Capital adequacy: Nigerian Banks remain resilient, financially sound  —  CBN

By Sodiq Adelakun

The Central Bank of Nigeria (CBN) has refuted claims that certain Nigerian banks have failed to meet the capital adequacy ratio.

Earlier reports had indicated that approximately eight banks with international authorisation were below the regulatory threshold in terms of their capital adequacy ratio.

The bank’s asset quality, as indicated by the ratio of non-performing loans, decreased slightly by 0.4 percentage points to 4.1 percent in the second quarter of 2023 from 4.5 percent in the previous quarter, reflecting a sustained improvement in loan recoveries by banks, according to a report attributed to the apex bank’s second economic quarter report on the financial soundness indicator.

The report detailed that the ratio fell short of the prudential target, which stands at 5 percent. During the review quarter, the industry liquidity ratio increased significantly by 10.9 percentage points to 62.2 percent, up from 51.4 percent in the previous quarter.

However, responding to the report in a statement on Monday, the apex bank debunked the story.

The statement by CBN read, “The attention of the Central Bank of Nigeria (CBN) has been drawn to reports in some media outlets suggesting that some licensed commercial banks in the country had failed the CBN’s Capital Adequacy Ratio (CAR) for international authorisation.

“We wish to clarify that the Nigerian banking industry remains resilient as key financial soundness indicators were within the regulatory thresholds as captured in the CBN’s most recent Economic Report of 2023.”

The bank, however, urged Nigerians to ignore media reports that listed banks as failing the Capital Adequacy Ratio (CAR) stress test for international authorisation. The bank disclosed that it was interacting with a number of crucial stakeholders to maintain the level of confidence in the country’s financial sector and stated that the report did not originate from the CBN.