CBN: Banks Remain Stable Despite COVID-19 Pandemic

Despite the COVID-19 pandemic, the Central Bank of Nigeria reports that the country’s banks have remained “stable, robust, and resilient”.

Mr Haruna Mustafa, CBN’s Director of Banking Supervision, stated this on Friday at the 2021 Financial Correspondents Association of Nigeria workshop in Ibadan.

Mustapha, represented by Mr Adekunle Adeniji, Assistant Director, Banking Supervision, CBN, stated that the Capital Adequacy Ratio (CAR) increased to 15.21% in August and the Liquidity Ratio (LR) increased to 42.233%.

He stated that the non-performing loan ratio fell from 6.58 per cent in January to 5.9 per cent in August 2021, while banking system credit to the economy increased to 10.99 per cent between January and August.

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Mustafa stated that the CBN’s regulatory measures contributed to the growth.
He listed some of the apex bank’s interventions to lessen the impact of the pandemic, including a 5% interest rate cut.

Other initiatives include a 50 billion naira target credit facility for households and Small and Medium Enterprises (SMEs), as well as the re-enactment of the Banks and Other Financial Institutions Act (BOFIA 2020), which will strengthen the regulatory and resolution architecture for banks and other financial institutions.

According to the director, the CBN will continue to develop additional counter-cyclical policy options that can be used in times of stress.

“We expect financial services to be provided more digitally. We will continuously update and assess our prudential rule books and policy to strengthen responses to economic and financial shocks”.

“We will continue to deploy effective stress testing methodologies to detect vulnerabilities early to enable appropriate pre-emptive action,” he said.

Mustafa went on to say that the banking sector had also helped to sustain the growth of key economic activities impacted by the pandemic, such as agriculture, manufacturing, retail, healthcare, hospitality, and tourism.