CBN clears air on banks failure to meet Capital Adequacy Ratio

The Central Bank of Nigeria (CBN) has refuted claims suggesting that certain Nigerian banks fell short of the capital adequacy ratio, as reported by some media outlets. Earlier reports had indicated that around 8 banks with international authorization had a capital adequacy ratio below the regulatory threshold.

Contrary to these reports, the CBN clarified in a statement on Monday that the Nigerian banking industry remains robust, with key financial soundness indicators well within the regulatory thresholds, as outlined in the CBN’s most recent Economic Report of 2023.

The bank emphasized that the asset quality, reflected by the non-performing loans ratio, experienced a slight decrease to 4.1 percent in the second quarter of 2023 from 4.5 percent in the previous quarter. Although this ratio fell short of the prudential target of 5%, the CBN noted a sustained improvement in loan recoveries by banks.

Addressing the liquidity aspect, the industry liquidity ratio notably increased by 10.9 percentage points to 62.2% during the review quarter, up from 51.4% in the previous quarter.

The CBN’s statement urged Nigerians to disregard media reports indicating banks’ failure in the Capital Adequacy Ratio (CAR) stress test for international authorization. The bank assured that it is actively engaging with essential stakeholders to uphold confidence in the country’s financial sector and clarified that the mentioned report did not originate from the CBN.