The Nation Newspaper

Tag: DMBs

  • CBN orders banks to open 7.6m new savings accounts

    CBN orders banks to open 7.6m new savings accounts

    …starts review of financial Inclusion strategy

     

    The Central Bank of Nigeria ( CBN ) has ordered all Deposit Money Banks (DMBs) and Microfinance banks to open 7,608,180 new savings accounts to meet its financial Inclusion target.

    Financial institutions in all the states and the Federal Capital Territory (FCT) were given different targets. Lagos banks have the highest target of 2,293,080 while banks in Abuja are to attract 153,000 savings account customers.

    CBN Abuja Branch Controller, Mrs Elizabeth O. Agu made this disclosure yesterday in Abuja at the inauguration of Financial Inclusion States’ steering committee (FISSCO).

    Agu stated that the apex bank has ordered all Deposit Money Banks (DMB) and Microfinance in the the Federal Capital Territory (FCT) to attract a minimum of 1500 and 2500 new savings customers respectively in 2018.

    She also confirmed that the apex bank has commenced the review of the strategy document for achieving required levels of financial inclusion in the country.

    Come 2020, the CBN is targeting 20% adult exclusion from financial services.

    The review is expected to throw up major challenges and corrective options to be adopted to put Nigeria back on track of meeting the 20% exclusion target by 2020.

    According to her, “as we speak, the bank is working on initiatives that are targeted at North East, North West and North Central zones of the country where exclusion rates are still very high. We intend to hold stakeholders’ workshops in those parts of the country to drill down on strategic measures that will give us quick results.”

    She added that “the bank is also working on developing non-interest financial products for the region. We are conceptualizing ways and means to reach out to women whose culture and religion require specialized products and channels”.

    The CBN Abuja Controller informed members of Abuja FISSCO steering committee which comprise top officers of Deposit Money Banks branches in Abuja metropolis and representatives of key agencies that, CBN has evolved appropriate governance arrangements for the implementation of Financial Inclusion Strategy at all levels.

    “We are therefore, inaugurating the Financial inclusion strategy State steering committee to be chaired by the CBN Branch Controller while the head of development finance office will serve as technical officer in the State/ committee” she said.

    In his address, Permanent Secretary, Federal Capital Territory Administration (FCTA) represented by Mr. Abubakar Sanni Pai urged the CBN to create a common platform for stakeholders to contribute their views to achieve the National Financial Inclusion Strategy (NFIS).

    Pai noted that “one of the ways to assist the masses to attain economic independence especially those at the bottom of the pyramid is to provide them adequate access to financial services in a convenient and affordable manner.”

    NFIS was launched on the 23rd of October, 2012 with the overall target of reducing the percentage of adult Nigerians excluded from access to financial service from 46.3% in 2010 to 20% in 2020 and make use of financial services with at least 70% of the number in the formal sector.

  • DBN to engage more DMBs, MFIs in financing MSMEs

    The Development Bank of Nigeria (DBN) is to engage more Deposit Money Banks (DMBs) and Micro Finance Institutions (MFIs) in lending to Micro Small and Medium Enterprises (MSMEs).

    Managing Director DBN  Tony Okpanachi made this known when he received a delegation of the KFW Development Bank of Germany, in Abuja, at the weekend.

    He said discussions have reached advanced stage and would soon culminate in agrements for the private financial institutions to expand credit facility to operators in the Small and Medium Enterprises (SMEs) sub-sector.

    Okpanachi said his team undertook a study tour to Germany in order to take advantage of the long experience of KFW so as to run a sustainable development bank in Nigeria.

    He said: “We undertook a study tour there to be able to understand how they have been able to sustain this model for all these years. The culmination of that, is the technical support that came from them and experience sharing with us, in addition to the funding they provided for us. We want the assistance to continue.

    Okpanachi added that the German development bank has “a long history of successful operations and DBN wants to learn a lot from them.  We want continuous assistance from them. We want their willingness to support us as we continue in the journey.”

