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+{"doc_id": "1bc86e1074bc72313c136e4c1b1ec1de", "text": "FINANCIAL STABILITY REPORT – JUNE 2022 \n1 \n \n \nClassified as Confidential \n \n \n \n \n \nFINANCIAL \nSTABILITY \nREPORT \n \n \n \n \nJUNE 2022 \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n1 \n \n \nClassified as Confidential \nCONTENTS \nCONTENTS .......................................................................................................................... 1 \nLIST OF FIGURES ............................................................................................................... 5 \nLIST OF TABLES ................................................................................................................. 7 \nLIST OF BOXES .................................................................................................................. 9 \nLIST OF ACRONYMS ........................................................................................................ 10 \nGOVERNOR’S STATEMENT ............................................................................................. 13 \nFOREWORD ...................................................................................................................... 15 \nEXECUTIVE SUMMARY .................................................................................................... 16 \n1 \nECONOMIC AND FINANCIAL DEVELOPMENTS....................................................... 18 \n1.1 \nGlobal Developments ............................................................................................ 18 \n1.1.1 \nOutput ............................................................................................................. 18 \n1.1.2 \nInflation ........................................................................................................... 19 \n1.1.3 \nOil Prices ........................................................................................................ 20 \n1.1.4 \nFood Prices ..................................................................................................... 20 \n1.1.5 \nInternational Stock Markets ............................................................................ 21 \n1.1.6 \nForeign Exchange Markets ............................................................................. 22 \n1.1.7 \nMonetary Policy Rates .................................................................................... 23 \n1.2 \nDomestic Macroeconomic Developments ............................................................. 25 \n1.2.1 \nOutput Growth ................................................................................................ 25 \n1.2.2 \nInflation ........................................................................................................... 26 \n1.2.3 \nFiscal Operations of the Federal Government ................................................ 27 \n1.2.4 \nExternal Reserves .......................................................................................... 29 \n1.2.5 \nRisks to the External Reserves ....................................................................... 30 \n2 \nDEVELOPMENTS IN THE FINANCIAL SYSTEM ....................................................... 32 \n2.1 \nMonetary and Credit Developments ...................................................................... 32 \n2.1.1 \nMarket Structure of the Banking Industry ........................................................ 33 \n2.1.2 \nConsumer Credit ............................................................................................. 33 \n2.1.3 \nSectoral Distribution of Credit ......................................................................... 34 \n2.2 \nOther Financial Institutions .................................................................................... 34 \n2.2.1 \nDevelopment Finance Institutions ................................................................... 36 \n2.2.2 \nPrimary Mortgage Banks ................................................................................ 38 \n2.2.3 \nFinance Companies ........................................................................................ 41 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n2 \n \n \nClassified as Confidential \n2.2.4 \nMicrofinance Banks ........................................................................................ 44 \n2.2.5 \nCapacity Building Programme ........................................................................ 47 \n2.3 \nFinancial Markets .................................................................................................. 48 \n2.3.1 \nMoney Market ................................................................................................. 48 \n2.3.2 \nCapital Market ................................................................................................. 53 \n2.4 \nReal Sector Interventions ...................................................................................... 61 \n2.4.1 \nAgricultural Policy Support .............................................................................. 62 \n2.4.2 \nSmall and Medium Enterprises & Industrial Policy Support ............................ 63 \n2.4.3 \nReal Sector Policy Support ............................................................................. 64 \n2.5 \nExport Policy Support ............................................................................................ 65 \n2.5.1 \nNon-oil Export Stimulation Facility .................................................................. 65 \n2.5.2 \nExport Facilitation Initiative ............................................................................. 65 \n2.6 \nEnergy Policy Support ........................................................................................... 65 \n2.6.1 \nPower and Airline Intervention Fund ............................................................... 65 \n2.6.2 \nNigerian Electricity Market Stabilisation Facility .............................................. 65 \n2.6.3 \nNigeria Bulk Electricity Trading – Payment Assurance Facility ....................... 66 \n2.6.4 \nNational Mass Metering Programme .............................................................. 66 \n2.7 \nInstitutional Support and Financial Inclusion ......................................................... 66 \n2.7.1 \nNational Collateral Registry ............................................................................ 66 \n2.8 \nFinancial Inclusion ................................................................................................. 67 \n3 \nREGULATORY AND SUPERVISORY ACTIVITIES .................................................... 70 \n3.1 \nFinancial Soundness Indicators............................................................................. 70 \n3.1.1 \nAsset-Based Indicators ................................................................................... 70 \n3.1.2 \nCapital-Based Indicators ................................................................................. 71 \n3.1.3 \nIncome and Expense Based Indicators .......................................................... 72 \n3.2 \nThe Banking Industry Stress Tests ........................................................................ 73 \n3.2.1 \nSolvency Stress Test ...................................................................................... 73 \n3.2.2 \nLiquidity Stress Test ....................................................................................... 77 \n3.2.3 \nMaturity Mismatch ........................................................................................... 78 \n3.2.4 \nContagion Risk Analysis ................................................................................. 79 \n3.3 \nSupervision of Banks ............................................................................................. 81 \n3.3.1 \nExamination .................................................................................................... 81 \n3.3.2 \nForeign Exchange Examination ...................................................................... 82 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n3 \n \n \nClassified as Confidential \n3.3.3 \nNon-Interest Banks ......................................................................................... 82 \n3.3.4 \nSupervision of Domestic Systemically Important Banks ................................. 82 \n3.3.5 \nAsset Management Corporation of Nigeria ..................................................... 83 \n3.3.6 \nCross Border Supervision of Nigerian Banks .................................................. 83 \n3.3.7 \nCredit Risk Management System ................................................................... 83 \n3.3.8 \nCredit Bureaux ................................................................................................ 84 \n3.4 \nSupervision of Other Financial Institutions ............................................................ 85 \n3.5 \nOther Developments in the Financial System ....................................................... 85 \n3.5.1 \nAnti-Money Laundering, Combating the Financing of Terrorism ..................... 85 \n3.5.2 \nCapacity Building and Collaboration on AML/CFT/CPF .................................. 86 \n3.5.3 \nActivities of the Financial Services Regulation Coordinating Committee ........ 86 \n3.5.4 \neNaira ............................................................................................................. 87 \n3.5.5 \nRisk- Based Cybersecurity Assessment ......................................................... 88 \n3.5.6 \nNigeria Sustainable Banking Principles .......................................................... 88 \n3.5.7 \nPost IFRS Implementation .............................................................................. 88 \n3.5.8 \nImplementation of Basel III ............................................................................. 89 \n3.5.9 \nInternal Capital Adequacy Assessment Process ............................................ 89 \n3.6 \nFinancial Literacy and Consumer Education ......................................................... 89 \n3.7 \nConsumer Protection Compliance Examination of OFIs ....................................... 89 \n3.8 \nComplaints Management and Resolution .............................................................. 89 \n4 \nDEVELOPMENTS IN THE PAYMENTS SYSTEM ...................................................... 93 \n4.1 \nBank Verification Number Operations ................................................................... 93 \n4.2 \nNigeria Electronic Fraud Forum ............................................................................. 93 \n4.3 \nLicensing of Payments System Participants .......................................................... 93 \n4.3.1 \nExamination of Payments System Participants ............................................... 94 \n4.4 \nCheque Standards and Cheque Printers Accreditation Scheme ........................... 95 \n4.5 \nOther Payments System Initiatives ........................................................................ 95 \n4.6 \nPayments System Statistics and Trend ................................................................. 95 \n4.6.1 \nLarge Value Payments ................................................................................... 95 \n4.6.2 \nRetail Payments .............................................................................................. 95 \n5 \nPENSIONS .................................................................................................................. 97 \n5.1 \nOther Developments in the Nigerian Pension Industry .......................................... 98 \n5.1.1 \nRevised Share Capital Requirement for Licensed Pension Fund Administrators\n \n98 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n4 \n \n \nClassified as Confidential \n5.1.2 \nRevised Regulation for the Administration of Retirement and Terminal Benefits\n \n99 \n5.1.3 \nOperational Framework for Co-Investment ..................................................... 