Mobilising deposits is becoming more challenging for deposit money banks and some other financial institutions departments (OFIDS) as the current economic crunch hits harder on the populace.
Savings culture is put at risk in the face of harsh economy as an average Nigerian who currently finds it difficult to sustain a family with two square meals thinks less of saving in the bank.
This is as the total deposits of bank customers with the banks dropped by N1.03 trillion, about 5.6 percent to N17.51 trillion in April 2016 in April 2015 compared to N18.54 trillion.
Also the banking sector recorded a decline of N154 billion in total assets within the one year period, from N27.58 trillion in April 2015 to N27.43 trillion in April 2016.
Also, the banking sector’s gross credit to the private and public sector went down by N41 billion, representing 0.3 percent from N13.4 trillion in April to N13.36 trillion in April 2016.
A document from the Central Bank of Nigeria (CBN) revealed that the Non-Performing Loans ratio for the sector currently stands at 10.1 per cent, which is far above the prudential limit of five percent.
The increase in the non-performing loans was attributed to the outcome of the risk assets examination of the DMB, which was conducted by the apex bank in December 2015. The result of the examination of the credit risk revealed NPL rose by 3.36 percent to N649.63 billion at end-December 2015, from N628.54 billion at end-June 2015. This reflected a 78.8 percent increase from the N363.31 billion recorded at end-December 2014. The NPL ratio rose to 4.86 per cent from 4.65 percent.
The document from CBN also noted that the banking industry recorded a decline in earnings within the period, as unaudited profit before tax for the industry decreased by N24 billion representing 10.8 percent from N222 billion in April 2015 to N198 billion at the end of April 2016.
However, as part of measures to address the current drop in banks deposit and revenue, the bankers committee is considering limiting across-the-counter withdrawals to N10,000, as a proposal to this effect had been sent to the CBN for approval.
The downside effect of this move is that if it is approved, the banks customers are faced with other alternative other than to save their money under pillow, thereby putting at risk the cashless policy of the CBN at risk. Consequently, the individual customer becomes vulnerable to armed robbers, an industry source told BusinessDay by phone.
On the positive side, the source said moves are targeted at limiting liquidity in circulation and tend to curb corruption and money laundering.
The CBN’s Customer Expectations Survey Report released on Monday show that the consumers’ overall confidence outlook1 in Q2, 2016 remained downbeat as it has been since Q3, 2011. At –24.2 index points, it dipped further by 11.8 points below the level achieved in the corresponding quarter of 2015. The bleak outlook of consumers in the quarter under review could be attributed to the deteriorating economic condition and decline in net household income, leading to drawdown on household savings or getting into debt.
HOPE MOSES-ASHIKE