    Earlier, the leader of the delegation and Director of  West Africa and Madagascar, Mr. Michael Wehinger, who expressed satisfaction over the operational model adopted by the DBN, said that his organization was ready to provide more funding for the bank.

    He said KFW saw DBN as a natural partner through which the Germany and KFW, in particular could channel efforts towards strengthening the Nigerian SME sub-sector.

    His words: “When the Nigerian government took the decision to establish a Development Bank of Nigeria, we saw ourselves as a natural partner to the bank. We put our funds into it and we also put our knowledge into the process.

    “I am happy all members of the delegation here have had the opportunity to share their views and review the progress in the establishment and operations of the DBN.”

     

  • NABG urges CBN, DMBs to invest more in agric sector

    The Nigeria Agribusiness Group (NABG) has urged the Central Bank of Nigeria (CBN) and Deposit Money Banks (DMBs) to pay more attention to investment in the agriculture sector and help government diversity the economy away from oil.

    This was the position of the Nigeria Agribusiness Group (NABG Associates Unlimited), the brainchild of a 23 member Executive Leadership Group headed by major players in the Agro allied sector.

    NABG Chairman, Sani Dangote explained that with the current low prices in oil, agriculture is inevitably the way forward for development adding that with the formation of the Nigeria Agribusiness Group, the group now has a platform to address challenges and find solutions to issues pertaining to the agric industry.

    He spoke at the group’s maiden Annual General Meeting held in Lagos, with theme: “Setting Policy direction, Strengthening Agriculture and Agribusiness Associations, Engaging Strategic Partners and Donors.

    He said the group was created as an organized private sector platform to lead in all matters affecting agricultural stakeholders in Nigeria through setting of policy directions, engaging policy and decision makers in government at all levels and forging strategic partnerships with public and private sector groups across Africa and the world.

    NABG Co-ordinator, Emmanuel Ijewere praised every partner who contributed to the formation of the association. “We appreciate the support of every partner which has led to the formation of the Nigeria Agribusiness Group and look forward to engagements with relevant stakeholders as it concerns the industry” he said.

  • Banks’ assets, liabilities hit N24t

    Banks’ assets, liabilities hit N24t

    The total assets and liabilities of Deposit Money Banks (DMBs) stood at N24.3 trillion at the end of the fourth quarter ended December 31, last year, a Central Bank of Nigeria (CBN) Quarterly Economic Report has shown.

    According to the report, the figure represents an increase of 4.4 per cent over the level at the end of the preceding quarter.The funds, it said, were sourced, largely, from increased mobilisation of demand deposit and Federal Government’s deposit.

    The CBN said banks’ credit to the domestic economy rose by 8.6 per cent to N12.2 trillion, when compared with date from the preceding quarter. The development, it said, was attributed, largely, to the 346.9 per cent increase in claims on the Federal Government. However, apex bank’s credit to the banks fell by 1.6 per cent to N229.8 billion, reflecting the decline in overdrafts to banks, while total specified liquid assets of the DMBs stood at N6.6 trillion, representing 39.5 per cent of their total current liabilities.

    Also, the liquidity ratio rose by 1.8 percentage points above the level in the preceding quarter, and was 9.5 percentage points above the stipulated minimum ratio of 30 per cent.

    The report further showed that loans-to-deposit ratio stood at 36.3 per cent, and was 2.9 percentage points above the level at the end of the preceding quarter, but was 43.7 percentage points below the prescribed maximum ratio of 80 per cent. The quarterly report also showed that the gross domestic product (GDP) was estimated to have grown by 7.7 per cent, compared with 6.8 per cent in the preceding quarter. The development, it said, was driven, largely, by the growth in the non-oil sector.

    Broad money supply (M2), grew by 9.1 per cent, in contrast to the 7.9 per cent decline recorded at the end of the preceding quarter. The CBN said the development reflected, largely, the 14.9 per cent increase in domestic credit (net) of banking.

    Similarly, narrow money supply (M1), rose by 11.4 per cent, in contrast to the 9.3 per cent decline at the end of the preceding quarter.

