By Chukwuma Umeorah
The Central Bank of Nigeria (CBN) reported a notable improvement in the banking sector’s Capital Adequacy Ratio (CAR), which increased to 14.01% in the third quarter (Q3) of 2024, up from 12.52% in the second quarter (Q2) of 2024.
According to the bank’s Q3 economic report, this represents a 1.49 percentage point rise, underscoring the banking sector’s enhanced resilience and stability amidst prevailing economic challenges.
The report noted that the development reflected the improvement of the banks’ total qualifying capital and decrease of risk weighted assets.
“The ratio remained above the 10.0% benchmark for banks with national/regional authorisation, but below the 15.0% threshold for banks with international authorization”, it said.
However, the report revealed that the banks’ asset quality measured by the ratio of non-performing loans (NPL ratio) weakened by 0.68 percentage point to 4.58 per cent, relative to 3.90 per cent at the end-June 2024.
“The ratio, however, remained below the prudential benchmark of 5.0 per cent. The industry Liquidity Ratio (LR) grew by 2.47 percentage points to 46.06 per cent, relative to the 43.59 per cent in the preceding quarter. The LR remained above the minimum regulatory benchmark of 30.0 per cent, depicting the liquidity sufficiency of the banks and their ability to meet up with their obligations”, it said.
The apex bank revealed that subscriptions for both Nigerian Treasury Bills (NTBs) and Federal Government of Nigeria (FGN) Bonds declined in the period under review, relative to the level in the preceding quarter. “Total NTBs offered, subscribed, and allotted across tenors amounted to N1.69 trillion, N4.19 trillion and N1.62 trillion respectively, compared with N1.47 trillion, N6.98 trillion, and N2.85 trillion in Q2 2024.
The lower amount offered and subscribed were accompanied by higher stop rates on all the maturities 19.20(±2.90) per cent, relative to 18.47(±2.23) in the preceding quarter.
FGN Bonds of various tranches were offered for sale in Q3 2024. The amount offered, subscribed, and allotted were N0.64 trillion, N1.15 trillion, and N0.86 trillion, respectively, compared with N1.35 trillion, N1.78 trillion, and N1.30 trillion in the preceding quarter.
The marginal rate at 20.49(±1.49) per cent was higher than 20.37(±1.13) per cent in the preceding quarter, while the bid rate stood at 22.00(±8.00) per cent relative to 19.00(±5.00) per cent in the preceding quarter. The lower demand for longer-tenured government securities could be attributed to inflation expectation”, the report stated.