99 \n6 \nINSURANCE .............................................................................................................. 100 \n6.1 \nAssets and Premium Income............................................................................... 100 \n6.2 \nKey Insurance Industry Financial Soundness Indicators ..................................... 100 \n6.2.1 \nCapital Adequacy Ratio ................................................................................ 100 \n6.2.2 \nLiquidity Ratio ............................................................................................... 100 \n6.2.3 \nCombined Ratio of the Insurance Industry .................................................... 101 \n6.2.4 \nPremium Debtors .......................................................................................... 101 \n6.2.5 \nRetention Ratio ............................................................................................. 101 \n6.3 \nKey Insurance Industry Regulatory/Supervisory Developments .......................... 102 \n7 \nRISKS TO THE FINANCIAL SYSTEM ....................................................................... 103 \n7.1 \nCredit Risk ........................................................................................................... 103 \n7.2 \nLiquidity Risk ....................................................................................................... 103 \n7.3 \nMarket Risk ......................................................................................................... 104 \n7.4 \nOperational Risk .................................................................................................. 105 \n7.5 \nMacroeconomic Risk ........................................................................................... 105 \n8 \nOUTLOOK ................................................................................................................. 106 \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n5 \n \n \nClassified as Confidential \nLIST OF FIGURES \nFIGURE 1.1 GROSS DOMESTIC PRODUCT (GROWTH %) ..................................................................... 25 \nFIGURE 1.2 INFLATIONARY TREND (YEAR-ON-YEAR) .......................................................................... 27 \nFIGURE 1.3 FEDERAL GOVERNMENT FISCAL OPERATIONS (N BILLION) ............................................. 27 \nFIGURE 1.4 FGN EXTERNAL AND DOMESTIC DEBT COMPOSITION (N BILLION) ................................. 28 \nFIGURE 1.5 FEDERAL GOVERNMENT DOMESTIC DEBT STOCK ........................................................... 29 \nFIGURE 1.6 EXTERNAL RESERVES POSITION (US$ MILLIONS) ............................................................. 30 \nFIGURE 2.1 CONCENTRATION RATIOS OF THE BANKING INDUSTRY ASSETS AND DEPOSITS ............. 33 \nFIGURE 2.2 CONSUMER CREDIT .......................................................................................................... 33 \nFIGURE 2.3 CONSOLIDATED BALANCE SHEET OF OFIS ....................................................................... 36 \nFIGURE 2.4 CONSOLIDATED BALANCE SHEET OF DFIS ........................................................................ 37 \nFIGURE 2.5 TOTAL ASSETS AND LIABILITIES OF DFIS .......................................................................... 37 \nFIGURE 2.6 CONSOLIDATED BALANCE SHEET OF PMBS (N'BN) .......................................................... 39 \nFIGURE 2.7 COMPOSITION OF ASSETS AND LIABILITIES OF PRIMARY MORTGAGE BANKS ............... 39 \nFIGURE 2.8 CONSOLIDATED BALANCE SHEET OF FCS ......................................................................... 42 \nFIGURE 2.9 COMPOSITION OF ASSETS AND LIABILITIES OF FCS ......................................................... 43 \nFIGURE 2.10 BALANCE SHEET OF MFBS .............................................................................................. 45 \nFIGURE 2.11 COMPOSITION OF ASSETS AND LIABILITIES OF MFBS .................................................... 46 \nFIGURE 2.12 MONEY MARKET RATES FOR FIRST HALF OF 2022 ....................................................... 48 \nFIGURE 2.13 INTEREST RATES SPREAD .............................................................................................. 49 \nFIGURE 2.14 PRIMARY MARKET: NIGERIAN TREASURY BILLS ALLOTMENT (%) ................................. 50 \nFIGURE 2.15 PRIMARY MARKET: NIGERIAN TREASURY BILLS TRANSACTIONS (N'BILLION) ............... 50 \nFIGURE 2.16 NTBS OUTSTANDING AT END-JUNE 2022 (PER CENT AND IN N'BN) ............................. 51 \nFIGURE 2.17 INVESTORS’ & EXPORTERS’ RATE ................................................................................. 52 \nFIGURE 2.18 YIELD CURVE ................................................................................................................... 58 \nFIGURE 3.1 BANKING INDUSTRY NPLS TO GROSS LOANS ................................................................... 70 \nFIGURE 3.2 BANKING INDUSTRY LIQUIDITY INDICATORS (%) ............................................................. 70 \nFIGURE 3.3 BANKING INDUSTRY REAL ESTATE INDICATORS (%) ........................................................ 71 \nFIGURE 3.4 BANKING INDUSTRY CAPITAL ADEQUACY INDICATORS (%) ............................................ 72 \nFIGURE 3.5 NON-PERFORMING LOANS NET OF PROVISION TO CAPITAL RATIO ................................ 72 \nFIGURE.3.6 BANKING INDUSTRY CAR (PER CENT)............................................................................... 74 \nFIGURE 3.7 CREDIT CONCENTRATION RISK ......................................................................................... 75 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n6 \n \n \nClassified as Confidential \nFIGURE 3.8 SECTORAL CONCENTRATION OF CREDIT .......................................................................... 76 \nFIGURE 3.9 IMPACT OF INTEREST RATE SHOCKS ON CAR .................................................................. 77 \nFIGURE 3.10 INDUSTRY LIQUIDITY RATIOS AT PERIODS 1-5 AND CUMULATIVE 30-DAY SHOCKS ..... 77 \nFIGURE 3.11 NETWORK ANALYSIS BASED ON INTERBANK EXPOSURES ............................................. 80 \nFIGURE 3.12 NUMBER OF COMPLAINTS RECEIVED ............................................................................ 90 \nFIGURE 3.13 DISTRIBUTION OF COMPLAINTS BY CATEGORY: JANUARY TO JUNE 2022 .................... 90 \nFIGURE 3.14 COMPLAINTS RESOLVED AND CLOSED .......................................................................... 91 \nFIGURE 3.15 COMPLAINTS RESOLVED/CLOSED .................................................................................. 91 \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n7 \n \n \nClassified as Confidential \nLIST OF TABLES \nTABLE 1:1 GLOBAL GROWTH ............................................................................................................... 19 \nTABLE 1:2 GLOBAL INFLATION ............................................................................................................ 20 \nTABLE 1:3 OIL PRICES (US$ PER BARREL) ............................................................................................ 20 \nTABLE 1:4 WORLD FOOD PRICE INDEX ................................................................................................ 21 \nTABLE 1:5 INDICES OF SELECTED STOCK MARKETS ............................................................................ 22 \nTABLE 1:6 PERFORMANCE OF SELECTED CURRENCIES ....................................................................... 23 \nTABLE 1:7 POLICY RATES OF SELECTED COUNTRIES ........................................................................... 24 \nTABLE 1:8 SECTORAL CONTRIBUTIONS TO REAL GDP ........................................................................ 26 \nTABLE 1:9 FOREIGN EXCHANGE FLOWS THROUGH THE CBN (US$ BILLION) ..................................... 30 \nTABLE 2:1 GROWTH RATES OF MONETARY AGGREGATES ................................................................. 32 \nTABLE 2:2 SECTORAL ALLOCATION OF CREDIT ................................................................................... 34 \nTABLE 2:3 COMPOSITION OF OTHER FINANCIAL INSTITUTIONS ........................................................ 35 \nTABLE 2:4 FINANCIAL HIGHLIGHTS OF PMBS ...................................................................................... 40 \nTABLE 2:5 FINANCIAL POSITION OF FCS .............................................................................................. 42 \nTABLE 2:6 HIGHLIGHTS OF FINANCIAL POSITION OF MFBS ................................................................ 45 \nTABLE 2:7 MATURITY STRUCTURE OF LOANS AND ADVANCES AND DEPOSIT LIABILITIES ............. 47 \nTABLE 2:8 INTERVENTIONS AT THE INTERBANK FOREIGN EXCHANGE MARKET ............................. 51 \nTABLE 2:9 NGX ASI, EQUITY AND DEBT MARKET CAPITALISATION .................................................. 53 \nTABLE 2:10 NEW ISSUES ..................................................................................................................... 54 \nTABLE 2:11 NIGERIAN EXCHANGE LIMITED INDICES ......................................................................... 55 \nTABLE 2:12 DOMESTIC AND FOREIGN PORTFOLIO PARTICIPATION IN EQUITIES TRADING ........... 56 \nTABLE 2:13 NATIONAL ASSOCIATION OF SECURITIES DEALERS TRANSACTIONS ............................. 56 \nTABLE 2:14 TRANSACTIONS ON AFEX (N’M) ....................................................................................... 57 \nTABLE 2:15 VOLUME AND VALUE OF TRANSACTIONS ON AFEX (N’M) .............................................. 57 \nTABLE 2:16 GEZAWA COMMODITY MARKET AND EXCHANGE (GCMX) TRANSACTIONS ................ 57 \nTABLE 2:17 LAGOS COMMODITIES AND FUTURES EXCHANGE (LCFE) TRANSACTIONS (N’M) ........ 58 \nTABLE 2:18 S&P/FMDQ SOVEREIGN BOND INDEX .............................................................................. 60 \nTABLE 2:19 CIS FUNDS ......................................................................................................................... 61 \nTABLE 2:20 TRANSACTIONS ON THE NATIONAL COLLATERAL REGISTRY PORTAL ............................. 66 \nTABLE 2:21 WOMEN AND WOMEN-OWNED BUSINESSES TRANSACTIONS ON THE NATIONAL \nCOLLATERAL REGISTRY PORTAL ................................................................................................... 67 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n8 \n \n \nClassified as Confidential \nTABLE 2:22 FINANCIAL INCLUSION STATISTICS ................................................................................. 69 \nTABLE 3:1 SELECTED FINANCIAL SOUNDNESS INDICATORS OF THE NIGERIAN BANKING INDUSTRY 73 \nTABLE 3:2 BANKING INDUSTRY BASELINE SELECTED KEY INDICATORS .............................................. 73 \nTABLE 3:3 CREDIT DEFAULT SHOCKS ................................................................................................... 74 \nTABLE 3:4 CREDIT CONCENTRATION RISK ........................................................................................... 75 \nTABLE3:5 STRESS TEST ON OIL AND GAS EXPOSURES ........................................................................ 76 \nTABLE 3:6 LIQUIDITY STRESS TEST RESULTS........................................................................................ 78 \nTABLE 3:7 MATURITY PROFILE OF ASSETS AND LIABILITIES AT END-JUNE 2022 ................................ 78 \nTABLE 3:8 TEST RESULTS FOR SYSTEM-WIDE MATURITY MISMATCH AT END-JUNE 2022 ................ 79 \nTABLE 3:9 PERCENTAGE OF ASSETS UNENCUMBERED AFTER FIRE SALES ......................................... 81 \nTABLE 3:10 CREDIT RISK MANAGEMENT SYSTEM .............................................................................. 84 \nTABLE 3:11 CREDIT BUREAUX STATISTICS ........................................................................................... 