At the end of June 2022, the total assets of the banking sector in Nigeria increased by N11.8 billion, or 22%, to reach N65.48 trillion.
In her personal statement at the most recent MPC meeting, Aishah Ahmad, the Deputy Governor of the Financial Systems Stability Directorate, revealed this.
According to her, gross credit has been growing steadily since 2019, reaching N5.02 trillion between June 2021 and June 2022, with notable increases in credit to the manufacturing, general commerce, and oil & gas sectors.
The increase, according to her, was made possible by the non-performing loans ratio’s ongoing drop, which went from 5.3% in April 2022 to 5.0% in June 2022.
She added that:
“Furthermore, results of stress tests showed resilience of banks’ solvency and liquidity ratios in response to potential severe macroeconomic shocks. However, the bank must remain vigilant to proactively manage probable macro risks to the financial system such as lingering spillover effects of the pandemic, winding down industry forbearance portfolio, and other risks to financial stability such as exchange rate, operational and cyber security risks.
Kingsley Obiora, a member of the MPC, claimed that the financial soundness indicators demonstrated that the banking system was still strong, stable, and resilient.
He said the growth was “driven by balances with CBN/banks, OMO bills and credit to the real sector of the economy.”
Consequently, the total flow of credit to the economy increased by 22.78% or N5.02tn from N22.04 trillion in June 2021 to N27.06 trillion in June 2022 to various sectors of the economy, including oil and gas, manufacturing, general, governments and general commerce. The industry Non-Performing Loans ratio was 4.95% at the end of June 2022 compared with 5.70% at the end of June 2021, which was below the prudential maximum of 5.0%”
In addition, he noted that from 9.39 and 8.38% in May to 10.89 and 11.10% in June 2022, the monthly average Open Buy Back and Inter-Bank rates varied within the asymmetric corridor.
He claimed that the rise was a result of limited banking liquidity, which might assist control inflation and maintain the stability of the financial system.