Nige­ria’s banks reg­u­la­tor says lenders have strong buf­fers

The Star (Kenya) - - News -

REUTERS/ Nige­ria’s banks are fac­ing eco­nomic chal­lenges but have strong cap­i­tal buf­fers to weather the cri­sis, a Cen­tral Bank of­fi­cial said fol­low­ing a meet­ing with lenders.

Nige­ria, Africa’s big­gest econ­omy, is in re­ces­sion with a slump in the oil rev­enues that make up the bulk of its for­eign earn­ings, hav­ing ham­mered pub­lic fi­nances and the naira cur­rency.

In June, the Cen­tral Bank dropped its peg of the naira against the dollar, prompt­ing the lo­cal cur­rency to de­pre­ci­ate by 40 per cent, fur­ther hit­ting consumers’ spend­ing power.

The non-per­form­ing loan rate in the bank­ing sec­tor hit 11.7 per cent in the first half of 2016, well above the Cen­tral Bank’s five per cent limit, and it has fore­cast a fur­ther rise in the sec­ond half.

NPLs stood at 5.3 per cent at the end of last year. Loans to the oil and gas sec­tors ac­counted for al­most a third of to­tal bank lend­ing, the Cen­tral Bank said in its half-year fi­nan­cial sta­bil­ity report.

The fall in oil prices since mid-2014 has forced Nige­rian lenders, who have long fo­cused on loans to the en­ergy sec­tor, to adapt their busi­ness mod­els.

“Banks have strong cap­i­tal buf­fers,” Tokunbo Martins, the cen­tral bank’s di­rec­tor of bank­ing su­per­vi­sion, told jour­nal­ists af­ter the meet­ing, which is held ev­ery two months.

In July, the Cen­tral Bank sacked the man­age­ment of Skye bank, Nige­ria’s eighth big­gest, for fail­ing to meet min­i­mum cap­i­tal re­quire­ments.

“Banks are feel­ing the head­winds,” added Martins, who said the sup­ply of for­eign ex­change for man­u­fac­tur­ers will be im­proved.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.