CBN says banks remain stable, resilient despite pandemic

The Central Bank of Nigeria (CBN) says banks in the country have remained stable, robust, and resilient in spite of the COVID-19 pandemic.

Haruna Mustafa, the director, Banking Supervision of CBN, said this at the 2021 Financial Correspondents Association of Nigeria (FICAN) workshop in Ibadan on Friday.

Mustapha, represented by Adekunle Adeniji, the assistant director, Banking Supervision, CBN, said the Capital Adequacy Ratio (CAR) rose to 15.21 percent as of August, Liquidity Ratio (LR) rose to 42.23 percent.

He said the non-performing loan ratio improved from 6.58 percent to 5.9 percent as of August 2021, while banking system credit to the economy increased to 10.99 percent between January and August.

Mustafa noted that the regulatory measures taken by CBN contributed to the growth.

He listed some interventions by the apex bank to lessen the impact of the pandemic to include a reduction in interest rates to five percent.

Others are 50 billion naira target credit facility for households and Small and Medium Enterprises (SMEs) and re-enactment of Banks and Other Financial Institutions Act (BOFIA 2020) to strengthen the regulatory and resolution architecture for banks and other financial institutions.

The director said CBN would continue to develop additional countercyclical policy options that could be utilised in periods of stress.

Mustafa explained that macro-prudential regulation and supervision were more critical now than ever.

“We expect financial services to be provided more in a digital manner.

“We will continuously update and assess our prudential rule books and policy to strengthen responses to economic and financial shocks.

“We will continue to deploy effective stress testing methodologies to detect vulnerabilities early to enable appropriate pre-emptive action,” he said.

Mustafa explained that the banking sector had also sustained the growth of key economic activities, which were impacted by the pandemic in the agriculture, manufacturing, retail, healthcare, hospitality, and tourism sectors.