84 \nTABLE 3:12 ENAIRA WALLET HOLDERS ............................................................................................... 87 \nTABLE 3:13 MINTING AND HOLDINGS OF ENAIRA .............................................................................. 87 \nTABLE 3:14 NSBP STATISTICS AT END-JUNE 2022 ............................................................................... 88 \nTABLE 4:1 BVN STATISTICS .................................................................................................................. 93 \nTABLE 4:2 PAYMENTS SYSTEM PARTICIPANTS .................................................................................... 94 \nTABLE 4:3 ELECTRONIC TRANSACTIONS ............................................................................................. 96 \nTABLE 5:1 PENSION ASSETS................................................................................................................. 98 \nTABLE 6:1 KEY INDICATORS ...............................................................................................................100 \nTABLE 6:2 INSURANCE INDUSTRY DASHBOARD ...............................................................................101 \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n9 \n \n \nClassified as Confidential \nLIST OF BOXES \nBOX 1: CBN COUNTER-MEASURES TO MITIGATE THE COVID-19 PANDEMIC.31 \nBOX 2: LIQUIDITY STRESS TEST ASSUMPTIONS ................................................................................... 75 \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n10 \n \n \nClassified as Confidential \nLIST OF ACRONYMS \nAMCON \nAsset Management Corporation of Nigeria \nAML/CFT \nAnti-Money Laundering and Combating the Financing of Terrorism \nASI \nAll Share Index \nBDCs \nBureaux de Change \nBOA \nBank of Agriculture \nBOI \nBank of Industry \nBRICS \nBrazil, Russia, India, China, and South Africa \nBVN \nBank Verification Number \nCACS \nCommercial Agriculture Credit Scheme \nCAR \nCapital Adequacy Ratio \nCBN \nCentral Bank of Nigeria \nCCP \nCentral Counterparties \nCIS \nCollective Investment Scheme \nCMNBs \nCommercial, Merchant and Non-interest Banks \nCMOs \nCapital Market Operators \nCOB \nCurrency Outside Banks \nCRMS \nCredit Risk Management System \nDAX \nDeutscher Aktienindex (German stock index of 30 major German \ncompanies) \nDCs \nDepository Corporations \nDFIs \nDevelopment Finance Institutions \nDVP \nDelivery Versus Payment \nEBAs \nEligible Bank Assets \nECB \nEuropean Central Bank \nEGX CASE \n30 \nEgypt Stock Exchange (Cairo and Alexandria Stock Exchange) 30 \nStock Index \nETF \nExchange Traded Funds \nFAO \nFood and Agriculture Organisation \nFATF \nFinancial Action Task Force \nFCs \nFinance Companies \nFGN \nFederal Government of Nigeria \nFMBN \nFederal Mortgage Bank of Nigeria \nFRACE \nFinancial Regulation Advisory Council of Experts \nFSIs \nFinancial Soundness Indicators \nFINANCIAL STABILITY REPORT – JUNE 2022 \n11 \n \n \nClassified as Confidential \nFSR \nFinancial Stability Report \nFSRCC \nFinancial Services Regulation Co-ordinating Committee \nGDP \nGross Domestic Product \nGSE \nGhanaian Stock Exchange \nGSI \nGlobal Standing Instruction \nHHI \nHerfindahl-Hirschman Index \nICE \nIntercontinental Exchange \nIFRS \nInternational Financial Reporting Standards \nIMF \nInternational Monetary Fund \nKYC \nKnow Your Customer \nLDR \nLoan-Deposit Ratio \nM1 \nNarrow Money Supply \nM2 \nBroad Money Supply \nM3 \nM2 plus CBN Bills held by the money holding sectors \nMENA \nMiddle East and North African Countries \nMFBs \nMicrofinance Banks \nMSMEs \nMicro, Small and Medium Enterprises \nMHSs \nMoney Holding Sectors \nMICEX \nMoscow Interbank Currency Exchange \nMoUs \nMemoranda of Understanding \nMPR \nMonetary Policy Rate \nNAICOM \nNational Insurance Commission \nNAV \nNet Asset Value \nNBS \nNational Bureau of Statistics \nNCR \nNational Collateral Registry \nNDC \nNet Domestic Credit \nNDIC \nNigeria Deposit Insurance Corporation \nNEXIM \nNigerian Export-Import Bank \nNGX \nNigerian Exchange Limited \nNIBSS \nNigeria Inter-bank Settlement System \nNMRC \nNigeria Mortgage Re-finance Company Plc \nNPLs \nNon-Performing Loans \nNSBP \nNigeria Sustainable Banking Principles \n \nNSE 20 \nNairobi Stock Exchange 20-Share Index \nFINANCIAL STABILITY REPORT – JUNE 2022 \n12 \n \n \nClassified as Confidential \nNSE ASI \nNigerian Stock Exchange All-Share Index \nNYMEX \nNew York Mercantile Exchange \nOBB \nOpen Buy Back \nODCs \nOther Depository Corporations \nOFIs \nOther Financial Institutions \nOPEC \nOrganisation of Petroleum Exporting Countries \nORB \nOPEC Reference Basket \nPAIF \nPower and Aviation Infrastructure Fund \nPENCOM \nNational Pension Commission of Nigeria \nPFAs \nPension Fund Administrators \nPFCs \nPension Fund Custodians \nPMBs \nPrimary Mortgage Banks \nPoS \nPoint of Sale \nPSV 2020 \nPayments System Vision 2020 \nROA \nReturn on Assets \nROE \nReturn on Equity \nRTGS \nReal-Time Gross Settlement \nSANEF \nShare Agent Network Facilities \nSDRs \nSpecial Drawing Rights \nS&P/TSX \nStandards and Poor’s Composite Index of the Toronto Stock Exchange \nSEC \nSecurities and Exchange Commission \nSIF \nSecurities Issuers Forum \nSMEs \nSmall and Medium Enterprises \nSRE \nSupervisory Review and Evaluation \nWAMZ \nWest African Monetary Zone \nWEO \nWorld Economic Outlook \nWTI \nWest Texas Intermediate \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n13 \n \n \nClassified as Confidential \nGOVERNOR’S STATEMENT \nThis edition of the Financial Stability Report highlights developments in the financial system \nduring the first half of 2022. The supply chain disruptions following the Russia-Ukraine \nconflict, the spillovers from sanctions imposed on Russia, as well as the lingering headwinds \nassociated with the COVID-19 pandemic, resulted in a weakening of the global economy. \nConsequently, global output for 2022 was projected at 3.20 per cent, 2.9 percentage points \nlower than the 6.10 per cent recorded in 2021. \nThe GDP growth in advanced economies was projected to slow to 2.50 per cent in 2022, \ncompared with 5.20 per cent in 2021. For the USA, Japan and the Euro Area, growth was \nestimated at 2.30, 1.70 and 2.60 per cent, respectively, compared with 5.70, 1.70 and 5.40 \nper cent recorded in 2021. Similarly, growth in Emerging Markets and Developing Economies \n(EMDEs) was projected at 3.60 per cent in 2022, compared with the 6.80 per cent recorded \nin 2021. Growth in sub-Saharan Africa (SSA) was projected at 3.80 per cent, lower than 4.60 \nper cent achieved in 2021. \nGlobal inflationary pressures heightened during the review period, driven by the disruptions \nto supply chains, resulting in tightening global financial conditions as most central banks \npursued aggressive monetary policy stance. Other ramifications include declining global \ntrade and growing risks to financial stability. \n \nIn Nigeria, the economy continued its recovery, albeit at a slower pace, as GDP grew by 3.32 \nper cent in the first half of 2022, compared with 4.02 per cent in the second half of 2021. The \ngrowth was driven by the non-oil sector, specifically, the services and agriculture sub-\nsectors. The performance of these sub-sectors was due to the sustained and targeted \ninterventions by the fiscal and monetary authorities. Total credit to the private sector \ncontinued to grow during the review period, with increased lending to the real sector and \nhouseholds, in line with the Bank’s policies to encourage lending to key sectors of the \neconomy. The exchange rate remained stable owing to improved foreign exchange liquidity \nin the system, particularly from non-oil sources. \n \nThe Bank continued the implementation of various regulatory and supervisory measures, \nincluding the Global Standing Instruction (GSI) and Guidelines for Credit Guarantee \nCompanies, to moderate risks and promote the soundness and stability of the banking \nsystem in the short to medium term. These measures reinforced the health and resilience of \nthe Nigerian banking system as it remained safe, sound and stable. \nThe Nigerian pension industry continued to improve its performance in the review period, \nwith growth in total enrolment in pension schemes and assets under management. \nFurthermore, the recapitalisation exercise initiated to enhance the resilience of pension fund \nadministrators was successfully concluded. Similarly, the Nigerian insurance industry \ncontinued to grow with the sustained implementation of ongoing policy programmes and \ndevelopment of new initiatives intended to reposition the industry for enhanced \ncontribution to the economy. Insurance penetration was potentially deepened by the \nlicensing of seven micro-insurance companies by the National Insurance Commission \n(NAICOM). \nFINANCIAL STABILITY REPORT – JUNE 2022 \n14 \n \n \nClassified as Confidential \nThe overall economic outlook for both the global and domestic economies in the short- to \nmedium-term remains uncertain. The effects of supply chain disruptions occasioned by the \nRussian-Ukraine crisis, elevated global inflation, the lingering impact of the Covid-19 \npandemic, as well as the broad shocks to foreign capital flows following rate hikes by most \nadvanced economies continue to dampen growth expectations. However, efforts to resolve \nthe Russia-Ukraine crisis has resulted in partial lift on grain exports with positive impact in \nthe short- to medium-term growth expectations. On the domestic front, the economy is \nexpected to sustain its growth trajectory, owing to the continued rise in oil prices, rebound in \nmanufacturing activities, and sustained policy support. However, persisting security \nchallenges and infrastructure deficit are major headwinds that could undermine the outlook \nfor growth. The Bank will continue to provide policy support to priority sectors to support \ngrowth. \nGodwin I. Emefiele, CON \nGovernor, Central Bank of Nigeria \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n15 \n \n \nClassified as Confidential \nFOREWORD \nThe first half of 2022 witnessed a downward trend in global growth, with tight monetary policy \nstance of most monetary authorities in response to the unprecedented rising inflationary \npressures, contributing to the general decline in output and constrained access to global \ncapital. The attendant tighter financial conditions posed considerable risk to financial stability \nowing to their tendency to induce debt distress, especially in emerging markets and \ndeveloping economies. \nThe Nigerian economy sustained the positive performance in the last six quarters, driven \nlargely by the continuous growth in the non-oil sector. Nigeria’s economic growth is projected \nto decline to 3.40 per cent, while inflation is expected to moderate to 16.10 per cent in 2022. \nHowever, the Nigerian NGX All-Share Index increased by 21.31 per cent in the first half of \n2022. \nSustained implementation of the appropriate mix of monetary and, micro and \nmacroprudential policies continued to yield positive results, as most financial soundness \nindicators were within the prudential requirements. Furthermore, results of stress tests \nshowed the resilience of the banking system and its ability to cope with severe \nmacroeconomic shocks. Other sub-sectors, including pension, capital market and insurance \ncontinued to contribute immensely to the resilience and stability of the financial system. \nThis edition of the FSR is divided into six sections. The first section examines global and \ndomestic trends. Section 2 discusses financial system developments, while the third \nhighlights key stability issues, as well as regulatory and supervisory activities. Section 4 \ndiscusses key developments in the payments system, while sections 5 and 6 focus on the \npension and insurance sub-sectors respectively. The key risks and the outlook for financial \nstability are presented in sections 7 and 8, respectively. \nThe Report provides insights on financial system conditions and the near-term outlook \nincluding risks and vulnerabilities, as well as the Bank's continuous efforts at