    Over the level at end-December 2012, broad money supply (M2) grew by 1.2 per cent, owing largely to the 18.5 per cent increase in net domestic credit, which more than offset the 26.0 and 5.9 per cent decline in other assets (net) and foreign assets (net) of the banking system.

    Reserve money (RM) rose at the end of the fourth quarter of last year.Available data indicated that banks’ deposit and lending rates trended upward, while the weighted average inter-bank call rate fell by 3.23 percentage points to 11.02 per cent, reflecting the liquidity condition in the inter-bank funds market.

     

     

    Provisional data indicated that the value of money market assets outstanding increased by 4.1 per cent to N6.8 trillion, compared with the increase of 5.7 per cent at the end of the preceding quarter. The development was attributed to the 4.7 and 3.9 per cent increase in Federal Government of Nigeria Bonds and Nigeria Treasury Bills outstanding, respectively. Also, total federally-collected revenue was 22.3 and 19.8 per cent below the quarterly budget estimate and the level in the preceding quarter, respectively. Oil receipts, which constituted 69.9 per cent of the total, fell below the budget estimate and receipts in the preceding quarter by 20.4 and 5.2 per cent, respectively. The decline in oil receipts was attributed to the fall in crude oil and gas exports during the review quarter.

     

  • Banks begin Basel Capital Adequacy computation

    Banks begin Basel Capital Adequacy computation

    Deposit Money Banks (DMBs) are expected to start a parallel run of both Basel I and II minimum capital adequacy computation before the end of the month, the Central Bank of Nigeria (CBN) has said.

    In a report posted on its website, the CBN Director, Banking Supervision, Mrs Tokunbo Martins, said the full adoption of Basel II Accords will be executed by June but preliminary works would start soon.

    The Basel Accord is a financial analysis principle expected to give banks’ financials better credibility.

    Martins explained in a circular to all banks and discount houses on the implementation of Basel Accords in the country, that both policies specify approaches for quantifying the risk weighted assets for credit risk, market risk and operational risk for the purpose of determining regulatory capital.

    According to her, the computations are consistent with the requirements of Pillar I of Basel II, which is expected to ensure that banks have sufficient high quality capital to support their risk taking activities. The lenders are also expected to establish effective risk management systems commensurate with their level of operations.

    She said all banks and banking institutions are expected to adopt the basic approaches for the computation of capital requirements for credit risk, market risk and operational risk.

    “Within the first two years of the adoption of these approaches under Pillar I, it is hoped that an effective rating system would have developed in Nigeria. Banks and banking groups are projected to have gathered more reliable data and gained more experience that would prepare them to consider the adoption of more sophisticated approaches,” she said.

    The CBN chief said the adoption of the Standardised Approach for Operational Risk and other sophisticated approaches would, however, be subject to the approval of the CBN.

    “The guidance notes are applicable to all banks and banking groups licenced to operate in Nigeria and should be applied on a solo as well as a consolidated basis. The minimum capital requirement is retained at 10 per cent and 15 per cent for local and internationally active banks,” she said.

    She said in line with Basel II Pillar Two, banks are reminded of the importance of comprehensive risk management policies and processes that effectively identify, measure, monitor and control their risk exposures in addition to having appropriate board and senior management oversight.

    “Henceforth, banks are required to carry out their Internal Capital Adequacy Assessment Process (ICAAP) on an annual basis, as at December 31, and forward copies of the report to the CBN for review,” she said.

    Experts said the global knowledge and expertise in Basel principles reduces the risks of getting things wrong adding that the adoption of the model will further enhance transparency and facilitate the restoration of investors’ confidence in the on-going efforts to sanitise and rebuild the financial services sector.

  • Banks grow assets, liabilities to N23tr in Q3

    Banks grow assets, liabilities to N23tr in Q3

    Deposit Money Banks (DMBs) grew their assets and liabilities to N23.3 trillion in the third quarter which ended in September, the Central Bank of Nigeria (CBN) has said.

