Stanbic IBTC Bank said since the issuance of regulatory directive for banks to maintain a minimum 65percent Loan to Deposit Ratio (LDR) and in line with its key strategic objective of driving economic growth in Nigeria, the bank has increasingly focused on the growth of its credit exposures to the real sector of the economy.
The Central Bank of Nigeria (CBN) had in its circular to banks dated January 7, 2020 on the regulatory measures to improve lending to the real sector of the Nigerian economy directed banks to maintain a minimum 65 percent Loan to Deposit Ratio (LDR) with a further requirement that an average daily 65 percent LDR compliance be maintained by banks.
The focus and concerted efforts of Stanbic IBTC Bank management to ensure compliance with the regulatory directive of improving lending to the real sector of the Nigerian economy have been responsible for the growth in the risk asset portfolio for Stanbic IBTC Bank over the last two years.
The loan book increased by 18percent from financial year 2019 position of N556.4billion to N655.3billion as at December 31, 2020. The Bank also recorded an increased loan growth by 30percent from the December 31, 2020 position to a gross risk asset position of N854.9billion recorded as at September 30, 2021.
The risk asset growth of 18percent and 30percent recorded by the Bank in FY 2020 and as at third-quarter (Q3) 2021 remain significantly higher than the industry average growth of 18percent and 8percent in FY 2020 and as at Q3:2021, respectively.
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Consequent upon the significant growth recorded in the Bank’s risk asset growth in 2020 and year-to-date (YtD) 2021, Stanbic has remained compliant with the CBN’s daily minimum LDR requirement of 65percent with a FY 2020 daily LDR average of 65.84percent and 2021 YtD daily average of 69.86percent.
The bank said it suffered no Cash Reserve Requirement (CRR) debits by the CBN for non-compliance with the regulatory LDR directive over the period.
The growth in the bank’s Cash Reserve Requirement (CRR) position from N369billion as at December 31, 2020 to N462.6billion as at September 30, 2021 has been largely on account of the monetary policy actions introduced by the CBN to rein in inflationary and exchange rate pressures in the economy.
In line with its price stability and monetary policy mandates, the CBN is saddled with the responsibility of managing surplus liquidity in the system and at various times over the period, the CBN has introduced special CRR debits to sterilize surplus market liquidity.
These special CRR debits which are over and above the minimum regulatory cash reserving requirement of 27.5percent of customer deposit growth have indeed been responsible for the growth in Stanbic IBTC Bank’s total and effective CRR positions which stood at N462.6billion and 60.09percent respectively as at September 30, 2021. .
Notwithstanding the financial constraints arising from the sterilised liquidity from the CBN, Stanbic IBTC Bank remains very liquid and adequately capitalized with liquidity ratio and capital adequacy ratio standing at 96.2percent and 15.7percent respectively as at September 30, 2021 and above the regulatory minimum of 30percent for liquidity ratio and 8percent for capital adequacy ratio.
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