promoting a \nsafe and resilient financial system in Nigeria. \nThe public is assured of the commitment of the Bank and other regulators in the financial \nsystem to ensuring a sound financial system that supports inclusive growth and sustainable \neconomic development. \n \nAishah N. Ahmad, CFA \nDeputy Governor, Financial System Stability \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n16 \n \n \nClassified as Confidential \nEXECUTIVE SUMMARY \nThe Russia-Ukraine crisis and the resurgence of Covid-19 in China disrupted the global \nsupply chains, heightened commodity prices, and fuelled inflationary pressures. \nFurthermore, rising inflation prompted the adoption of tight monetary policy stance by most \ncentral banks which led to tightening financial conditions with attendant risk to financial \nstability. Consequently, growth of the global economy earlier projected at 4.40 per cent for \n2022 was revised to 3.20 per cent, lower than 6.10 per cent recorded in 2021. \nGrowth in Sub-Saharan Africa was estimated at 3.80 per cent in 2022, a moderated from \n4.60 per cent achieved in 2021. In Nigeria, growth for the first half of 2022 declined to 3.32 \nper cent, from 4.02 per cent in the second half of 2021. This was due mainly to the lingering \neffects of the Russia-Ukraine crisis, which disrupted supply chains and heightened prices of \nraw materials and operational costs. Consequently, annual growth was projected to \nmoderate to 3.40 per cent in 2022, from 3.60 per cent in 2021. \nGlobal prices continued its upward trend in the first half of 2022, reflecting supply-side \nconstraints and lingering effects of an accommodative monetary policy stance adopted to \nameliorate the impact of the Covid-19 pandemic. In line with global trends, Inflationary \npressures in Nigeria rose in the first half of 2022, owing largely to domestic security \nchallenges which continued to impact on crude oil production, agricultural output and food \nsupply as well as spill over effects of Russia-Ukraine crisis, which increased freight costs \nand commodity prices. However, inflationary pressures are expected to moderate slightly \nfrom 17.00 per cent in 2021 to 16.10 per cent in 2022. \nGross external reserves at end-June 2022 decreased by 2.66 per cent to US$39.16 billion, \nfrom US$40.23 billion at end-December 2021. The low accretion to reserves was due mainly \nto reduction in crude oil production and high debt-service obligations. \nThe Bank sustained its implementation of various supervisory measures including virtual \nexaminations, the Global Standing Instruction (GSI) policy, and also issued guidelines for \ncredit guarantee companies. This boosted public confidence in the banking industry and \nenhanced safety and soundness of banks, as evidenced by the Financial Soundness \nIndicators (FSIs), which were within prudential requirements. \nThe ratio of non-performing loans net of provisions to capital for commercial, merchant and \nnon-interest banks (CMNBs) increased marginally to 4.95 per cent at end-June 2022, from \n4.85 per cent at end-December 2021. Similarly, the ratio of interest margin to gross income \ndecreased marginally to 47.93 per cent during the review period, from 48.59 per cent at end-\nDecember 2021. Also, the ratio of non-interest expenses to gross income declined to 65.04 \nper cent at end-June 2022, from 65.14 per cent at end-December 2021. The ratio of \npersonnel expenses to non-interest expenses declined to 25.47 per cent at end-June 2022, \nfrom 29.38 per cent at end-December 2021. \nResults of the stress test showed that the banking industry could withstand a shock of “up to \n100 per cent increase” in the industry NPLs, as the post-shock industry CAR would remain \nabove the regulatory requirement of 10 per cent. The sector concentration stress test showed \nthat the industry could withstand “up to 20.00 per cent shock” to oil and gas exposures as \npost-shock CAR would decline marginally below the regulatory requirement. The results also \nFINANCIAL STABILITY REPORT – JUNE 2022 \n17 \n \n \nClassified as Confidential \nshowed resilience to obligor credit concentration risk as the CAR remained above the \nregulatory threshold of 10.0 per cent. \n \nThe Bank sustained its interventions to households and businesses adversely impacted by \nthe Covid-19 pandemic through the implementation of the Healthcare Sector Intervention \nFacility and Targeted Credit Facility, amongst others. \nSimilarly, the Bank continued its efforts to ensure that financial institutions comply with the \nredesigned Credit Risk Management System (CRMS) thereby strengthening credit \nadministration as indicated by improved credit records. Thus the total number of credit \nrecords on the database increased by 10.00 per cent relative to the preceding period. \nConsumer confidence in the banking industry was enhanced with the resolution of 1,399 \ncomplaints entailing refunds to the complainants and closure of 1,321 customers’ complaints \nagainst financial institutions during the review period. The total complaints resolved and \nclosed increased by 4.7 and 20.64 per cents, respectively. \n \nIn the first half of 2022, the Bank sustained its efforts in the implementation of eNaira, Africa’s \nfirst Central Bank Digital Currency (CBDC), extended the charges-free regime for eNaira \ntransactions, and commenced the integration of the digital currency with Nigeria Inter-Bank \nSettlement System (NIBSS) instant payment platform. At end-June 2022, the number of \neNaira wallet downloads, onboarded customers and activated wallets were 807,920; \n244,340; and 182,790, respectively. These indicate increases of 32.45, 35.52, and 45.11 per \ncents, respectively, above the levels at end-December 2021. \n \nThe capital market recorded bullish performance as evidenced by an increase in aggregate \nmarket capitalisation by 21.31 per cent to N50.18 trillion, at end-June 2022, from N43.12 \ntrillion, at end-December 2021. The pension industry also grew with total enrolment in \npension schemes, increasing by 1.25 per cent to 9.71 million, from 9.59 million in the \nprevious half year, largely driven by the increased adoption of the Contributory Pension \nScheme (CPS) by States and Local Governments as well as the steady uptake of the Micro \nPension Plan in the informal sector. The net pension Assets under Management (AuM) grew \nby 6.30 per cent to N14.27 trillion, from N13.42 trillion at end-December 2021. Similarly, the \ninsurance industry recorded an increase in its total assets by 2.41 per cent to N2.28 trillion, \nfrom N2.23 trillion at end-December 2021. The net premium income and gross claims rose \nby 16.89 and 7.71 per cent to N260.34 billion and N174.78 billion at end-June 2022, from \nN222.72 billion and N162.27 billion at end-December 2021, respectively. \n \nThe key risks to financial system stability during the review period include elevated inflation, \nexchange rate pressures, spill-over effects of the Russia-Ukraine crisis, shortage of \npetroleum products, cyber-risk from increased use of digital financial services, as well as \nincreased operating costs and operational risks. Consequently, the Bank and other financial \nsector regulators implemented appropriate measures to mitigate these risks. Overall, the \noutlook for financial stability remained optimistic, given the robust policy measures adopted \nby the Bank and other financial sector regulators towards enhancing the resilience of the \nfinancial system. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n18 \n \n \nClassified as Confidential \n \n1 \nECONOMIC AND FINANCIAL DEVELOPMENTS \n1.1 Global Developments \n1.1.1 Output \nGlobal output weakened considerably in the first half of 2022, owing mainly to the Russia-\nUkraine crisis, which disrupted demand and supply chains in many countries. This \ndevelopment resulted in increased commodities prices including food, oil and natural gas. \nSimilarly, the economic downturn, in China, due largely to the resurgence of COVID-19 \npandemic and the attendant lockdowns also exacerbated the global slowdown. In addition, \nthe tight monetary policy stance of most central banks in response to rising inflationary \npressures contributed significantly to the general decline in output growth. The attendant \ntighter financial conditions pose considerable risk to financial stability due to its tendency to \ninduce debt distress, especially in emerging markets and developing economies. \nConsequently, global output growth in 2022 is projected at 3.20 per cent, lower than the 6.10 \nper cent recorded in 2021. \n \nIn the advanced economies, growth was projected to moderate to 2.50 per cent in 2022, \ncompared with 5.20 per cent in 2021. In the United States (US), growth was estimated at \n2.30 per cent in 2022, compared with 5.70 per cent in 2021, attributed largely to tighter \nmonetary policy and lower-than-expected consumer spending. Similarly, in the Euro area, \noutput was expected to soften to 2.60 per cent in 2 022, from 5.40 per cent in 2021, reflecting \nspill over from the Russia-Ukraine crisis and tight monetary conditions. In Japan, however, \ngrowth was projected to remain flat at 1.70 per cent in 2022. \n \nIn Emerging Market and Developing Economies (EMDEs), growth was projected at 3.60 per \ncent in 2022, compared with 6.80 per cent in 2021. This was largely a reflection of a slow \ngrowth in China which was projected at 3.30 per cent in view of Covid-19 induced lockdowns, \ncompared with 8.10 per cent in 2021. Similarly, Middle East and North Africa (MENA) region \nwas expected to grow by 4.90 per cent during the review period, compared with 5.80 per \ncent in 2021. Growth in Sub-Saharan Africa (SSA) was estimated at 3.80 per cent, compared \nwith 4.60 per cent recorded in 2021. In line with the global trend, growth in Nigeria was \nprojected to moderate to 3.40 per cent in 2022, from 3.60 per cent in 2021. \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n19 \n \n \nClassified as Confidential \n \nTable 1:1 Global Growth \nRegion/Country \nYear-on-Year (%) \n \n2017 \n2018 \n2019 \n2020 \n2021 \nWorld \n3.75 \n3.57 \n2.84 \n–3.12 \n5.88 \nAdvanced Economies \n2.46 \n2.25 \n1.74 \n–4.54 \n5.20 \nUnited States \n2.26 \n2.92 \n2.29 \n–3.41 \n5.97 \nEuro Area \n2.63 \n1.85 \n1.50 \n–6.34 \n5.04 \nJapan \n1.68 \n0.56 \n0.02 \n–4.59 \n2.36 \nUnited Kingdom \n1.74 \n1.25 \n1.43 \n–9.85 \n6.76 \nCanada \n3.04 \n2.43 \n1.86 \n–5.31 \n5.69 \nEmerging \nMarket \nand \nDeveloping \nEconomies \n4.77 \n4.58 \n3.67 \n–2.07 \n6.38 \nChina \n6.95 \n6.75 \n5.95 \n2.34 \n8.02 \nMiddle East and Central Asia \n2.48 \n2.17 \n1.48 \n-2.79 \n4.11 \nSub-Saharan Africa \n2.95 \n3.28 \n3.13 \n–1.66 \n3.70 \n*Nigeria \n0.82 \n1.91 \n2.27 \n–1.92 \n3.40 \nSource: IMF’s World Economic Outlook Update, July, 2022, *National Bureau of Statistics (NBS) \n1.1.2 Inflation \nGlobal inflation remained elevated during the first half of 2022, mainly reflecting disruptions \nto supply value chains by the Russia-Ukraine crisis, resulting in the rising prices of food, \nenergy and other commodities. The development induced many central banks to switch to \ntight monetary policy mode to tame inflation. \nInflation in Advanced Economies was expected to accelerate to 6.60 per cent in 2022, \ncompared with 3.10 per cent in 2021. The United States, Japan and the United Kingdom \nwere expected to record higher inflation rates of 7.70, 1.90 and 9.10 per cent in 2022, \nrespectively, compared with 4.30, 0.80 and 2.20 per cent in 2021. \nSimilarly, inflation in EMDEs was projected to increase to 9.50 per cent in 2022, compared \nwith 5.90 per cent in 2021. SSA was expected to experience inflation of 12.20 per cent in \n2022, compared with 11.00 per cent in 2021. In Nigeria, however, inflation was expected to \nmoderate slightly to 16.10 per cent in 2022, from 17.00 per cent in 2021. \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n20 \n \n \nClassified as Confidential \nTable 1:2 Global Inflation \nRegion/Country \n2017 \n2018 \n2019 \n2020 \n2021 \n2022 \nAdvanced Economies \n1.70 \n2.00 \n1.40 \n0.70 \n3.10 \n6.60 \n United States \n2.10 \n2.40 \n1.80 \n1.20 \n4.30 \n7.70 \n Euro Area \n1.50 \n1.80 \n1.20 \n0.30 \n2.20 \n7.30 \n Japan \n0.50 \n1.00 \n0.50 \n-1.20 \n0.80 \n1.90 \n United Kingdom \n2.70 \n2.50 \n1.80 \n0.90 \n2.20 \n9.10 \nEmerging Markets and Developing \nEconomies \n4.40 \n4.90 \n5.10 \n5.20 \n5.90 \n9.50 \nSub-Saharan Africa \n10.60 \n8.30 \n8.10 \n10.20 \n11.00 \n12.20 \nNigeria \n16.50 \n12.10 \n11.40 \n13.20 \n17.00 \n16.10 \nSource: WEO Update, July 2022 \n \n1.1.3 Oil Prices \nThe prices of crude oil increased significantly in the review period, owing to the disruption in \nthe supply chain following the Russia-Ukraine crisis, and rising global demand owning to \nsustained increase in economic activities. The OPEC Reference Basket (ORB) rose by 50.98 \nper cent to US$117.72 pb at end-June 2022, compared with US$77.97 pb at end-December \n2021. The ICE Brent also increased by 52.08 per cent to US$119.78 pb at end-June 2022, \nover US$78.76 pb at end-December 2021. In the same vein, the West Texas Intermediate \n(WTI) rose by 120.38 per cent to US$114.84 pb at end-June 2022, compared with US$52.11 \npb at end-December 2021. Similarly, the Bonny Light rose by 69.29 per cent to US$126.00 \npb at end-June 2022, compared with US$74.43 pb at end-December 2021. \n \nTable 1:3 Oil Prices (US$ per barrel) \n CRUDE OIL TYPES\\DATES \nEnd-Dec. \n2018 \nEnd-Dec. \n2019 \nEnd-Dec. \n2020 \nEnd-Dec. \n2021 \nEnd-Jun. \n2022 \nOPEC \nReference \nBasket \n(ORB) (US$) \n69.78 \n64.04 \n41.47 \n77.97 \n117.72 \nICE Brent (US$) \n68.94 \n61.19 \n46.20 \n78.76 \n119.78 \nWest Texas Intermediate \n(WTI) (US$) \n61.81 \n55.47 \n42.71 \n52.11 \n114.84 \nBonny Light (US$) \n72.11 \n65.63 \n41.53 \n74.43 \n126.00 \nSource: OPEC and Reuters \n1.1.4 Food Prices \nThe Food and Agriculture Organization (FAO) Food Price Index increased by 15.41 per cent \nto 154.30 points at end-June 2022, compared with 133.70 points at end-December 2021. \nThe above development was due, mainly to the rise in the prices of meat, dairy, cereals, \nvegetable oils, and sugar products. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n21 \n \n \nClassified as Confidential \nThe Meat Price Index increased by 12.25 per cent to 124.60 points at end-June 2022, \ncompared with 111.00 points at end-December 2021; while the Dairy Price Index increased \nby 16.43 per cent to 150.20 points at end-June 2022, over the level of 129.00 at end-\nDecember 2021. Also, the Cereals Price Index increased by 18.36 per cent to 166.30 points \nat end-June 2022, compared with 140.50 points at end-December 2021, while the Vegetable \nOil and Sugar Price Indices rose by 18.66 and 0.77 per cent, to 211.80 and 117.30 points at \nend-June 2022, compared with 178.50 and 116.40 points at end-December 2021, \nrespectively. The upward trend in the various indices was attributed to supply constraint \ninduced by the Russia-Ukraine crisis and low inventory levels for most items. \n \nTable 1:4 World Food Price Index \n \nEnd-Dec. 2018 \nEnd-Dec. 2019 \nEnd-Dec. 2020 \nEnd-Dec. 2021 \nEnd-Jun. \n2022 \nFood Price Index \n92.20 \n101.00 \n108.60 \n133.70 \n154.30 \nMeat \n92.90 \n106.60 \n94.80 \n111.00 \n124.60 \nDairy \n97.80 \n103.50 \n109.20 \n129.00 \n150.20 \nCereals \n101.1 \n97.40 \n116.40 \n140.50 \n166.30 \nVegetable Oils \n76.84 \n101.50 \n131.20 \n178.50 \n211.80 \nSugar \n78.30 \n83.00 \n87.10 \n116.40 \n117.30 \nSource: Food and Agriculture Organisation (FAO). \n \n1.1.5 International Stock Markets \nInternational stock markets generally recorded a bearish performance during the review \nperiod, reflecting a shift in investors’ preference from equity market to fixed income securities \nin response to rising interest rates. \nIn North America, the United States S&P 500, the Canadian S&P/TSX Composite, and the \nMexican Bolsa indices decreased by 21.36, 11.72, and 10.94 per cent, to 3,752.71, \n18,713.62 and 47,337.65, from 4,772.14, 21,198.03 and 53,150.36, respectively. Similarly, \nin South America, the Brazilian Bovespa Stock and the Colombian COLCAP indices \ndecreased by 6.69 and 4.60 per cent to 97,805.61 and 1,346.03, respectively, while the \nArgentine Merval index increased by 4.22 per cent to 87,023.10. \nIn the European stock markets, the UK FTSE 100, France CAC 40 and the Germany DAX \nindices decreased by 3.22, 17.54, and 19.89 per cent, respectively, relative to their levels at \nend-December 2021. \nIn Asia, the Japan NIKKEI 225, China Shanghai SEA, and India BSE Sensex decreased by \n8.33, 6.62 and 8.99 per cent, respectively, compared with their levels at end-December 2021. \nIn Africa, the South African JSE All-Share Index, the Kenyan Nairobi NSE 20, Egyptian EGX \nCASE 30, and Ghanaian GSE All Share Index declined by 10.01, 15.23, 22.79, and 8.86 per \ncent, respectively, while the Nigerian NGX All-Share Index increased by 21.31 per cent. \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n22 \n \n \nClassified as Confidential \nTable 1:5 Indices of Selected Stock Markets \nCountry \nIndex \nEnd-Dec 2019 \n(1) \nEnd-Dec 2020 \n(2) \nEnd-Dec 2021 \n(3) \nEnd-June \n2022 (4) \n% Change \n(4) & (3) \nAFRICA \nNigeria \nNGX All-Share \nIndex \n26,842.07 \n40,270.72 \n42,716.44 \n51,817.59 \n21.31 \nSouth Africa \nJSE All-Share \nIndex \n57,084.10 \n59,408.68 \n73,709.39 \n66,334.42 \n-10.01 \nKenya \nNairobi NSE 20 \nShare index \n2,654.39 \n1,868.39 \n1,902.57 \n1,612.89 \n-15.23 \nEgypt \nEGX CASE 30 \n13,961.56 \n10,845.26 \n11,949.18 \n9,225.61 \n-22.79 \nGhana \nGSE All-Share \nIndex \n2,257.15 \n1,939.14 \n2,793.24 \n2,545.79 \n-8.86 \nNORTH AMERICA \nUS \nS&P 500 \n3,230.78 \n3,756.07 \n4,772.14 \n3,752.71 \n-21.36 \nCanada \nS&P/TSX \nComposite \n17,063.43 \n17,433.36 \n21,198.03 \n18,713.62 \n-11.72 \nMexico \nBolsa \n43,541.02 \n44,066.88 \n53,150.36 \n47,337.65 \n-10.94 \nSOUTH AMERICA \nBrazil \nBovespa Stock 115,645.00 \n119,017.20 \n104,822.00 \n97,805.61 \n-6.69 \nArgentina \nMerval \n41,671.41 \n51,226.49 \n83,500.11 \n87,023.10 \n4.22 \nColumbia \nCOLCAP \n1,662.42 \n1,437.89 \n1,410.97 \n1,346.03 \n-4.60 \nEUROPE \nUK \nFTSE 100 \n7,542.44 \n6,460.52 \n7,384.54 \n7,146.66 \n-3.22 \nFrance \nCAC 40 \n5,978.06 \n5,551.41 \n7,153.03 \n5,898.63 \n-17.54 \nGermany \nDAX \n13,249.01 \n13,718.78 \n15,884.86 \n12,724.61 \n-19.89 \nASIA \nJapan \nNIKKEI 225 \n23,656.62 \n27,444.17 \n28,791.71 \n26,393.04 \n-8.33 \nChina \nShanghai SE A \n3,195.98 \n3,640.46 \n3,814.30 \n3,561.90 \n-6.62 \nIndia \nBSE Sensex \n41,253.74 \n47,905.84 \n58,253.82 \n53,018.94 \n-8.99 \nBloomberg: https://www.bloomberg.com \n \n1.1.6 Foreign Exchange Markets \nMajor currencies depreciated against the US dollar during the first half of 2022, owing to the \ntight monetary policy stance of the US Federal Reserve (the Fed) during the period. In \nEurope, the British pound sterling and the Euro depreciated by 10.81 and 7.95 per cent, \nrespectively while the Russian rubble appreciated by 27.32 per cent. The strong performance \nof the Russian rubble was underpinned by various capital control measures imposed by the \ngovernment to mitigate the impact of sanctions imposed by the West. \n \nIn Asia, the Japanese yen, the Chinese renminbi, and the Indian rupee depreciated by 17.96, \n5.35 and 6.28 per cent, respectively. In North America, the performance was mixed as the \nMexican peso recorded an appreciation of 1.13 per cent during the review period, while the \nCanadian dollar depreciated by 1.57 per cent. In South America, the Brazilian real \nFINANCIAL STABILITY REPORT �� JUNE 2022 \n23 \n \n \nClassified as Confidential \nappreciated by 5.57 per cent, while the Argentine and the Colombian pesos depreciated by \n21.88 and 2.01 per cent, respectively. \nIn Africa, the Nigerian naira, South African rand, Kenyan shilling, Egyptian pound and \nGhanaian cedi depreciated against the US dollar by 0.42, 1.94, 6.11, 19.59 and 31.27 per \ncent, respectively. \nThe developments in the various foreign exchange markets heightened foreign exchange \nrisk of the banks, particularly in the EMDEs. \n \nTable 1:6 Performance of Selected Currencies \nCountry/Region \nCurrency \nEnd-\nDecember \n2019 (1) \nEnd-\nDecember \n2020 (2) \nEnd-\nDecember \n2021 (3) \nEnd-June \n2022 (4) \n% Change (-\nApp/+Dep) \n(4) & (3) \nAFRICA \nNigeria \nNaira \n364.51 \n390.35 \n412.99 \n414.72 \n0.42 \nSouth Africa \nRand \n14.00 \n14.69 \n15.97 \n16.28 \n1.94 \nKenya \nShilling \n101.36 \n102.66 \n111.11 \n117.90 \n6.11 \nEgypt \nPound \n16.04 \n15.73 \n15.72 \n18.80 \n19.59 \nGhana \nCedi \n5.75 \n5.87 \n6.14 \n8.06 \n31.27 \nNORTH AMERICA \nCanada \nDollar \n1.30 \n1.27 \n1.27 \n1.29 \n1.57 \nMexico \nPeso \n18.94 \n19.88 \n20.34 \n20.11 \n-1.13 \nSOUTH AMERICA \nBrazil \nReal \n4.02 \n5.19 \n5.57 \n5.26 \n-5.57 \nArgentina \nPeso \n59.87 \n84.15 \n102.74 \n125.22 \n21.88 \nColombia \nPeso \n3286.84 \n3430.77 \n4071.48 \n4153.19 \n2.01 \nEUROPE \nUK \nPound \n0.75 \n0.73 \n0.74 \n0.82 \n10.81 \nEuro Area \nEuro \n0.89 \n0.82 \n0.88 \n0.95 \n7.95 \nRussia \nRuble \n62.00 \n74.05 \n75.26 \n54.70 \n-27.32 \nASIA \nJapan \nYen \n108.65 \n103.30 \n115.08 \n135.75 \n17.96 \nChina \nRenminbi \n6.96 \n6.53 \n6.36 \n6.70 \n5.35 \nIndia \nRupee \n71.35 \n73.07 \n74.34 \n79.01 \n6.28 \nPTP= Period to Period ; YTD = Year to Date \n Source: Bloomberg \n \n1.1.7 Monetary Policy Rates \nDevelopments in monetary policy were mixed during the review period. Most central banks \ncommenced monetary policy normalisation in response to inflationary pressure that \naccompanied the prolonged period of monetary policy accommodation. \n \nIn the advanced economies, the Bank of England, the Fed, Bank of Canada, Bank of Korea, \nthe Reserve Bank of New Zealand and the Reserve Bank of Australia increased policy rates, \nfrom 0.25, 0.25, 0.25, 1.00, 0.75 and 0.10 per cent, to 1.25, 1.75, 1.50, 2.00, 2.00 and 0.85 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n24 \n \n \nClassified as Confidential \n \nper cent, respectively. The Bank of Japan and the European Central Bank, however, \nmaintained policy rates at -0.10 and 0.00 per cent, respectively. \nIn Asia, the Bank of Indonesia maintained its policy rate at 3.50 per cent, while Bank Negara \nMalaysia increased its rate to 2.00 per cent, from the level of 1.75 per cent at the end of the \nprevious period. In the BRICS, the Central Bank of Brazil, Reserve Bank of India, and South \nAfrican Reserve Bank increased policy rates to 13.50, 4.90 and 4.25 per cent, relative to \n9.25, 4.00 and 3.75 per cent, respectively, while Bank of Russia and the Peoples’ Bank of \nChina reduced rates to 6.50 and 3.70 per cent, from 7.50 and 3.80 per cent, respectively. \n \nAll the emerging market economies reported upon during the period signalled a tight \nmonetary policy stance. The Bank of Mexico, Central Bank of Chile and the Bank of the \nRepublic (Colombia), increased their policy rates to 7.75, 9.00 and 7.50 per cent, relative to \n4.00, 4.00 and 3.00 per cent, respectively. Similarly in Africa, the Central Bank of Egypt, \nBank of Ghana, and Central Bank of Nigeria increased policy rates to 11.25, 19.00 and 13.00 \nper cent, compared with 8.25, 14.50 and 11.50 per cent, respectively. \n{{ \nTable 1:7 Policy Rates of Selected Countries \nCountry/Region \nJun-21 \nJul-21 \nAug-21 \nSep-21 \nOct-21 \nNov-21 Dec-21 \nJun-22 \nDeveloped Economies \nJapan \n-0.10 \n-0.10 \n-0.10 \n-0.10 \n-0.10 \n-0.10 \n-0.10 \n-0.10 \nEurope \n0.00 \n0.00 \n0.00 \n0.00 \n0.00 \n0.00 \n0.00 \n0.00 \nUK \n0.10 \n0.10 \n0.10 \n0.10 \n0.10 \n0.10 \n0.25 \n1.25 \nUS \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n1.75 \nCanada \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n0.25 \n1.50 \nSouth Korea \n0.50 \n0.50 \n0.75 \n0.75 \n1.00 \n1.00 \n1.00 \n1.75 \nNew Zealand \n0.25 \n0.25 \n0.25 \n0.25 \n0.5 \n0.75 \n0.75 \n2.00 \nAustralia \n0.10 \n0.10 \n0.10 \n0.10 \n0.10 \n0.10 \n0.10 \n0.85 \nAsia \nIndonesia \n3.50 \n3.50 \n3.50 \n3.50 \n3.50 \n3.50 \n3.50 \n3.50 \nMalaysia \n1.70 \n1.70 \n1.70 \n1.70 \n1.70 \n1.70 \n1.75 \n2.00 \nBRICS \nBrazil \n4.25 \n4.25 \n5.25 \n5.25 \n7.75 \n7.75 \n9.25 \n13.50 \nRussia \n5.50 \n6.50 \n6.50 \n6.75 \n7.50 \n7.50 \n7.50 \n6.50 \nIndia \n4.00 \n4.00 \n4.00 \n4.00 \n4.00 \n4.00 \n4.00 \n4.90 \nChina \n3.80 \n3.80 \n3.80 \n3.80 \n3.80 \n3.80 \n3.80 \n3.70 \nSouth Africa \n3.75 \n3.75 \n3.75 \n3.75 \n3.75 \n3.75 \n3.75 \n4.25 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n25 \n \n \nClassified as Confidential \nOther Emerging Economies & South America \nMexico \n4.25 \n4.25 \n4.50 \n4.75 \n4.75 \n5.00 \n5.00 \n7.75 \nChile \n0.75 \n0.75 \n1.50 \n1.50 \n2.75 \n2.75 \n4.00 \n9.00 \nColombia \n2.00 \n2.00 \n2.00 \n2.00 \n2.50 \n2.50 \n3.00 \n7.50 \nAfrica \n \n \n \n \n \n \n \n \nEgypt \n8.25 \n8.25 \n8.25 \n8.25 \n8.25 \n8.25 \n8.25 \n11.25 \nGhana \n13.50 \n13.50 \n13.50 \n13.50 \n13.50 \n14.50 \n14.50 \n19.00 \nNigeria \n11.50 \n11.50 \n11.50 \n11.50 \n11.50 \n11.50 \n11.50 \n13.00 \nSource: www.cbrates.com, www.tradingeconomics.com, relevant central bank websites. \n \n1.2 Domestic Macroeconomic Developments \n1.2.1 Output Growth \nThe Nigerian economy continued its recovery in the first half of 2022, albeit at a slower pace \nrelative to the level in the preceding half year. Output grew by 3.32 per cent in the first half \nof 2022, compared with 4.01 per cent in the second half of 2021.The moderation in growth \nwas due to the negative impact of the Russia-Ukraine crisis and the lingering security \nchallenges, particularly in the major food producing areas. These developments resulted in \nmajor economic and financial shocks which induced inflationary and exchange rate \npressures. \n \nFigure 1.1 Gross Domestic Product (Growth %) \n \nSource: National Bureau of Statistics \nThe non-oil sector remained the major driver of growth, owing to the improved performance \nof the services sectors. The non-oil sector contributed 4.97 percentage points to output in \nthe first half of 2022. However, the oil sector, however, contracted, contributing negative 1.64 \npercentage points to the growth in GDP. \n \n \n2.38\n2.42\n-2.18\n(1.70)\n2.70 \n4.01\n3.32\nH2 2018\nH2 2019\nH1 2020\nH2 2020\nH1 2021\nH2 2021\nH1 2022\nPER CENT\nFINANCIAL STABILITY REPORT – JUNE 2022 \n26 \n \n \nClassified as Confidential \n \nTable 1:8 Sectoral Contributions to real GDP \nSource: National Bureau of Statistics \n \nIn terms of relative sectoral contribution to real GDP growth, the Services sector maintained \nits steady improvement, contributing 3.87 percentage points, compared with 3.50 percentage \npoints in the preceding half year, while the contribution of the agriculture sector dropped \nmarginally to 0.50 percentage point from 0.68 percentage point in the preceding half of 2021. \nThe improvement in the Services sector was due to the growth in ICT, while the slow growth \nin agriculture sector was owing to a decline in crop production arising from the lingering \nsecurity challenges in the food producing areas. The contribution of the industry sector, \nhowever, was negative (-0.05 percentage point). \n1.2.2 Inflation \nInflationary pressures heightened in the first half of 2022, driven, largely by the continued \nincrease in both core and food components. Headline inflation (year-on-year) rose to 18.60 \nper cent in June 2022, compared with 15.63 per cent in the second half of 2021. The 12-\nmonth-moving-average headline inflation, however, moderated slightly to 16.54 per cent at \nend-June 2022, compared with 16.95 per cent at end-December 2021. \nFood inflation (year-on-year) increased to 20.60 per cent, compared with 17.37 per cent in \nthe second half of 2021, largely driven by the lingering insecurity, particularly in the food \nproducing areas and supply chain disruptions induced by the Russia-Ukraine crisis. Core \ninflation also rose to 15.75 per cent, compared with 13.87 per cent in the second half of \n2021. The rise was due, mainly, to increased electricity tariffs, high price of Automotive Gas \nOil (AGO) and scarcity of Premium Motor Spirit (PMS). \n \n \n \n \n \nSector \nH1 2021 \nH2 2021 \nH1 2022 \nAgriculture \n0.41 \n0.68 \n0.50 \n Of which: Crop Production \n0.38 \n0.68 \n0.45 \nIndustry \n-0.02 \n-0.17 \n-1.05 \n Of which: Oil \n-0.66 \n-0.69 \n-1.64 \n Manufacturing \n0.32 \n0.29 \n 0.42 \nServices \n2.31 \n3.50 \n3.87 \n Of which: ICT \n0.95 \n1.02 \n1.49 \nGDP Growth \n2.70 \n4.01 \n3.32 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n27 \n \n \nClassified as Confidential \n \nFigure 1.2 Inflationary Trend (Year-on-Year) \n \nSource: National Bureau of Statistics \n1.2.3 Fiscal Operations of the Federal Government \nProvisional data on Federal Government Retained Revenue, at N2,134.47 billion in the first \nhalf of 2022, fell short of the budget benchmark by 60.30 per cent, reflecting the subsisting \nrevenue challenges. Provisional aggregate expenditure, at N8,368.06 billion in the first half \nof 2022, was below the prorated budget by 2.30 per cent, owing to the shortfall in capital \nexpenditure. Consequently, the fiscal operations of the Federal Government resulted in an \noverall deficit of N6,233.60 billion, indicative of an expansionary policy stance. \n \nFigure 1.3 Federal Government Fiscal Operations (N Billion) \n \nSource: OAGF & CBN Staff Estimate \n \nThe gap between total revenue and expenditure was bridged by borrowing from domestic \nand external sources. The consolidated public debt stock at end-March 2022 stood at \nN41,604.06 billion, comprising 60.06 per cent and 39.94 per cent of domestic and external \ndebt, respectively. The total public debt stock indicated an increase of 5.18 per cent over the \nlevel at end-December 2021. The debt stock represented 27.34 per cent of GDP, which was \nbelow the Medium-Term Debt Strategy (MTDS) threshold of 40.0 per cent. \n \n \n17.95\n15.63\n18.60\n13.09\n13.87\n15.75\n21.83\n17.37\n20.60\n2021 H1\n2021 H2\n2022 H1\nHeadline (Y-on-Y)\nCore (Y-on-Y)\nFood (Y-on-Y)\n1,947.08\n2,045.69\n2,303.58\n2,129.08\n2,134.47\n4,716.36\n5,511.53\n6,632.05\n6,003.52\n8,368.06\n-2,769.28\n-3,465.84\n-4,328.47\n-3,874.44\n-6,233.60\n-8,000.00\n-6,000.00\n-4,000.00\n-2,000.00\n0.00\n2,000.00\n4,000.00\n6,000.00\n8,000.00\n10,000.00\n2020 First Half\n2020 Second Half\n2021 First Half\n2021 Second Half\n2022 First Half\nRetained Revenue\nAggregate expenditure\nOverall Balance\nFINANCIAL STABILITY REPORT – JUNE 2022 \n28 \n \n \nClassified as Confidential \n \nThe total domestic debt of N24,986.87 billion at end-March 2022, reflected an increase of \nN286.67 billion or 1.16 per cent, compared with N23,700.80 billion at end-December 2021. \nThe increase was driven, largely, by Nigerian Treasury Bills, FGN Savings Bond and FGN \nBonds issues. The FGN portion constituted 80.62 per cent, while states and FCT held 19.38 \nper cent. \nAt end-March 2022, the FGN domestic debt stood at N20,144.03 billion (54.80 per cent of \ntotal FGN debt), while the FGN external debt was N16,617.19 billion (45.20 per cent) (Fig \n1.4). FGN Bond issues maintained its dominance, accounting for 70.70 per cent of the total \ndomestic debt, followed by Treasury Bills (21.88 per cent), Promissory Notes (3.79 per cent), \nFGN Sukuk (3.03 per cent), and others1 (0.60 per cent). \nNigeria’s consolidated external debt comprised multilateral, commercial and bilateral loans, \nwhich accounted for 47.43, 39.83 and 11.25 per cent, respectively, while ‘other’2 loans \nconstituted 1.50 per cent. \nFigure 1.4 FGN External and Domestic Debt Composition (N Billion) \n \nSource: Debt Management Office \n \n \n \n \n \n \n \n1 This includes Treasury bonds (0.38 per cent), Green bonds (0.13 per cent) and FGN Savings bonds (0.09 per \ncent). \n2 Promissory Notes. \n12,470.4 \n13,710.9 \n15,573.0 \n15,855.2 \n16,617.2 \n16,513.9 \n17,631.8 \n18,232.9 \n19,242.6 \n20,144.0 \n -\n 5,000.0\n 10,000.0\n 15,000.0\n 20,000.0\n 25,000.0\n 30,000.0\n 35,000.0\n 40,000.0\n -\n 5,000.0\n 10,000.0\n 15,000.0\n 20,000.0\n 25,000.0\n2021 Q1\n2021 Q2\n2021 Q3\n2021 Q4\n2022 Q1\nExternal Debt\nDomestic Debt\nTotal Debt\nFINANCIAL STABILITY REPORT – JUNE 2022 \n29 \n \n \nClassified as Confidential \nFigure 1.5 Federal Government Domestic Debt Stock \n \n Source: Debt Management Office \n1.2.4 External Reserves \n \nAt end-June 2022, gross external reserves decreased by 2.66 per cent to US$39.16 \nbillion, from US$40.23 billion at end-December 2021. A breakdown of the reserves \nindicated that the CBN, FGN and Federation holdings were 96.84, 3.07 and 0.09 per \ncent, respectively. The currency composition showed that 76.59 per cent of the reserves \nwas held in US dollars, 12.88 per cent in SDRs, 9.32 per cent in Renminbi and 1.21 per \ncent in other currencies. \n \nTotal inflow to the external reserves was US$16.40 billion in the first half of 2022, \ncompared with US$26.01 billion in the second half of 2021, reflecting a decrease of 36.95 \nper cent. The higher inflow in the preceding half was attributed largely to non-recurring \ninflows of US$3.34 billion (SDR allocation) and US$4.0 billion (proceeds of the FGN \nEuro bond issuance). \n \nTotal outflow decreased by 24.16 per cent to US$16.89 billion, compared with US$22.27 \nbillion in the second half of 2021, owing largely to a decrease in the Bank’s intervention \nat the foreign exchange market. \n \n \n \n \n \n \n \n \n \n \n \n70.7%\n21.9%\n3.8% 3.0%\n0.6%\nFGN Bonds\nTreasury Bills\nPromissory Notes\nFGN Sukuk\nOthers\nFINANCIAL STABILITY REPORT – JUNE 2022 \n30 \n \n \nClassified as Confidential \nFigure 1.6 External Reserves Position (US$ Millions) \n \n \nTable 1:9 Foreign Exchange Flows through the CBN (US$ billion) \n \n \n \n \n \n \n \n \n \n1.2.5 Risks to the External Reserves \nThe level of external reserves remained a key factor in the stability of the financial system. \nDownside risks to the external reserves include: \n• Low inflows from crude oil & gas revenue. The non-receipt of inflows from crude oil \nand gas sales despite the rise in oil prices has continued to impact negatively on \naccretion to the reserves. This was attributed to reduction in crude oil production, \namong others. \n• Rising foreign loan repayment obligations. The increase in the foreign debt profile is \nan indication that foreign debt service payments are likely to increase, and would \nnegatively affect the level of reserves. \n• Global inflationary pressures. Global inflation is expected to remain elevated a \nsituation that was previously anticipated, necessitating the hike in interest rates by the \n -\n 5,000.00\n 10,000.00\n 15,000.00\n 20,000.00\n 25,000.00\n 30,000.00\n 35,000.00\n 40,000.00\n 45,000.00\nGross Foreign Reserves\nPeriod \nInflow \nUS$ billion \nOutflow \nUS$ billion \nNet flow \nUS$ billion \nH1 – 2021 \n 14.06 \n 17.65 \n (3.59) \nH2 – 2021 \n 26.01 \n22.27 \n 3.74 \nH1 – 2022 \n16.40 \n16.89 (0.49) \nFINANCIAL STABILITY REPORT – JUNE 2022 \n31 \n \n \nClassified as Confidential \nFed and other major central banks. This scenario poses a threat to reserves accretion \nas foreign investors move assets from emerging economies to advanced economies \nfor expected higher returns. \n• Lead-up to the 2023 general elections. There is the expectation of increased foreign \nexchange demand pressure resulting from uncertainties surrounding the conduct of \nthe 2023 general elections. \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n32 \n \n \nClassified as Confidential \n2 \n DEVELOPMENTS IN THE FINANCIAL SYSTEM \n2.1 Monetary and Credit Developments \nBroad money supply (M3) grew by 10.00 per cent to N48,890.24 billion at end-June 2022. \nThe development reflected an increase in domestic claims (17.88 per cent), arising from \n31.61 and 12.44 per cent growth in net claims on the central government and claims on \n‘other’ sectors, respectively. The increase in claims on ‘other’ sectors reflected improved \ncredit delivery to the real economy. \n \nThe growth in total monetary liabilities was due, mainly, to the rise in transferable deposits \n(16.61 per cent) and other deposits (8.19 per cent). The growth in transferable deposit was \ndue, largely, to the increase in transferable deposits of commercial and merchant banks, \nwhile the increase