By Ishaya Ibrahim
Nigeria’s alumni of Bloomberg Media Initiative Africa (BMIA) on Wednesday, April 11, 2018 took a look at the performance of the Nigerian banking industry in 2017 and discovered that its trajectory of growth did not reflect on the economy.
BMIA is a data and financial journalism training programme in Africa, the brainchild of Bloomberg Incorporated.
The lead discussant, Teslim Shitta-Bey, an investment banker, broker and journalist, said taking the data from six banks that published their 2017 results, it shows that earnings rose by 22 percent, net interest income up by 16 percent and profit after tax climbed by 50 percent. He wondered that at the same time, the manufacturing sector was having problem accessing loans from the same banks.
“Nigerian banking system has faced a number of challenges. First is the challenge of liquidity. The second is the challenge of capital inadequacy. Surprisingly, no challenge in the area of profitability.
“We have realised that a bank that is having liquidity problem will find it extremely difficult to advance loans. Now if it doesn’t do that, what happens is that its income will stop subsequently be dropping. And when those incomes drop, the bottom line (profit) will be adversely affected. So, there is clearly the need for Nigerian banks to improve liquidity,” he said.
He said there is cheering news about Nigeria’s economy which has expanded by 0.8 percent. But he warned that the figure should not be taken in isolation.
“Never look at figures in isolation. GDP growth must be relative to population growth. The nominal growth is what we have been looking at because it suits us. But if we look at it in real terms, which is to asjust it for inflation, we are flat,” he said.