Guaranty Trust Bank Plc, Access bank Plc, Zenith Bank Plc, and Stanbic IBTC Holdings Plc ,led 8 other banks in the banking industry in Capital Adequacy Ratio (CAR) as at June 30, 2017,abovethe Central Bank of Nigeria (CBN) requirement.
CAR is the ratio of a bank’s capital to its risk, which the CBN uses to determine a bank’s capacity to absorb a reasonable amount of loss, as a means of protecting the depositors and promoting stability and efficiency in the financial systems.
The apex bank had designated that its Systemic Important Banks (SIBs) are required to maintain a minimum CAR of 15 per cent of which Tier II bank capital should not constitute more than 25per cent of the qualifying capital with CAR of 10 per cent.
Analysts had identified four out of eight SIBs Nigerian Tier-I banks, Guaranty Trust Bank (GTBank), Access Bank, Zenith Bank and United Bank for Africa (UBA) with strong buffer to pull through economy challenges.
Nigerian NewsDirect can exclusively report that some banks have failed in disclosing their CAR but planning to inject fresh capital through right issues, bonds already approved by shareholders later in the year.
Specifically, Guaranty Trust Bank’s CAR closed half year of 2017 at 23.10 per cent while Stanbic IBTC Holdings and Access Bank reported CAR of 22.9 per cent and 21.6 per cent respectively.
Zenith Bank’s CAR hits 21 per cent in half year of 2017. Another Tier I bank, United Bank for Africa has Basel II CAR closed half year of 22017 at 20 per cent, which underpins the financial institution ability to grow, as the macro risks decline.
Fidelity Bank’s reported CAR of 18.4 per cent while First Bank Nigeria Limited, CAR closed the period under review at 17.6 per cent (Basel II).
The Group in its report to investors/Analysts said, “Including half year of 2017 profit, CAR will be 18.6 per cent, FBN Merchant Bank’s CAR for half year of 2017 at 26.7 per cent excluding half year of 2017 profit.”
Furthermore, First City Monument bank Plc reported 17.3 per cent CAR while Ecobank Nigeria’s CAR moved to 16.70 per cent in half year of 2017.
For Diamond Bank Plc, one of the CBN’s SIB, its CAR dropped from 15.60 per cent in prior half year of 2016 to 15.40 per cent in half year of 2017.
Chief Executive Officer, Diamond Bank, Uzoma Dozie, stated that despite the economic headwind, the Bank would remain resilient and sustain the positive growth throughout the two remaining business quarters.
According to him, the Bank’s strong liquidity and capital adequacy ratios plus its digital infrastructure have strengthened and rightly positioned it to meet customer obligations and offer service deliveries that are beyond banking, adding that the improving macroeconomic conditions will help stimulate and sustain the growth trajectory of the Bank.
“The positive economic signals witnessed at the beginning of the year continued in the second quarter and we believe this will translate to greater productivity in the months ahead. There have been market driven adjustments in the exchange rate of the naira versus other currencies and this has helped supply into these markets.
Overdue trade obligations, which were an issue some months ago, have been addressed significantly and demand is generally being satisfied providing the right conditions for trade activities. Inflation has continued to recede, with the prospect of some Gross Domestic Product (GDP) growth by year end, even if marginal.
Against this backdrop, our income streams remain resilient and considerable growth was recorded in gross earnings,” he said.
Although marginal, Wema Bank Plc and Sterling Bank Plc, reported CAR of 12.74per cent and 11.8 per cent respectively as at June 30, 2017.