in other deposits was hinged on the 13.40 per cent rise in foreign currency \ndeposits. Narrow money supply (M1) rose by 12.69 per cent to N20,347.59 billion at end-\nJune 2022, compared with N18,055.86 billion at end-December 2021. The growth in M1 was \ndue to rise in demand for cash as inflationary pressures persisted in the economy. \n \nTable 2:1 Growth Rates of Monetary Aggregates \n% Change (Over preceding December) \nDec 20 \nJun 21 \nDec 21 \nJun 22 \nForeign Assets (Net) \n50.95 \n-18.73 \n-1.71 \n-34.73 \nNet Domestic Asset \n3.55 \n7.64 \n16.95 \n21.93 \n Domestic Claims \n12.71 \n6.85 \n17.25 \n17.88 \n Claims on Central Government (Net) \n13.81 \n0.88 \n15.96 \n31.61 \n Claims on Other Sectors \n12.30 \n9.15 \n17.75 \n12.44 \n Other Items (Net) \n108.48 \n11.97 \n23.78 \n8.60 \n Currency Outside Depository Corporations \n23.38 \n-9.91 \n17.74 \n-7.46 \n Transferable Deposits \n54.69 \n3.25 \n14.15 \n16.61 \nNarrow Money Supply (M1) \n48.74 \n1.17 \n14.72 \n 12.69 \n Other Deposits \n20.63 \n3.86 \n16.63 \n8.19 \nMonetary Liabilities (M2) \n31.00 \n2.73 \n15.83 \n 10.02 \n Securities Other than Shares \n-81.98 \n-39.82 \n-99.92 \n-681.36 \n Total Monetary Liabilities (M3) \n11.63 \n1.56 \n12.63 \n10.00 \nSource: Statistics Department, Central Bank of Nigeria \nFINANCIAL STABILITY REPORT – JUNE 2022 \n33 \n \n \nClassified as Confidential \n2.1.1 Market Structure of the Banking Industry \nDuring the review period, six banks accounted for 68.79 and 66.69 per cent of total deposits \nand assets, compared with 63.88 and 63.79 per cent in the second half of 2021, respectively, \nreflecting an increase in concentration. This was consistent with the Herfindahl Hirschman \nIndices (HHI) of 954.53 and 933.89, for deposits and assets, respectively, compared with \n847.43 for deposits and 854.24 for assets at end-December 2021. The shares of individual \nbanks ranged from 0.07 to 15.56 per cent in deposits and 0.33 to 17.04 per cent in assets. \nFigure 2.1 Concentration Ratios of the Banking Industry Assets and Deposits \n \nSource: Research Department, Central Bank of Nigeria \n \n2.1.2 Consumer Credit \nConsumer credit outstanding, which accounted for 7.22 per cent of total credit to the private \nsector, declined by 6.78 per cent to ₦1,933.18 billion at end-June 2022, compared with \nN2,073.76 billion at end-December 2021. The decrease was due, largely, to the reduction in \npersonal loans, owing to the rise in lending rates. \nFigure 2.2 Consumer Credit \n0.00\n200.00\n400.00\n600.00\n800.00\n1000.00\n0.00\n20.00\n40.00\n60.00\n80.00\nDec-20\nFeb-21\nApr-21\nJun-21\nAug-21\nOct-21\nDec-21\nFeb-22\nApr-22\nJun-22\nHHI\nConcentration Ratio\nCR(Deposits)\nCR( Assets)\nCR( Largest-Deposits)\nCR (Largest-Assets)\nHHI (Deposits) (rhs)\nHHI (Assets) (rhs)\n0.00\n500.00\n1,000.00\n1,500.00\n2,000.00\n2,500.00\n0.00\n1.00\n2.00\n3.00\n4.00\n5.00\n6.00\n7.00\n8.00\n9.00\n10.00\nJun-20\nDec_20\nJun_21\nDec_21\nJun_22\n₦'Billion\nRatio (%)\nRatio of consumer credit to claims on private sector (lhs)\nConsumer credit (rhs)\nFINANCIAL STABILITY REPORT – JUNE 2022 \n34 \n \n \nClassified as Confidential \n2.1.3 Sectoral Distribution of Credit \nTotal credit to various sectors of the economy grew by 10.12 per cent to N26,846.40 billion \nat end-June 2022, owing, largely, to a 12.41 per cent increase in credit to N14,624.15 billion \nin the Services Sector. Also, credit to Agriculture and Industry increased by 11.84 and 6.87 \nper cent to ₦1,630.38 billion and ₦10,591.87 billion, respectively. \nServices and Industry remained the dominant sectors, accounting for 54.47 and 39.45 per \ncent of the total credit, respectively, compared with 53.36 and 40.66 per cent at end-\nDecember 2021. The share of Agricultural Sector increased by 0.09 percentage point to 6.07 \nper cent, compared with 5.98 per cent, at end-December 2021. \nThe improved flow of credit to the real sector reflected the Bank’s sustained effort in \nsupporting productivity and, real output growth and employment generation in the economy. \nTable 2:2 Sectoral Allocation of Credit \nITEM \nJun-21 \nDec-21 \nJun-22 \nPercentage Share in Total \n % \nChange \nBetween \n(=N='m) \n(=N='m) \n(=N='m) \nJun-\n21 \nDec-\n21 \nJun-22 \n(2) &(3) \n(1) &(3) \n (1) \n (2) \n (3) \n (4) \n (5) \n(6) \n \n \nSECTORAL \nCREDIT \nALLOCATION \n \n \n \n \n \n[a] Agriculture \n1,154.69 \n1,457.82 \n1,630.381 \n5.27 \n5.98 \n6.07 \n11.84 \n41.20 \n[b] Industry \n9,274.05 \n9,911.14 \n10,591.87 \n42.36 \n40.66 \n39.45 \n6.87 \n14.21 \n of which Construction \n \n1,096.19 \n \n1,069,500.7 \n1,177.24 \n5.00 \n4.40 \n4.39 \n10.07 \n7.39 \n[c] Services \n \n11,466.57 \n \n13,009.23 \n14,624.15 \n52.37 \n53.36 \n54.47 \n12.41 \n27.54 \n of which Trade/General \nCommerce \n \n1,376.32 \n \n1,708.38 \n1,913.39 \n6.30 \n7.00 \n7.13 \n12.00 \n39.02 \nTOTAL \n \nPRIVATE \nSECTOR \nCREDIT \n \n21,895.31 \n \n24,378.19 \n26,846.40 \n100.0 \n100.0 \n100.00 \n10.12 \n22.61 \nSource: Central Bank of Nigeria \n \n2.2 Other Financial Institutions \nThe total number of Other Financial Institutions (OFIs) increased by 15 to 6,697 at end-June \n2022, compared with 6,682 at end-December 2021. The increase was due to the licensing \nof six Finance Companies (FCs) and nine Microfinance Banks (MFBs) in the review period. \nThe 6,697 OFIs comprised Seven Development Finance Institutions (DFIs), 875 MFBs, 106 \nFCs, 34 Primary Mortgage Banks (PMBs) and 5,675 Bureaux-de-change (BDCs) (Table \n2.31). \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n35 \n \n \nClassified as Confidential \n \nTable 2:3 Composition of Other Financial Institutions \nS/N \nType \nNumber of Institutions \nat end-December, 2021 \nNumber of Institutions \nat end-June, 2022 \n1 \nMicrofinance Banks \n866 \n875 \n2 \nBureaux De Change \n5,675 \n5,675 \n3 \nFinance Companies \n100 \n106 \n4 \nDevelopment \nFinance \nInstitutions \n7 \n7 \n5 \nPrimary Mortgage Banks \n34 \n34 \n \nTotal \n6,682 \n6,697 \n \nThe total assets of OFIs, excluding BDCs, increased by 8.10 per cent to N5,646.65 billion at \nend-June 2022, from the level of N5,223.66 billion recorded at end-December 2021. This \nwas due largely to increase in investments, cash and bank balances, net loans and advances \nand placements. Investments increased by 21.24 per cent to N1,231.45 billion, at end-June \n2022, from N1,015.71 billion at end-December 2021, while cash and bank balances \nincreased by 16.04 per cent to N263.82 billion, from N227.37 billion. \nSimilarly, net loans and advances and placements increased by 3.19 per cent and 5.58 per \ncent to N3,023.61 billion and N708.54 billion at end-June 2022, from N2,930.06 billion and \nN671.07 billion, respectively, at the end of the preceding period. \nAggregate shareholders’ funds grew by 6.91 per cent to N733.92 billion at end-June 2022, \ncompared with N686.47 billion at end-December 2021, owing to compliance with the new \nminimum capital requirement for MFBs and the accretion to reserves. \n \n´Due to other banks’ and borrowings increased by 218.64 per cent and 16.81 per cent to \nN157.94 billion and N2,125.76 billion, at end-June 2022, compared with N49.57 billion and \nN1,819.87 billion, respectively, at end-December 2021. Similarly, deposit liabilities increased \nby 7.21 per cent to N1,186.56 billion at end-June 2022, from N1,106.79 billion, at end-\nDecember 2021, while long-term liabilities decreased by 25.27 per cent to N521.94 billion \nfrom N698.45 billion. \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n36 \n \n \nClassified as Confidential \n \nFigure 2.3 Consolidated Balance Sheet of OFIs \n \n \n \n \n \n2.2.1 Development Finance Institutions \nThe total assets of the development finance sub-sector grew by 9.16 per cent to N3,334.06 \nbillion at end-June 2022, from the level of N3,054.33 billion at end-December 2021. The \nincrease was due largely to investments and placements which grew by 23.37 per cent and \n8.79 per cent to N1,121.46 billion and N466.51 billion at end-June 2022, from N909.04 billion \nand N428.81 billion, respectively, at end-December 2021. Net loans and advances increased \nby 0.83 per cent to N1,598.62 billion at end-June 2022, compared with N1,585.39 billion at \nend-December 2021. \nThe growth in assets was driven mainly by the 19.24 per cent increase in borrowings to \nN1,886.72 billion at end-June 2022, from N1,582.32 billion at end-December 2021.The \naggregate shareholders’ funds increased by 4.07 per cent to N471.67 billion at end-June \n2022, from N453.24 billion at end-December 2021, due to accretion of N18.43 billion to \nreserves. Deposit liabilities also increased by 8.45 per cent to N558.36 billion at end-June \n2022, from N514.85 billion at end-December 2021; while other liabilities decreased by 15.40 \nper cent to N371.03 billion from N438.60 billion. \nDFI: \n58.47%\nPMB: \n9.68%\nFC: 6.94%\nMFB: \n24.91%\nTotal Assets of OFIs at End-Dec. 2021\nDFI\nPMB\nFC\nMFB\nDFI: \n59.04%\nPMB: \n9.32%\nFC: 6.68%\nMFB: 24.95%\nTotal Assets of OFIs at End- Jun. 2022\nDFI\nPMB\nFC\nMFB\n0\n500\n1,000\n1,500\n2,000\n2,500\n3,000\n3,500\nN'Billions\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n37 \n \n \nClassified as Confidential \n \nThe breakdown of the total assets by institutions, indicated that the Bank of Industry (BOI), \nDevelopment Bank of Nigeria (DBN), Federal Mortgage Bank of Nigeria (FMBN), Nigerian \nExport-Import Bank (NEXIM) accounted for 59.83, 14.91, 14.46 and 6.49 per cent, \nrespectively. Furthermore, Nigeria Mortgage Refinance Company (NMRC), Bank of \nAgriculture (BOA) and The Infrastructure Bank (TIB), accounted for 2.58, 1.66 and 0.07 per \ncent, respectively. The BOI, DBN, FMBN, NEXIM, BOA and NMRC accounted for 48.75, \n20.06, 19.31, 8.53, 1.80 and 1.55 per cent of total net loans and advances, respectively. \nFigure 2.4 Consolidated Balance Sheet of DFIs \n \n \nFigure 2.5 Total Assets and Liabilities of DFIs \n \nCash & \nBank \nBalances\n0.03%\nPlacement\ns\n14.04%\nInvestment\n29.76%\nNet Loans & \nAdvances\n51.91%\nOther \nAssets\n2.22%\nFixed \nAssets\n2.04%\nAssets of DFIs at End- Dec. 2021\nTotal Assets of N3,054.33 billion\nCash & Bank \nBalances\n0.66%\nPlacements\n13.99%\nInvestment\n33.64%\nNet Loans & \nAdvances\n47.95%\nOther Assets\n1.82%\nFixed Assets\n1.95%\nAssets of DFIs at End- Jun. 2022\nTotal Assets of N3,334.06 billion\n0\n200\n400\n600\n800\n1,000\n1,200\n1,400\n1,600\n1,800\n2,000\nN'billion\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n38 \n \n \nClassified as Confidential \n \n2.2.2 Primary Mortgage Banks \nThe total assets of the sub-sector increased by 4.14 per cent to N526.53 billion, at end-June \n2022, compared with N505.61 billion, at end-December 2021, owing largely to increases in \nnet loans and advances, as well as balances with banks. Net loans and advances and \nbalances with banks increased by 4.32 per cent and 31.77 per cent to N287.97 billion and \nN23.64 billion at end-June 2022, compared with N276.03 billion and N17.94 billion, \nrespectively, at end-December 2021. Placements with banks increased by 4.63 per cent to \nN77.35 billion at end-June 2022, from the level of N73.93 billion at end-December 2021, \nwhile short-term investments declined by 36.26 per cent to N4.39 billion from N6.88 billion. \nThe shareholders’ funds increased by 26.75 per cent to N41.23 billion at end-June 2022, \nfrom N32.53 billion at end-December 2021, owing to accretion to reserves. Long-term loans \nand other liabilities also increased to N86.30 billion and N203.71 billion at end-June 2022, \nfrom N77.06 billion and N194.26 billion at end-December 2021, indicating increases of \n11.99 and 4.87 per cent, respectively. \nCash & \nBank \nBalanc…\nPlacement\ns…\nInvestment\n29.76%\nNet Loans & \nAdvances\n51.91%\nOther \nAssets\n2.22%\nFixed \nAssets\n2.04%\nAssets of DFIs at End- Dec. 2021\nTotal Liabilities of N3,054.33 billion\nPaid-up \nCapital\n7.16%\nReserves\n6.99%\nDeposits\n16.75%\nBorrowings\n56.58%\nDue to \nBanks\n0.09%\nOther \nLiabilities\n11.13%\nLong-term \nLiabilities\n1.30%\nLiabilities of DFIs at End- Jun. 2022\nTotal Liabilities