Nigerian Banks Safe and Sound – NDIC

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Umar Ibrahim, MD, NDIC

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The Nigeria Deposit Insurance Corporation, NDIC, releases its 2014 annual reports, stating that banks in Nigeria are safe and sound despite losing N25.61 billion to fraud and forgeries within the system

By Anayo Ezugwu  |  Jul 20, 2015 @ 01:00 GMT  |

THE Deposit Money Banks, DMBs, in Nigeria lost a total sum of N25.61 billion to fraud and forgeries within the banking system in 2014. This represents an increase of N3.81 billion or 17.5 percent compared to N21.80 billion lost in the previous year, according to the Nigeria Deposit Insurance Corporation, NDIC, 2014 annual report.

 Also, a total of 10,612 fraud cases were recorded in 2014 compared with 3,786 cases in 2013, representing an increase of 182.77 percent. As a result, the expected and actual loss in fraud and forgeries increased from 5.76 billion in 2013 to 6.19 billion in 2014, representing an increase of 7.57 percent largely due to the astronomical increase in the incidence of web-based (online banking), Automated Teller Machine, ATM and fraudulent transfer and withdrawal of deposit frauds.

The report, which was released on Tuesday, July 7, by the NDIC, however, said that the health of the banking system remained intact as 23 banks had been rated sound and satisfactory during the period under review. “Overall the banking industry was safe and sound in 2014.”

The asset quality of the banking industry improved significantly during the period under review as total industry loans and advances increased by 25.73 percent to 12.63 trillion in 2014 compared to 10.04 trillion in 2013. However, the total industry’s non-performing loan portfolio increased by 10.26 percent to N354.84 billion compared to 321.66 billion in 2013.

The banking industry non-performing loans to total loans ratio improved from 3.20 percent in 2013 to 2.81 percent in 2014, revolving within the regulatory threshold of 5 percent. “The observed improved asset quality could be explained by the improved process of loan underwriting as well as the continued purchase of non-performing loans, NPLs, by AMCON,” it said.

The NDIC paid a total sum of 6.83 billion to 529,046 insured depositors of 48 closed DMBs in 2014 compared to 6.824 billion to 528,277 insured depositors in 2013. Similarly, the corporation disclosed that a cumulative sum of N2.77 billion was paid to 80,178 verified depositors of closed Micro Finance Banks, MFBs, in 2014 compared to N2.52 billion paid to 75,571 verified depositors in 2013.

In addition, a cumulative sum of N2.02 million was paid to 30 verified depositors of closed Primary Mortgage Banks, PMBs, in 2014. The NDIC said the sum of N94.74 billion was paid as liquidation dividend to 250,592 depositors of DMBs in 2014 compared to N93.51 billion paid to 250,497 depositors 2013. The amount included the uninsured portion of private sector depositors of 11 out of the 13 banks closed post-consolidation which was funded by the Central Bank of Nigeria, CBN.

It said the sum of N1,728.4 million was declared as dividends to 1,284 creditors of nine banks out of which the NDIC had paid the sum of N1,247.77million to the 889 creditors who filed their claims as against N1,191.54 million paid to the 424 creditors 2013.

On the financial condition of banks in 2014, the report said the banking industry’s financial soundness indicators revealed that the industry remained generally sound. The industry recorded significant growth in assets of 11.84 percent while credits to the economy grew by 25.73 percent as well as and deposit liabilities which rose by 7.45 percent. The unaudited profits of the industry showed a growth of 11.31 percent in 2014. However, the Capital Adequacy Ratio, CAR, of the deposit money banks, DMBs, declined by 1.26 percentage points from 17.18 percent in 2013 to 15.92 percent in 2014. This, however, exceeded the minimum capital adequacy threshold of 10 percent.

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