MPC member, Prof. Festus Adenikinju, said the deposit base represents a 21.4 per cent increase to about N44 trillion in total industry deposits between April 2022 and April 2023.
Industry credit increased by N4.54 trillion or 17.40 per cent while gross credit has been on an upward trajectory within the same periods.
Stress tests conducted on the industry show that it can weather the major risks and vulnerabilities in the system.
Adenikinju said the gross external reserves stood at US$35.19 billion in April and could provide 6.46 months cover of import of goods and services or 8.88 months cover of import of goods.
He said the financial soundness indicators are positive and showed that the banking system remains strong, sound, and resilient.
“The capital adequacy ratio (CAR) stood at 12.8 per cent in April 2023, still within the prudential requirement of between 10 per cent – 15 per cent.
“Non-performing loans (NPLs) ratio declined from 4.5 per cent in March 2023 to 4.4 per cent in April 2023.
“Liquidity ratio (LR) rose to 45.3 per cent in April 2023, from 43.8 per cent in March 2023. This is above the minimum 30 per cent recommended by the prudential requirement,” he stated.
Adenikinju said both the Return on Equity (ROE) and Returns on Asset (ROA) increased between March 2023 and April 2023.
“ROE rose from 21.6 per cent to 22.6 per cent; while ROA increased from 1.6 per cent to 1.7 per cent between March 2023 and April 2023, respectively,” he said.
CBN Deputy Governor, Mrs. Aisha Ahmad, said sustaining banking sector lending to critical sectors of the economy as monetary policy tightens to contain inflation remains paramount.
She said that given the positive correlation of market lending rates to the Monetary Policy Rate, borrowing costs have risen, while growth in credit has slowed.
She added: “Stress test results showed that industry solvency and liquidity positions could withstand mild to moderate shocks in the short to medium term.
“Nonetheless, the sector must continue to build adequate capital buffers – ongoing implementation of the Basel III capital standards (which prescribes additional capital buffers) are relevant in this regard.”
Also, CBN Deputy Governor, Edward Adamu, said the short-term outlook for inflation and its major drivers remains unfriendly.
“Although the pace of increase has subsided, year-on-year inflation could continue to rise according to in-house estimates.
“To ensure that flattening is quickly achieved to pave the way for deceleration, the stance of monetary policy needs to be firmer.”
This, he said is against the backdrop of an uncertain outlook for fiscal policy, energy prices and wages in the rest of the year.
Adamu said although much of the impact of the initial shocks to inflation may have dissipated, inflation expectation has remained significantly elevated.
“This needs to change, and quickly so. I believe communication is key in this regard, but equally important is what the market can see the bank doing.
“I am persuaded that policy must strive to rein in inflation expectation as a deserving complement to effective liquidity management,” he said.