Six of the largest banks in the country accounted for 57.05 per cent of the total deposits in the industry as at June 2017, compared with the 53.70 per cent recorded at the end of December 2016.
Also, the six banks also accounted for 60.11 per cent of total industry assets, as against the 53.68 per cent recorded at end-December 2016.
The Central Bank of Nigeria (CBN) disclosed this in its Financial Stability Report as at the end of June 2017, posted on its website thursday.
This, according to the report, highlighted the oligopolistic market structure of the banking industry, with few banks controlling more than 50 per cent of the industry deposits and assets.
Furthermore, it stated that the low concentration ratios in the industry showed a trend towards more competition across the banks.
“The market share of the largest bank with respect to deposits and assets stood at 12.93 and 14.79 per cent, respectively, while that of the second largest bank stood at 12.88 and 11.72 per cent.
“Twenty-three other banks had market shares ranging from 0.02 to 9.01 per cent in deposits and 0.08 to 9.96 per cent in assets.
“The increased competition in the banking industry was supported by the Herfindahl-Hirschman Index (HHI)5 for the industry, which stood at 737.66 and 783.65 for deposits and assets, respectively, at end-June 2017 compared with 773.21 and 774.50 for deposits and assets at end-December 2016,” the report stated.
It also showed that as at the end of June 2017, banking industry stress test which covered 20 commercial and four merchant banks was conducted to evaluate the resilience of the banks to credit, liquidity, interest rate and contagion risks (shocks).
According to the report, the average baseline capital adequacy ratios (CARs) for the banking industry, large, medium and small banks at end-June 2017 stood at 11.51, 13.13, -6.71 and 13.54 per cent, respectively.
These represented a decline of 3.27, 2.34 and 19.46 percentage points for the industry, large and medium banks, respectively from the position at end-December 2016.
However, the small banks group grew by 10.40 percentage points from 3.14 to 13.54 per cent.
“The decline in CARs was attributable to the challenges in the oil and gas sector coupled with the slow recovery in the domestic economy which resulted to a rise in NPLs and capital deterioration.
“The pre-shock Return of Assets (ROA) of the banking industry, large, medium and small banks were 0.25, 0.26, 0.22 and 0.18 per cent, respectively, while the Return on Equity (ROE) of the banking industry, large, medium and small banks were 3.84, 3.53, -5.06 and 1.04 per cent in June 2017.
The credit concentration stress test showed that the banking industry and the three other categories exhibited high levels of credit concentration as their respective CARs fell below 10 per cent regulatory threshold.