As part of its continuing efforts to Emefiele ensure consumer protection, the Central Bank of Nigeria (CBN) directed financial institutions to refund N7.21 billion, $2.40 million and €6,940, to customers between January and June last year. The apex bank disclosed this in its Financial Stability Report (FRS) for the first half 2017 released yesterday. The banking watchdog revealed that it received 1,141 new complaints from consumers of financial services in the period under review, compared with 1,183 received in the second half of 2016.
CBN stated that 1,112 of these complaints or 97.46 per cent were against commercial banks, while 29 or 2.54 per cent were against other financial institutions. According to the CBN, the complaints covered excess/unauthorized charges, frauds, guarantees, account management, Automated Teller Machine (ATM) dispense errors, funds transfers, amongst others.
The CBN said: “A total of 1,270 complaints were resolved and/or closed in the period under review compared with 928 in the second half of 2016, representing an increase of 342 or 36.85 per cent. Total claims amounted to N14.72 billion, $2.42 million and €6,940, while the sums of N7.21 billion, $2.40 million and €6,940, respectively were refunded by financial institutions to customers.”
However, the CBN said it conducted checks on banks’ compliance with the various consumer protection regulations, especially the Guide to Bank Charges, adding that: “The report of the examination showed reasonably high compliance levels.” Besides, it noted that the tough times in the banking industry intensified in the first half of 2017 as the quality of lenders’ assets declined during the period, compared with the position at the end of December 2016.
“In the banking industry, the asset quality of commercial banks deteriorated in the first half of 2017 as the ratio of Non- Performing Loans (NPLs) to gross loans increased compared with the level at end-December 2016. This led to slight capital deterioration and a decline in earnings indicators. “To test the resilience of the industry, a stress test was conducted on the banks.
The test showed that the capital adequacy ratio of the banks deteriorated when the most severe shocks were applied. It also showed that liquidity shortfalls will only occur when the most severe shocks of a cumulative 30- day run were applied,” the CBN stated in the report. Specifically, the report showed that the ratio of NPLs to gross loans increased by 2.2 and 4.3 percentage points to 15.0 per cent at end-June 2017 compared with the levels at end-December 2016 and end-June 2016, respectively.
Also, the report stated that the ratio of regulatory capital to risk weighted assets decreased by 3.3 percentage points to 11.5 per cent at end-June 2017, compared with 14.8 per cent at end-December 2016. It added that the ratio of tier 1 capital to riskweighted assets declined by 3.9 percentage points to 12.4 per cent at end-June 2017 from 16.3 per cent at end-December 2016.
Similarly, the report showed that the ratio of NPLs net of provision to capital for the industry increased to 31.8 per cent at end-June 2017 from 29.0 per cent at end-December 2016. However, the report also showed that the ratio of core liquid assets to total assets increased by 1.0 percentage point to 17.2 per cent at end-June 2017, from 16.2 per cent recorded at end-December 2016.
In the same vein, the ratio of core liquid assets to short-term liabilities increased by 1.4 percentage points to 25.9 per cent at end-June 2017, compared with 24.5 per cent at end- December 2016. According to the CBN, “The increase reflected improved liquidity buffers to meet short-term obligations.”