The challenge of defaulting credits, which has put the banking system under pressure, may not end soon as financial institutions’ top 50 debtors owe N5.59 trillion (34 per cent) of total industry credit exposure of N16.29 trillion.
But an adverse economic impact on the borrowers and their businesses, resulting in rising default, additional provisioning by banks and consequent reduction in banks’ Capital Adequacy Ratio (CAR), has been blamed for the default.
The N5.59 trillion represents 77 per cent of the nation’s 2017 federal budget proposal at N7.3 trillion, and would comfortably fund the non-debt recurrent expenditure at N2.98 trillion, as well as capital expenditure of N2.24 trillion.
It also amounts to the size of three large banks; six medium size banks; the entire small size banks; and the entire capital base requirements of all the banks and other financial institutions in the country. What this effectively says is that administration of credit by the banks has not been widespread. It is restrictive, leaving unserviced a large chunk of small and mid-scale operators who need financial lifelines to remain afloat.
The revelation came just as the banking industry Non-Performing Loans (NPLs) moved up from 11.7 per cent to 12.8 per cent at the end of 2016 to N2.1 trillion at the end of December 2016 from N1.67 trillion in June of the same year.
But despite the NPL challenges, Nigerian banks have been adjudged stable in a six-month financial stability test, amid declining economic growth, rising credit risks and default that have affected the operations.
The stability of the banking sector has been attributed to the regulatory foresight in adopting prudential ratios that are far above international thresholds, which now serve as a buffer for the operators in difficult times.
Credit default has become a lingering challenge in the banking sector, with the Asset Management Corporation of Nigeria (AMCON), battling non-responsive debtors that liquidated some lenders since 2010, while fresh ones are now piling up, creating an operational and survival dilemma.
The Managing Director of First Registrar, Bayo Olugbemi, said the problem of credit was not about the volume, but the level of performance. He sees nothing to worry about in the number of people involved in the debt but cautioned that financial institutions no longer have excuse for not checking up the background of creditors before proceeding, as it has become easier with emerging policies and technologies.
“The Bank Verification Number (BVN) is now operational, hence a serial debtor will not succeed easily in duping several institutions at once. Again, banks would need to step up their monitoring of loans performance,” he said.
Frontline economist, Bismarck Rewane, said it was not totally unexpected given the challenging macroeconomic situation in the country, but admitted that increase in industry NPL, with such debt concentration, must be watched.
“Of course, in a high interest rate environment with challenging economy, the level of default must rise. This shows that something more needs to be done, otherwise the trend will continue with obvious repercussion,” he said.
As at December 2016, loans to the oil and gas sector constituted 30.02 per cent of the gross loan portfolio of the banking system as credit to that sector grew from N4.5 trillion to N4.9 trillion.
The development showed that despite the economic misfortunes of crude oil, banks are still lending heavily to the sector operators, and perhaps in efforts to aid further their operations or to other related sub-sector.
“Overall, credit risk remains tangible in 2017 as obligors remain constrained in servicing both naira and foreign currency-denominated loans due to the low level of economic activities, low international oil prices and the depreciation of the naira,” the Financial Stability Report of the Central Bank of Nigeria noted.
The liquidity ratio for the banking industry increased by 1.35 percentage points to 43.96 per cent, above the prudential minimum limit of 30 per cent, as they all raised stake in government’s assets with the increased Monetary Policy Rates from 12 per cent to 14 per cent.
Specifically, the stress test covering 23 commercial and merchant banks, to evaluate their resilience to credit, liquidity, interest rate and contagion risks, showed that capital adequacy indicators declined marginally, but remained above the regulatory thresholds,
The banking industry is categorised into large (assets more than N1 trillion); medium (assets more than N500 billion but less than N1 trillion); and small banks (assets less or equal to N500 billion).
The baseline CAR for the industry, large, medium, and small banks stood at 14.78 per cent, 15.47 per cent, 12.75 per cent and 3.14 per cent, representing 0.04 per cent, -0.18 per cent, 0.76 per cent and -0.02 per cent change from June 2016 record for each category.
“From bum shorts to leggings” – BBNaija’s Ozo called out over his choice of outfits
It is not new that ex-BBNaija housemate Ozoemena Chukwu likes to wear skimpy shorts – the kind of clothing items called bum shorts that are mostly worn by ladies.
Throughout the BBNaija show, Ozo was often seen wearing those kind of shorts, sometimes pulling them further up himself to reveal his light-skinned thighs.
Ozo’s choice of outfit lately makes him trend and at the same time, his getting backlash from his fans for what he is wearing.
The light skin big brother Naija ex housemate doesn’t look bothered, as he keeps wearing what he feels comfortable in.
The picture above was what Ozo was seen wearing that got him a lot of backlash as he decided to wear something more longer but still the trolling didn’t stop.
A Facebook user identified as Bright said “Ozo upgraded from bum short to leggings”
@enna said “if I catch my man wearing a leggings like that, we are done”
@alpha said “what is this guy wearing”
@enioluwa said “what kind of trouser is this guy always wearing”
See other reactions;
North Is The Worst Place To Live In Nigeria -Sultan of Sokoto
The Sultan of Sokoto,Alhaji Sa’ad Abubakar, on Thursday lamented the high rate of insecurity in the North, saying it was the worst place in the country to live.
The Sultan, who stated this at the fourth quarterly meeting of the Nigeria Inter-Religious Council in Abuja, said bandits were fast overrunning the North as residents slept with their eyes open.
While describing the North as the worst place to live, he said that bandits had become daring.
He said they moved from house to house, village to village, market to market, with AK-47 rifles openly, purchasing foodstuffs and other items and even collecting change without any challenge from the security agencies.
The foremost traditional ruler stated that the security system in the North had completely collapsed.
He said, “Security situation in Northern Nigeria has assumed a worrisome situation. Few weeks ago, over 76 persons were killed in a community in Sokoto in a day. I was there with the governor to commiserate with the affected community.
“Unfortunately, you don’t hear these stories in the media because it’s in the North. We have accepted the fact that the North does not have strong media to report the atrocities of these bandits.
“People think North is safe but that assumption is not true. In fact, it’s the worst place to be in this country because bandits go around in the villages, households and markets with their AK 47 and nobody is challenging them.
“They stop at the market, buy things, pay and collect change, with their weapons openly displayed. These are facts, I know because I am at the centre of it.
“I am not only a traditional ruler, I am also a religious leader. So, I am in a better place to tell the story. I can speak for the North in this regard because I am fully aware of the security challenges there. We have to sincerely and seriously find solutions to the problem, otherwise, we will find ourselves soon, in a situation where we would lose sleep because of insecurity.”
‘Stop Calling Friday ‘Black Friday’, Its A Holy Day For Muslims’ – Kano Hisbah Board Warns Radio Station
The Kano Hisbah Board has reportedly warned a Nigerian radio station and it is about Black Friday.
Per the letter sent to the radio station, the group ordered the station to stop calling Friday ‘Black Friday’ ahead of a “Black Friday Sales” which is scheduled to take place today.
Per the letter from the Sharia Police, majority of the residents in Kano are Muslims and they consider Friday a holy day.
Read the letter below;
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