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    Nigeria’s banking industry remained well-capitalized with NPLs contained, but…IMF says

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    Godwin Okaforhttps://naija247news.com
    Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

    Nigeria’s banking industry remained well-capitalised with the level of non-performing loans (NPLs) contained.

    “Nevertheless, it remains to be seen what share of forborne loans may turn non-performing as the impact of the pandemic abates,” it said, adding that NPLs often rose towards the end of an economic crisis.

    The extension of the moratorium on principal payments of qualifying credit facilities on a case-by-case basis through March 2022 should be limited to viable debtors with strong pre-crisis fundamentals.

    CBN stress tests purport that the banking system would remain adequately capitalized except in case of a severe deterioration of credit quality.

    Nevertheless, it remains to be seen what share of forborne loans may turn non-performing as the impact of the pandemic abates.

    Since NPLs often rise at the later part of economic crisis, CBN’s strong oversight remains critical to safeguarding financial sector stability.

    The recent removal of the official exchange rate from the CBN website and measures to enhance transparency in the setting of the NAFEX exchange rate are encouraging.

    The mission recommended maintaining the momentum toward fully unifying all exchange rate windows and establishing a market-clearing exchange rate.

    On monetary policy, to strengthen the monetary targeting regime, the mission recommended integrating the interbank and debt markets and using central bank or government bills of short maturity as the main liquidity management tool, instead of the cash reserve requirements.

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