Still the Fraudsters’ Haven

Umaru Ibrahim, managing director, NDIC

The 2012 annual report of the Nigeria Deposit Insurance Corporation reveal that fraudsters are still on the prowl in the Nigerian banking industry

|  By Anayo Ezugwu  |  Sep. 2, 2013 @ 01:00 GMT

NIGERIAN banks lost about N5 billion to fraudsters last year. The Nigeria Deposit Insurance Corporation, NDIC, disclosed this in its 2012 annual report and statement of accounts presented in Abuja, on Tuesday, August 20. According to the report, a total of 3,380 fraud cases involving the sum of N17.97 billion with expected/contingent loss of about N4.52 billion was recorded by banks in 2012.

The expected/contingent loss puts to N455 million, 10.9 percent as against N4.072 billion reported in 2011. It also indicated that there was 43.7 percent increase in the number of reported fraud cases from 2,352 in 2011 to 3,380 in 2012. But the amount involved decreased by 36.4 percent from N28.40 billion in 2011 to N18.04 billion in 2012. The report further said that the corporation had so far paid a total of N6.82 billion to about 528,212 insured depositors of closed banks in the year which ended December 31, 2012.

The report showed that the paid amount was slightly higher compared to the N6.68 billion paid to 527,942 insured depositors in December 31, 2011. Similarly, it stated that a total sum of N2.505 billion was paid to 75,322 verified depositors of 95 out of 103 closed Micro Finance Banks, MFBs during the year as against the sum of N2.249 billion paid to 72,062 verified depositors in 2011.

Also, the sum of N73.58 billion had been paid as liquidation dividend to 250,209 depositors of DMBs as at December 31, 2012.  It is pertinent to indicate that a total of 14 out of the 34 banks-in-liquidation prior to 2006 had declared a final dividend of 100 percent of their total deposits, indicating that all depositors of the affected closed banks had fully recovered their deposits.

“The NDIC, in collaboration with the Central Bank of Nigeria, CBN, conducted risk-based examination of 16 deposit money banks during the year. The NDIC led in the examination of six of the banks while the CBN led in 10 banks.  Furthermore, the two institutions conducted a maiden examination of the three banks acquired by AMCON, namely: Keystone Bank, Mainstreet Bank and Enterprise Bank during the year. While the CBN led in the examination of Mainstreet Bank and Enterprise Bank, the NDIC led in the examination of Keystone Bank. The Corporation, in collaboration with the CBN, also conducted a maiden examination of Jaiz Bank Plc and Stanbic-IBTC Non-Interest window during the year under review’’ the report stated.

Accordingly, it said that the corporation in 2012 conducted routine examination of 246 MFBs out of which six were found to have closed shop. The NDIC also conducted risk-based examination of forty primary mortgage banks in 2012 out of which three were found to have voluntarily closed shop.

On bank performance, the NDIC said that the banking industry recorded a significant improvement in its financial condition and performance in 2012 as revealed by all major financial indicators compared to the previous year. For instance, the banking industry’s total assets grew from N21.89 trillion in 2011 to N24.58 trillion in 2012.  Out of the total industry’s assets of N24.58 trillion, total loans and advances stood at N8.15 trillion, representing over 33 percent of total assets. Of the banking industry total loans, the sum of N4.48 trillion was extended to the real sector of the economy in 2012 as against N3.88 trillion and N3.51 trillion in 2011 and 2010, respectively.

The report also noted the rising trend in the banking industry’s credits to the agricultural sector which stood at 3.60 percent of total loans and advances in 2012 compared to 2.15 percent and 3.11 percent recorded in 2010 and 2011, respectively.  “The banking industry was adequately capitalised in the year under review with capital adequacy ratio of 18.07 per cent compared to 17.71 percent recorded in 2011. All the deposit money banks, DMBs also met the minimum liquidity threshold of 30 percent. The asset quality significantly improved during the year as the ratio of non-performing loans to total loans decreased from 4.95 percent in 2011 to 3.51 percent in 2012. The improvement in the banking industry’s asset quality was due to the purchase of the non-performing loans of DMBs by AMCON and the enhanced credit risk management by DMBs. The overall effect was an improvement in the industry’s profit before tax which increased from a loss of N6.71 billion in 2011 to a profit of N525.34 billion in 2012’’ it stated.

5 thoughts on “Still the Fraudsters’ Haven

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