The Central Bank of Nigeria (CBN) has assured the public that the country’s banks remain resilient despite facing both internal and external challenges.
On Tuesday, CBN Governor Mr. Yemi Cardoso delivered this positive assessment during the presentation of the communiqué at the 298th meeting of the bank’s Monetary Policy Committee (MPC) in Abuja.
Cardoso highlighted that Nigeria’s Deposit Money Banks (DMBs) have shown significant resilience, maintaining stability even as they face financial pressures.
According to Cardoso, members of the MPC were pleased to see that key financial indicators, including the Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL) ratio, and Liquidity Ratio (LR), continue to show strength.
“These indicators remain robust despite the economic turbulence,” Cardoso said. He emphasized that the CBN would continue to monitor the banking system closely to ensure that the banks remain compliant with regulatory standards.
The governor also commended the efforts of the CBN in pushing for deeper financial inclusion, which he believes is crucial for improving the effectiveness of monetary policies in the country.
However, Cardoso noted that the MPC was also focused on addressing the rising inflation and stabilizing the exchange rate to ensure economic stability.
Cardoso shared that the National Bureau of Statistics (NBS) data revealed a worrying increase in inflation rates. Year-on-year inflation rose to 33.88% in October, up from 32.70% in September. This was also reflected in the month-on-month rise, which increased to 2.64% in October, from 2.52% the month before.
“The rise in inflation is primarily due to food and core components,” he said. Food inflation surged to 39.16% in October, up from 37.77% in September, while core inflation also rose to 28.37%, from 27.43%.
Despite these challenges, the MPC noted a moderation in the prices of farm produce, a development Cardoso credited to the federal government’s increased focus on improving agricultural productivity.
In addition to inflation concerns, Cardoso provided a positive update on Nigeria’s economic growth. He reported that the country’s Gross Domestic Product (GDP) had grown by 3.46% year-on-year in the third quarter of 2024.
“This growth was driven by both the oil and non-oil sectors, with the services sector making a significant contribution,” Cardoso explained. The non-oil sector grew by 3.37%, compared to 2.80% in the second quarter, signaling strong performance outside of oil.
The oil sector, although still growing, showed a decrease in growth rate, rising by 5.17% compared to 10.15% in the second quarter. Nevertheless, the overall positive GDP growth paints an optimistic picture for the Nigerian economy, according to the CBN governor.
Further supporting this positive outlook, Cardoso revealed that Nigeria’s external reserves had increased slightly to $40.88 billion as of November 21, up from $40.06 billion at the end of October. This level of reserves is sufficient to cover 17 months of imports, a reassuring sign of the country’s financial stability.
Despite the positive news regarding the banks and the economy, Cardoso’s statements also acknowledged the difficulties posed by the rising inflation rates and exchange rate instability. These remain major concerns for both the public and policymakers alike.
“Inflation remains a challenge, but our focus is on ensuring that the banking sector remains stable and well-regulated,” Cardoso stated. His remarks reflect the CBN’s commitment to maintaining financial stability while addressing the economic pressures faced by the country.
Cardoso also expressed confidence that the Nigerian banking system’s stability would support the country’s broader economic recovery efforts, even amid the pressures of inflation and exchange rate fluctuations.
“We are working on ensuring the optimal policy responses to tackle inflation and stabilize the exchange rate,” he said.
The governor’s speech comes at a time when Nigerians are grappling with the rising costs of living, particularly due to inflation and high food prices. The CBN’s role in regulating the financial system and supporting economic growth remains crucial as the country navigates these challenges.
While the banking sector in Nigeria has been resilient, Cardoso emphasized that vigilance would be key. The CBN plans to continue its close monitoring of the industry to ensure that banks adhere to regulatory requirements and maintain their financial health.
Despite external pressures, such as global economic instability and the impact of the oil price fluctuations, Cardoso reassured the public that Nigeria’s financial system remains strong. This, he said, is vital for boosting investor confidence and providing a stable foundation for economic growth.
