Leadership (Abuja)
Justus Nduwugwe
12 November 2009
Abuja — The Nigeria Deposit Insurance Corporation has said that the financial health of 21 out of the 24 banks was generally satisfactory as at December 31, 2008, in spite of the global financial meltdown and the turmoil in the domestic stock market.
In its 2008 annual report and statement of accounts, made available to Leadership yesterday, the corporation said, "Out of the 24 banks in the industry as at the end of 2008, twenty-one (21) were rated sound and/or satisfactory, two (2) marginal and one (1) was rated unsound just like the preceding year".
The report, however, noted that the market share of assets, credits and deposits of the unsound bank represented 0.84 per cent, 1.64 per cent and 1.40 per cent of the industry's total respectively.
"The two marginal banks' total market share of assets, credits and deposits were 3.3 per cent, 3.75 per cent and 3.96 per cent of the industry total respectively. The three banks accounted for less than 5 per cent of industry statistics and posed no threat to the financial soundness of the industry", it stated.
According to the report, "the total deposits of insured banks which accounted for more than fifty per cent of the industry's liabilities increased by 62.27 percent from N5.36trillion to N8.70 trillion as at the end of 2008, whilst shareholders' funds increased by 62.91 per cent from N1.712trillion in December, 2007 to N2.789trillion as at the end of December, 2008".
The NDIC also revealed that, unlike in the preceding year, the performance of insured banks, proxied by profitability, slightly declined in 2008. "Whereas the profit before tax (PBT) was N619.96 billion as at the end of 2007, by 2008 year end, it had gone down to N603.88 billion. Indeed, PBT would have been further reduced if adjusted for banks' exposure to the capital market".
Meanwhile, the Corporation realized the sum of N16.65billion from the sale of physical assets of 42 failed banks as at 31st December, 2008. A bulk of the money came from the assets of the defunct Hallmark Bank Plc, Lead Bank Plc, Allstates Trust Bank Plc and Trade Bank Plc.
With respect to the payment of liquidation dividends to the uninsured depositors, the report indicated that the sum of N60,839.72million was paid as liquidation dividend as at 31st December, 2008 to 969,831 depositors as against the sum of N41,955.296million paid to 162,758 depositors as at 31st December, 2007.
On the financial condition of insured banks in 2008, the Corporation noted that in spite of the global financial crisis which hit major economies in 2008 and near collapse of the domestic stock market, the nation's banking industry enjoyed a steady growth during the period under review.
"The industry recorded an appreciable growth of 46.56 per cent in total assets from N10.47trillion in December, 2007 to N15.34trillion in December, 2008, exclusive of the off-balance sheet (OBS) items. "The OBS engagements of banks grew by 51.81 per cent from N2.58trillion in 2007 to N3.92trillion in 2008. Asset quality witnessed a seeming improvement as the ratio of non-performing credits to total credits reduced from 8.30 per cent in 2007 to 6.25 per cent as at the end of 2008", the report also stated. However, NDIC noted, if the forbearance granted by the CBN on banks' exposure to the capital market was factored into the appraisal of asset quality, the net position would have reflected a deterioration of banks' asset portfolio.
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