By Obinna Chima
The total value of the Nigerian banking industry assets increased by 7.62 per cent to N15.74 trillion as at December 2011 as against the N14.63 trillion, it stood as at December 2009.
Analysts at FSDH Securities Limited revealed this in a report titled: “Nigerian Banking Industry, December 2011- Review and Outlook,” a copy of which was made available to THISDAY at the weekend.
The report also showed that the total customers’ deposits, which represented depositors’ confidence in the banking industry, also improved by 5.42 per cent to N10.99 trillion as at December last year, compared with the N10.42 trillion it was as at December 31, 2009.
Prior to last year’s recapitalisation exercise, there were 24 banks operating in Nigeria. Twenty-one of these banks were quoted on the Nigerian Stock Exchange (NSE), while three were unquoted. However, FSDH revealed that the report covered 22 banks, saying that the defunct Afribank (now Mainstreet Bank Limited) as well as Equitorial Trust Bank (which has merged with Sterling Bank Plc) because they were not able to get their audited reports as at the time of the report.
The report covered the financial institutions separately, not minding that some of them had either merged or had been acquired. It also insisted that the activities of the Asset Management Corporation of Nigeria (AMCON) had drastically reduced banks’ non-performing loans.
It said: “The bank with largest customer deposit which represents the share of deposit mobilisation was still First Bank of Nigeria Plc, which stood at N1.45 trillion and represented 13.20 per cent of the industry total deposits. This was also closely followed by Zenith Bank Plc with N1.32 trillion accounting for 11.99 per cent of the industry.
“Five largest banks by deposits which are First Bank (N1.45 trillion), Zenith Bank (N1.32 trillion); United Bank for Africa Plc (N1.27 trillion); GTBank (N760 billion); Intercontinental Bank (N680 billion) and Oceanic Bank (660 billion) controlled 44.26 per cent of the industry total deposit liabilities. The total liabilities in the industry stood at N14.63 trillion. Customers’ deposit liabilities accounted for about 75.15 per cent of the total liabilities. First Bank also controlled the largest liabilities in the industry standing at N1.96 trillion which represented 13.43 per cent of the total.”
The research and investment firm forecast that the attractiveness of banks’ valuation and earnings would attract investors into banking stocks this year. It also argued that the industry would maintain low non-performing assets/loans and more disclosure the commercial banks adopts the International Financial Reporting Standard (IFRS). According to FSDH, the Central Bank of Nigeria’s policy on cash-less economy would be expected to drive more non-interest income for banks.
“Notwithstanding these opportunities, the major risk we see in the industry for the results of banks in December 2011 is the losses that banks may book from their bond portfolio investment which is as a result of drop in the price of bonds and increase in yields.
“The insecurity in the country is also a threat as this may affect the productive sector and scare investors both local and foreign. FSDH Research notes that efforts to address the infrastructural challenges especially in electricity and transport system will go a long way towards the achievement of sustainable single-digit inflation rate in Nigeria,” it added.