.10 billion or 20.88 per cent. Similarly, the Special Institutions Insurance Fund (SIIF) increased by 23.39 per cent to N71.21 billion.
Also, at the end of 2014, the number of bank branches increased from 5,265 to 5,349, indicating an increase of 84 branches or 1.60 per cent of the 5,265 branches/offices reported in 2013.
The majority of the Micro Finance Banks (MFBs) in Nigeria, the NDIC noted, continued to be concentrated in the South-Western, with 313 MFBs (35.49 per cent), followed by the South-East and North-Central with 166 (18.82 per cent) and 160 (18.14 per cent) operators, respectively. The North-West had 104 (11.79 per cent), while the South-South and North-East had the least number of MFBs with 101 (11.45 per cent) and 38 (4.31 per cent), respectively.
*Sola Alabadan and Akinwunmi King – Daily Independent