    According to the CBN Economic Report for the quarter released at the weekend, the figures represent about 3.4 per cent growth, compared to those of the previous quarter.

    It said the funds, which were sourced largely, from increased mobilisation of demand deposit and unclassified liabilities, were used for accretion to reserves, extension of credit and acquisition of foreign and unclassified assets.

    Also, at N11.2 trillion, banks’ credit to the domestic economy declined by 5.8 per cent below the level in the preceding quarter. It attributed the development largely to the 125.8 per cent decline in claims on the Federal Government.

    However, CBN’s credit to the banks rose by 1.5 per cent to N233.4 billion at the end of the review period, reflecting the decline in overdrafts to banks, while total specified liquid assets of the DMBs stood at N5,992.8 billion, representing 37.7 per cent of their total current liabilities.

    It explained that at that level, the liquidity ratio, fell by 18.4 percentage points below the level in the preceding quarter, but was 7.7 percentage points above the stipulated minimum ratio of 30 per cent.

    It said loans-to-deposit ratio, which stood at 33.4 per cent, was 10.5 and 46.6 percentage points below the levels at the end of the preceding quarter and the prescribed maximum ratio of 80 per cent, respectively.

    The report said total assets/liabilities of the discount houses stood at N202.83 billion, indicating a decline of 41.1 and 30.3 per cent below the levels at the end of the preceding quarter and the corresponding quarter of last year.

    “At 37.7 per cent, the liquidity ratio in third quarter was 7.7 percentage points above the stipulated minimum ratio, while the loan-to-deposit ratio fell below the prescribed maximum of 80 per cent by 46.6 percentage points.

    It said discount houses’ investment in Federal Government securities of less than 91-day maturity declined significantly by 77.5 per cent to N33.4 billion, representing 22.6 per cent of their total deposit liabilities.

    “At this level, discount houses’ investment was 37.4 percentage points below the prescribed minimum level of 60.0 per cent for fiscal 2013. Total borrowing by the discount houses was N41.7 billion, while their capital and reserves stood at N41.9 billion. This resulted in a gearing ratio of 1.0:1, compared with the stipulated maximum of 50 to one for fiscal 2013,” it said.

     

     

    Available data from the National Bureau of Statistics (NBS) showed that gross domestic product (GDP) was estimated to have grown by 6.9 per cent in the third quarter of 2013, compared with 6.2 per cent in the preceding quarter. The development was attributed, largely, to the increase in the contribution of the non-oil sector.

    It said broad money supply, (M2), fell by 7.8 per cent at the end of the third quarter, compared with the decline of 0.5 per cent at the end of the preceding quarter, but contrasted with the increase of 4.3 per cent recorded at the end of the corresponding period of 2012.

    The development, relative to the preceding quarter reflected largely the 1.5 and 13.9 per cent fall in domestic credit (net) and other asset (net) of the banking system, respectively. Similarly, narrow money supply, (M1), fell by 9.3 per cent, in contrast to the growth of 0.02 per cent at the end of the preceding quarter. Reserve money (RM) rose at the end of the third quarter of 2013.

    It said available data indicated mixed developments in banks’ deposit and lending rates adding that the spread between the weighted average term deposit and maximum lending rates narrowed by 0.20 percentage point during the review quarter.

    Provisional data indicated that the value of money market assets outstanding increased by 0.34 per cent to N6.5 trillion, compared with the increase of 5.96 per cent at the end of the preceding quarter.

    The development was attributed to the 94.13 and 53.15 per cent increase in Commercial Paper and Banker’s Acceptances outstanding.

     

    Also at N13.1 trillion, aggregate banking system’s credit (net) to the domestic economy, fell by 1.45 per cent at the end of the third quarter of 2013, in contrast to the increase of 4.34 per cent at the end of the preceding quarter. The development relative to the preceding quarter was due largely, to the 33.08 per cent decline in claims on the Federal Government, which more than offset the effect of the 3.83 per cent rise in claims on private sector.

