Six Nigerian banks increase dominance

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The Concentration Ratio (CR) of the six largest banks in Nigeria with respect to deposits and assets stood at 60.31 and 59.74 per cent at the end of December 2018 respectively.

This showed an increase, compared with the 57.68 and 63.68 per cent recorded as at the end of June 2018. The Central Bank of Nigeria (CBN) disclosed this in its Financial Stability Report as at December 2018, posted on its website yesterday.

Although the banking sector regulator did not disclose the names of the banks, the six largest banks in the country are Access Bank, Guaranty Trust Bank, Zenith Bank, First Bank of Nigeria Limited, United Bank for Africa Plc and Ecobank Nigeria Limited.

According to the central bank, the market shares of the largest bank with respect to deposits and assets stood at 13.54 and 14.35 per cent respectively.

“The remaining 20 banks had market shares ranging from 0.09 to 4.89 per cent, in deposits, and 0.14 to 4.89 per cent in assets, reflecting the skewed structure of the banking industry.

“The Herfindahl-Hirschman Index (HHI)7 for the industry stood at 783.35 and 774.58 for deposits and assets at end-December 2018, compared with 846.14 and 732.72 at end-June 2018, respectively, indicating high concentration,” it stated.

During the review period, seven banks were categorised as Domestic Systemically Important Banks (D-SIBs).

The banks were selected based on the D-SIB supervisory framework, given their size, interconnectedness, substitutability and complexity.

The D-SIBs accounted for 63.80 per cent of the industry total assets of N35.10 trillion and 65.23 per cent of the industry total deposit of N21.73 trillion as well as 66 per cent of the industry total loans of N15.34 trillion.

The examination revealed that the D-SIBs were largely in compliance with the regulatory requirements, including capital adequacy and liquidity ratios.

The average capital adequacy ratio (CAR) for the D-SIBs stood at 19.82 per cent, while liquidity ratio stood at 46.29 per cent. It also showed an improvement in non-performing loans ratio from 11.31 per cent as at the end of June 2018 to 9.82 per cent as at the end of December 2018.

The report also noted that in response to global and domestic economic developments, the Bank maintained its non-expansionary monetary policy stance in 2018.

Monetary aggregates trended upwards in the second half of 2018 as broad money supply (M3) grew by 16.58 per cent at end-December 2018, compared with 2.35 and 0.59 per cent at end-June 2018 and end-December 2017, respectively.

According to the report, aggregate credit to the domestic economy (net) grew by 6.42 per cent to N27.594 trillion as at the end of December 2018, as against the decline of 16.29 per cent as at the end of June 2018. The growth in aggregate credit was attributed to the 33.77 and 1.96 per cent increases in net claims on the federal government and claims on the private sector, respectively.

Consequently, aggregate. It also showed that commercial banks’ outstanding credit at the end of the second half of 2018, showed that maturities below one year accounted for 47.10 per cent, compared with 44.10 per cent in the first half of 2018.