…fraud and forgeries in banks increased to N2.71 billion in the first half of 2022 compared with 46,761 cases in 2021.
Banking industry credit risk remained stable during the first half of the fiscal year 2022. Although the nonperforming loans ratio remained below the regulatory limit of 5 percent, there was a marginal increase to 4.95 percent at end-June 2022, from 4.85 percent at end-December 2021.
Credit risks are expected to remain stable in the second half of 2022. However, there are downside risks due to the lingering challenges in the business environment and the imminent transition to a full interest rate regime on loans that were granted forbearance in the wake of the Covid-19 pandemic.
However sustained implementation of various regulatory and supervisory measures, including the Global Standing Instruction (GSI) and Guidelines for Regulation and Supervision of Credit Guarantee Companies in Nigeria, is expected to moderate the risks in the short to medium-term.
According to the Central Bank of Nigeria’s recently released Financial Stability Report, June 2022, Industry liquidity remained healthy and stable during the review period and was above the regulatory threshold of 30.00 percent.
“Banking industry liquidity ratio increased to 42.6 percent at end-June 2022, compared with 41.33 percent at end-December 2021. The liquidity coverage ratio for the industry stood at 42.60 percent at end-June 2022, compared with 41.30 per cent at end-December 2021, driven by the increase in high quality liquid assets during the period.” “The weighted average Open Buy Back rate stood at 10.89 per cent at end June 2022, compared with 12.75 per cent at end-December 2021, reflecting higher liquidity in the banking system.”
“Liquidity risk is expected to remain low and stable in the short to medium-term and the banking industry is expected to maintain a robust liquidity position and resilience to short term liquidity shocks. However, downside risks persisted, including rollover risk, asset and liability mismatches and funding gaps at the short-term maturity buckets.”
Operational Risk Rating
Lingering structural rigidities continued to pose threats in the review period.
There was rise in operating costs as a result of security and power challenges, as well as high energy prices heightened operational risks. Cyber security challenges also remained elevated during the period, with incidents of social engineering, unauthorised access to confidential information, insider threats and third-party risks.
Reported losses from cases of fraud and forgeries in banks increased to N2.71 billion in the first half of 2022, from N1.64 billion in the second half of 2021.
The banks reported 67,878 cases of fraud and forgeries in the first half of 2022, compared with 46,761 cases in the preceding period. Operational risk could remain high with an upward trend in the short to medium term.
As par market risk, it stated that the exchange rates remained generally stable at the Investors and Exporters (I&E) window during the period under review. The Naira, however, depreciated slightly against the United States dollar to N414.72/US$1 at end-June 2022, compared with N412.99/US$1 at end-December.
Olusola Bello