    Over the level at end-December 2012, aggregate banking system’s credit (net) to the domestic economy, rose by 3.18 per cent, due largely to the 7.5 per cent increase in claims on the private sector.

    Banking system’s credit (net) to the Federal Government, at the end of the review quarter, fell by 33.08 per cent to negative N3.1 trillion compared with the decline of 21.52 per cent in the corresponding period of 2012. This contrasted with the growth of 4.9 per cent recorded at the end of the preceding quarter.

    The development relative to the preceding quarter was accounted for, largely, by the 120.48 per cent decline in holdings of treasury instruments by the banking system. Over the level at end-December 2012, credit (net) to the Federal Government fell by 30.04 per cent, reflecting largely the decline in banking system’s holding of Federal Government securities.

  • ‘Banks to spend $84m on new computer platform movement

    Deposit Money Banks(DMBs) will spend an estimated  $84 million to migrate  to Finacle 10 platform, to enable them to enjoy seamless integration of their services and products, experts have said.

    Finacle 10 is an upgraded version of Finacle five and seven, which banks acquired after the 2005 consolidation in order to provide a faultless, well-coordinated, and incorporated services to their customers.

    Developed by Infosys Technology, Finacle 10, is a software package used in generating data across various spectrums of operations such as internet banking and telephone banking, among other electronic payment services. First Bank of Nigeria Plc, Wema Bank Plc, Mainstreet Bank Limited, among others, migrated to Finacle 10 platform because of its sophistication, reliability, and ability to help provide innovative products.

    The Chief Executive officer, Precise Solution Limited, Mr Yele Okeremi, said each bank would spend $4 million to migrate to the Finacle 10 platform.

    Explaining why IT platform is expensive, Okeremi said banks would spend money in bringing the software package; install them and training people to use it. He said the 20 banks in the country are expected to spend between $84 million or $85 million to provide the technology and further improve their services.

    The need, he said, became necessary to make the lenders perform optimally, and remain competitive. He said the phase of banking, which is spurred by technology is changing globally as evident in the introduction of latest technology, noted that Nigerian banks are not ready to be left behind.

    He said: “Conservatively, a bank would spend close to $4million to migrate to Finacle 10 platform. I can tell you that many of the banks are not acquiring the platform. Rather, they are migrating from the old Finacle to the new ones, the cost of which cannot be less than $4 million. When you factor in the cost of bringing expatriates to Nigeria to fix the technology, feeding, accommodating them, training bank’s workers to use the technology, among others, you will discover that banks are spending millions of dollars to provide the platform.”

    Also, an official of Computer Warehouse Group, Mr James Agada, said a lot of money is required to upgrade to Finacle 10 platform.

    He said: “It is a lot of money. I’m only a vendor and cannot say exactly the amount of money required to get the platform. Only the banks can provide the figures because they are strongly involved in the issue. They need to change their processes, hire consultants and train people who understand the platform well before they can migrate to it. This made the platform more expensive.”

  • ‘DMBs provide 70% of total banking credit’

    The deposit money banks (DMBs) provide close to 70 per cent of total credit in the banking system, FBN Capital has said.

    It said that net loans from the banking system including the Central Bank of Nigeria (CBN) to the private sector, defined as the domestic economy other than the Federal Government, contracted by 0.9 per cent month on month in December and increased by just 7.4 per cent year on year.

    It said the modest rate of loan growth over the year may surprise, given GDP growth of more than six per cent. “We could query both data series but we can also observe that the marked slowdown of lending growth since the twin bank bailouts of 2009 has had a limited effect on Gross Domestic Product expansion,” it said.

    FBN Capital said although some might argue that the banks’ cash reserve requirement (CRR) of 12 per cent inhibits lending growth but the growth was subdued before the increase in the CRR by the Monetary Policy Committee in July 2012.

    “Over this period the banks have enjoyed higher and safer returns in the government debt market although this advantage has been eroded by the yield compression of about 600bps on FGN bonds and NTBs since August 2012,” it said.