Following the adoption IFRS 9, as of December 2018, 10.9% of the loan book representing 1.5trillion was in stage 3 according to the recently released Banking Industry Report by Agusto & Co. Stage 3 loans are loans with objective evidence of impairment at the reporting date. In the previous period, Stage 3 loans can be assumed to be “individually impaired or non-performing loans”.
In 2017 non-performing loans was 1.3trillion, this accounted for 9.5% of the loan book. The 15% increase in stage 3 loans in 2018 compared to 2017 is evidence of the deterioration of the loan assets recognized by
Nigerian banks, this is largely due to the fact that most companies are yet to recover from the economic recession particularly the impact of the foreign exchange rate crises.
The Industry’s Stage 2 loans and advances as of December 2018 were 2.9 trillion; this represents 22% of gross loans. In prior periods, Stage 2 loans can be assumed to be “past due but not impaired” and it amounted to 793 billion in 2017.
Although Stage 2 loans do not have objective evidence of credit loss, these loans should be monitored closely to ensure that it does not deteriorate to Stage 3. If after 90 days, there is no longer evidence of a significant increase in credit risk, such loans could be transferred back to Stage 1. Comforting, however, the banking Industry has provided for 87.35% of the industry’s nonperforming loans.
Agusto & Co. in its recently published 2019 banking report also revealed that the Banking Industry’s total loans declined by 2.8%, this is largely due to the repayment by some customers and the cautious approach by banks towards extending further loans due to weak macro-economic climate.
In the near term, Agusto & Co expect a reduction in NPL ratio but this will not be significant. We also expect that there will be no significant growth in the Industry’s loan book as banks will continue to be risk-averse in the face of harsh operating terrain.
The Lagos state branch of the Chartered Institute of Bankers of Nigeria (CIBN) is leveraging technology to bridge learning challenges faced by young and aspiring bankers with the recent launch of its e-learning platform.
With the advent of several digital platforms for learning and the current level of technology adoption across the world, continuous innovation in line with the recent technology advancements and adoption is considered the catalyst for educational advancement.
“With the level of adoption of technology all over the world, it is often said that technology is no longer a competitive advantage. The adoption of technology is also in line with the strategic priorities that we set out when we took over the mantle of leadership earlier this year,” said Peter Ashade, chairman of the Lagos branch of the CIBN
at the launch of the e-learning platform.
According to Ashade, the e-learning platform will help create divergent membership base for the institute. “Historically, close to 70% of the members sitting for our examination resides in Lagos, thus limiting our membership and the efficacy of our strategic objective as an institute at large.
“The trickle-down effect of increased membership will then be increased revenue for the institute as the prospective members who would otherwise not have enrolled in the institute will now take advantage of this opportunity,” Ashade stated.
Mesiah Uche Olowu, the president of the CIBN on his part lauded the centre for taking a proactive move with the e- learning platform, stating that content is the critical factor that separates the institute from other professional bodies in Nigeria. “We need transformational leaders,” said Olowu who pledged that the national secretariat will collaborate with the Lagos chapter on e-learning.
The launch of the e-learning platform, which was developed in conjunction with CIBN technology partner, Edutech from the Venture Garden Group have lectures in form of texts, audio recordings, video recordings, online games and other simulated classroom learning features.
The e-learning platform creates flexibility for members, especially student members that have suspended their participation in the CIBN examination as a result of time factors due to increase work demand at their various organisations either financial or non-financial.
It is expected that the platform will significantly increase the membership drive capacity of the Lagos branch of the institute, as the access to quality study for its exam is made available to all in every part of the world thereby compressing the time, place and cost for students
