INDICATIONS have emerged that key banking industry aggregates have continued their year-on-year upward trajectory with total assets rising to N65.48 trillion in June 2022 from N53.64 trillion in June 2021, representing N11.84 trillion while total deposits rose to N42.03 trillion from N33.85 trillion over the same period.
This is according to the Central Bank of Nigeria (CBN) as contained in the Personal Statements of the Monetary Policy Committee (MPC) members at the 143 MPC meeting of July 18-19, 2022.
The statements released last week also showed that gross credit has maintained an upward trajectory since 2019, rising by N5.02 trillion between June 2021 and June 2022 with significant growth in credit to manufacturing, general commerce and oil and gas sectors.
A member of the committee, Aisha N Ahmad, said the notable increase was achieved amidst continued decline in non-performing loans ratio from 5.3 per cent in April 2022 to 5.0 per cent in June 2022.
Also, Robert C. Asogwa observed that there is some encouraging progress in the domestic economic context since the last MPC meeting in May 2022, though several adverse indicators seem to have overshadowed the positive news.
A strong optimism however exists for the second half of 2022 which is expected to witness more expansion of the domestic economy despite the current risks.
For the banks, he noted that the declines in non-performing loans ratio (NPLs) from 5.31 percent in April to 5.20 per cent in May and further to 4.95 per cent June, 2022 as well as increases in total assets between May and June 2022 are encouraging indicators of increased system soundness and resilience.
According to the committee, the year-on-year downward trend in NPLs was attributable mainly to write-offs, restructuring of facilities, Global Standing Instruction (GSI) and sound credit risk management by banks.
Furthermore, the monthly average Open Buy Back (OBB) and Inter-Bank rates, fluctuated within the asymmetric corridor and increased from 9.39 and 8.38 per cent in May to 10.89 and 11.10 per cent in June 2022.
The increase reflects a tight banking liquidity condition, which could help rein in inflation and safeguard financial system stability.
In addition, growth in total industry credit had remained strong in June despite the policy rate increases at end-May 2022.
On the other hand, the stock market performed poorly as both the All Share Index and the Aggregate Market Capitalisation dropped significantly between May and June 2022.
“While CBN staff report attribute this downward stock market trend to dovish sentiments arising from policy rate hikes, the perceived volatility within that period smacks of uncertainties and disorderly market dynamics,” he stated.
The financial soundness indicators showed that the banking system remained sound, stable and resilient.
But amid stable and resilient banking system stability, significant headwinds remain in the economy. Inflationary pressures continued to surge as headline inflation increased.
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