Why banks have remained stable despite COVID – CBN

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The Central Bank of Nigeria (CBN) says banks in the country have remained stable, robust and resilient in spite of the COVID-19 pandemic partly due to regulatory measures taken by the apex bank.

Director, banking supervision of CBN Haruna Mustafa made the statement on Friday at the 2021 Financial Correspondents Association of Nigeria (FICAN) workshop in Ibadan, Oyo State.

Mustapha, represented by the assistant director, banking supervision, CBN Adekunle Adeniji, said the capital adequacy ratio (CAR) rose to 15.21 per cent as of August, liquidity ratio (LR) rose to 42.23 per cent.

He said non-performing loan ratio improved from 6.58 per cent to 5.9 per cent as at August 2021, while banking system credit to the economy increased to 10.99 per cent between January and August.

Mustafa listed some interventions by the apex bank to lessen the impact of the pandemic to include reduction in interest rates to five per cent.

Others are N50 billion target credit facility for households and small and medium enterprises (SMEs) and re-enactment of Banks and Other Financial Institutions Act (BOFIA 2020) to strengthen the regulatory and resolution architecture for banks and other financial institutions.

The director said CBN would continue to develop additional countercyclical policy options that could be utilised in periods of stress.

Mustafa explained that macro-prudential regulation and supervision was more critical now than ever.

 “We will continue to deploy effective stress testing methodologies to detect vulnerabilities early to enable appropriate pre-emptive action,” he said.