of N3,054.33 billion\nFINANCIAL STABILITY REPORT – JUNE 2022 \n39 \n \n \nClassified as Confidential \nFigure 2.6 Consolidated Balance Sheet of PMBs (N'BN) \n \nFigure 2.7 Composition of Assets and Liabilities of Primary Mortgage Banks \n \nCash & \nShort-\nTerm …\nInvestmen\nt…\nNet \nLoans & \nAdvanc…\nOther \nAssets\n10.57%\nFixed \nAssets\n3.90%\nAssets of PMBs at End- Dec. 2021\nTotal Assets of N526.53 \nbillion\nCash & \nShort-\nTerm …\nInvestme\nnt…\nNet Loans \n& \nAdvance…\nOther \nAssets\n10.56%\nFixed \nAssets\n3.78%\nAssets of PMBs at End- Jun. 2022\nTotal Assets of N526.53 billion\n-100\n-50\n0\n50\n100\n150\n200\n250\n300\n350\nAssets and Liabilities\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n40 \n \n \nClassified as Confidential \n \nTable 2:4 Financial Highlights OF PMBs \n \nEnd-December \n2021 \n (N’ billion) \nEnd-June 2022 \n (N’ billion) \nChange \n(N’ billion) \n% Change \nTotal Assets \n505.61 \n526.53 \n20.92 \n4.14 \nNet Loans and Advances \n276.03 \n287.97 \n11.93 \n4.32 \nInvestments \n58.97 \n57.81 \n(1.15) \n(1.95) \nOther Assets \n53.42 \n55.62 \n2.20 \n4.11 \nCash and Short-Term Funds \n97.45 \n105.24 \n7.79 \n8.00 \nReserves \n(76.18) \n(69.55) \n6.62 \n8.70 \nDeposit liabilities \n180.20 \n174.20 \n(6.00) \n(3.33) \nOther liabilities \n194.26 \n203.71 \n9.46 \n4.87 \nLong-term Liabilities \n77.06 \n86.30 \n9.24 \n11.99 \nShareholders’ funds \n32.53 \n41.23 \n8.70 \n26.75 \n \nInvestible funds available to the PMB sub-sector at end-June 2022 amounted to N31.41 \nbillion. The funds were sourced mainly from increases in long-term loans and other liabilities \nPaid-up \nCapital, \n21.50%\nReserves, \n-15.02%\nDeposits, \n35.64%\nDue to \nBanks, \n4.27%\nLong-term \nLiabilities, \n15.24%\nOther \nLiabilities, \n38.42%\nLiabilities of PMBs at End- Dec. 2021\nTotal Liabilties of N526.53 billion\nPaid-up \nCapital, \n21.04%\nReserves, \n-13.21%\nDeposits, \n33.09%\nDue to \nBanks, \n4.01%\nLong-term \nLiabilities, \n16.39%\nOther \nLiabilities, \n38.69%\nLiabilities of PMBs at End- Jun. 2022\nTotal Liabilities of N526.53 billion\nFINANCIAL STABILITY REPORT – JUNE 2022 \n41 \n \n \nClassified as Confidential \nby N9.24 billion and N9.46 billion, respectively and were mainly utilised to increase loans \nand advances, as well as cash and short-term funds. \nThe capital adequacy ratio of the PMBs increased to 12.09 per cent at end-June 2022, \ncompared with 9.95 per cent at end-December 2021 and was above the regulatory minimum \nof 10.00 per cent. The increase in the CAR was due to additional capital injection, which \nimpacted positively on shareholders’ funds. Also, the Liquidity Ratio increased to 49.34 per \ncent at end-June 2022, compared with 43.65 per cent at end-December 2021 and surpassed \nthe prudential minimum of 20.00 per cent. Similarly, asset quality improved as non-\nperforming loans (NPL) ratio reduced by 21.63 percentage points to 27.28 per cent at end-\nJune 2022, compared with 48.91 per cent at end-December 2021. The NPL ratio, however, \nremained above the regulatory maximum of 10.00 per cent. \n \n2.2.3 Finance Companies \nDuring the review period, six new FCs were granted licences, bringing the total to 106 at \nend-June 2022, compared with 100 at end-December 2021. Similarly, the total assets of FCs \nincreased by 4.10 per cent to N377.47 billion at end-June 2022, from N362.62 billion at end-\nDecember 2021. The development was attributed largely to the six newly licenced FCs and \nincreases in net loans and advances and other assets. \nAt end-June 2022, net loans and advances increased by 8.88 per cent to N181.80 billion and \nother assets by 13.84 per cent to N66.20 billion; compared with N166.98 billion and N58.15 \nbillion, respectively, at end-December 2021. Furthermore, fixed assets increased by 7.89 per \ncent to N49.79 billion at end-June 2022, from N46.15 billion at end-December 2021. \nInvestments, however, decreased by 35.43 per cent to N12.76 billion at end-June 2022, from \nthe level of N19.76 billion recorded at end-December 2021. \n \nTotal borrowings and other liabilities increased by 0.63 and 8.42 per cent to N239.04 billion \nand N89.31 billion at end-June 2022, compared with N237.55 billion and N82.38 billion at \nend-December 2021, respectively. Similarly, shareholders’ funds increased by 15.54 per \ncent to N47.18 billion at end-June 2022, compared with N40.84 billion at end-December \n2021, resulting from additional capital injection and accretion to reserves. \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n42 \n \n \nClassified as Confidential \n \nTable 2:5 Financial Position of FCs \n \n \nEnd-December 2021 \n(N’ billion) \nEnd-June 2022 \n \n(N’ billion) \n% Change \n \nTotal Assets \n362.62 \n377.47 \n4.10 \nCash in Vault \n2.37 \n2.23 \n(5.94) \nBalances with Banks \n27.32 \n27.67 \n1.28 \nNet Loans and Advances \n166.98 \n181.80 \n8.88 \nInvestments \n19.76 \n12.76 \n(35.43) \nPlacements \n41.89 \n37.02 \n(11.62) \nFixed Assets \n46.15 \n49.79 \n7.89 \nBorrowings \n237.55 \n239.04 \n0.63 \nOther Liabilities \n82.38 \n89.31 \n8.42 \nShareholder’s Funds \n40.84 \n47.18 \n15.54 \nPaid up capital \n25.65 \n29.40 \n14.62 \nReserves \n15.19 \n17.78 \n 17.09 \n \nFigure 2.8 Consolidated Balance Sheet of FCs \n \n \n \n0\n25\n50\n75\n100\n125\n150\n175\n200\n225\n250\n275\n(N'Billion)\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n43 \n \n \nClassified as Confidential \nFigure 2.9 Composition of Assets and Liabilities of FCs \n \n \n \nInvestible funds at end-June 2022 amounted to N26.86 billion, compared with N42.17 billion \nat end-December 2021. The decline was mainly due to reduction in other liabilities and \nborrowings. The funds were sourced mainly from increases in paid-up capital and other \nliabilities by N3.75 billion and N6.93 billion, as well as decreases in placements and \ninvestments by N4.87 billion and N7.00 billion, respectively. The funds were utilised mainly \nto increase loans and advances, and other assets. \nThe CAR for the subsector was 11.24 per cent at end-June 2022, compared with 11.12 per \ncent at end-December 2021, while NPL ratio declined to 19.17 per cent from 19.91 per cent \nover the same period, reflecting an improvement in asset quality and loan repayment. \n \nCash & Bank \nBalances\n8.19%\nPlacements\n11.55%\nInvestment\n5.45%\nNet Loans & \nAdvances\n46.05%\nOther \nAssets\n16.04%\nFixed \nAssets\n12.73%\nAssets of FCs at End- Dec. 2021\nTotal Assets of N377.47 billion\nCash & Bank \nBalances, \n7.92%\nPlacements, \n9.81%\nInvestments, \n3.38%\nNet Loans & \nAdvances, \n48.16%\nOther \nAssets, \n17.54%\nFixed \nAssets, \n13.19%\nAssets of FCs at End- Jun. 2022\nTotal Assets of N377.47 billion\nPaid-up \nCapital, \n7.07%\nReserves, \n4.19%\nBorrowings\n65.51%\nLong-term \nLiabilities, \n0.51%\nOther \nLiabilities, \n22.72%\nLiabilities of FCs at End- Dec. 2021\nTotal Liabilities of N377.47 billion\nPaid-up \nCapital, \n7.79%\nReserves, \n4.71%\nBorrowing\ns 63.33%\nLong-term \nLiabilities, \n0.51%\nOther \nLiabilities, \n23.66%\nLiabilities of FCs at End- Jun. 2022\nTotal Liabilities of N377.47 billion\nFINANCIAL STABILITY REPORT – JUNE 2022 \n44 \n \n \nClassified as Confidential \n2.2.4 Microfinance Banks \nDuring the review period, nine Unit MFBs were licensed, bringing the total to 875 (9 National, \n134 State and 732 Unit MFBs), compared with 866 (9 National, 134 State and 723 Unit \nMFBs) at end-December 2021. \n \n \nThe total assets of the subsector increased by 8.26 per cent to N1,408.58 billion, at end-\nJune 2022, from N1,301.11 billion, at end-December 2021. The increase was due to the \nnewly licensed MFBs and growth in net loans and advances, cash and bank balances, and \nfixed assets. Similarly, net loans and advances increased by 5.94 per cent to N955.23 billion, \nat end-June 2022, compared with N901.66 billion, at end-December 2021, while fixed assets \nincreased by 141.93 per cent to N35.45 billion, at end-June 2022, from N14.65 billion, at \nend-December 2021. Cash increased by 96.09 per cent to N32.74 billion, at end-June 2022, \ncompared with N16.70 billion, at end-December 2021. \nShareholders’ funds increased by 8.74 per cent to N173.83 billion at end-June 2022, \ncompared with N159.86 billion at end-December 2021, owing largely to capital injection and \nretained earnings. Similarly, takings from other banks increased by 707.52 per cent to \nN133.93 billion at end-June 2022, from N16.58 billion at end-December 2021, while deposits \nincreased by 10.26 per cent to N453.99 billion, from N411.74 billion. However, long-term \nloans declined by 12.95 per cent to N390.36 billion at end-June 2022, from N448.43 billion \nat end-December 2021. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n45 \n \n \nClassified as Confidential \n \nTable 2:6 Highlights of Financial Position of MFBs \n \n \nEnd-December 2021 \n(N’ Billion) \nEnd-June 2022 \n(N’ Billion) \nChange \n(N’ \nBillion) \n% \nChange \n \nTotal Assets \n1,301.11 \n1,408.58 \n107.48 \n8.26 \nPlacement with Banks \n126.45 \n127.67 \n1.22 \n0.97 \nNet Loans and Advances \n901.66 \n955.23 \n53.57 \n5.94 \nFixed Assets \n14.65 \n35.45 \n20.80 \n141.93 \nPaid up capital \n93.73 \n119.26 \n25.53 \n27.23 \nReserves \n66.13 \n54.57 \n(11.55) \n(17.74) \nShareholder’s Funds \n159.86 \n173.83 \n13.98 \n8.74 \nDeposits \n411.74 \n453.99 \n42.25 \n10.26 \nTakings from Other Banks 16.58 \n133.93 \n117.34 \n707.52 \nLong \nTerm \nLoans/On-\nlending \n448.43 \n390.36 \n(58.08) \n(12.95) \nOther Liabilities \n264.49 \n256.48 \n(8.01) \n(3.03) \nFigure 2.10 Balance Sheet of MFBs \n0\n100\n200\n300\n400\n500\n600\n700\n800\n900\n1,000\n1,100\nN\"Billion\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n46 \n \n \nClassified as Confidential \n \n \nFigure 2.11 Composition of Assets and Liabilities of MFBs \n \n \n \nInvestible funds at end-June 2022 amounted to N190.32 billion, compared with N183.67 \nbillion at end-December 2021. The funds were sourced mainly from additional paid-up capital \n(N25.53 billion), deposits (N42.25 billion) and takings from other banks (N117.34 billion). The \nfunds were utilised mainly to increase net loans and advances by N53.57 billion, fixed assets \n(N20.80 billion), investments (N11.47 billion) and cash and bank balances (N10.84 billion) \nas well as reduction in long-term loans (N58.08 billion). \nCash & Bank \nBalances\n13.31%\nPlacements\n9.72%\nInvestment\n2.15%\nNet Loans & \nAdvances\n69.29%\nOther \nAssets\n4.40%\nFixed \nAssets\n1.13%\nAssets of MFBs at End- Dec. 2021\nTotal Assets of N1,408.58 billion\nCash & Bank \nBalances\n13.06%\nPlacements\n9.06%\nInvestment\n2.79%\nNet Loans & \nAdvances\n67.82%\nOther \nAssets\n4.74%\nFixed \nAssets\n2.52%\nAssets of MFBs at End- Jun. 2022\nTotal Assets of N1,408.58 billion\nPaid-up \nCapital, \n7.20%\nReserves, \n5.08%\nDeposits, \n31.65%\nTakings \nfrom \nOther \nBanks, \n1.27%\nLong-term \nLiabilities, \n34.47%\nOther \nLiabilities, \n20.33%\nLiabilities of FCs at End- Dec. 2021\nTotal Liabilities of N1,408.58 billion\nPaid-up \nCapital, \n8.47%\nReserves, \n3.87%\nDeposits, \n32.23%\nTakings from \nOther Banks, \n9.51%\nLong-term \nLiabilities, \n27.71%\nOther \nLiabilities, \n18.21%\nLiabilities of MFBs at End- Jun. 2022\nTotal Liabilities of N1,408.58 billion\nFINANCIAL STABILITY REPORT – JUNE 2022 \n47 \n \n \nClassified as Confidential \n \nThe capital adequacy and liquidity ratios of the subsector improved to 15.51 and 75.71 per \ncent at end-June 2022, compared with 15.42 and 78.01 per cent, respectively, at end-\nDecember 2021. The ratios were above the minimum regulatory requirements of 10.00 and \n20.00 per cent, respectively. Portfolio-At-Risk (PAR) rose to 8.68 per cent in the first half of \n2022, from 5.94 per cent at end-December 2021. \n \n2.2.4.1 Maturity Structure of Loans and Advances and Deposit Liabilities \nCredits with maturity period of more than a year accounted for 58.90 per cent of the total \nloans and advances at end-June 2022, reflecting an increase of 37.79 percentage points, \nfrom the level of 21.11 per cent recorded at end-December 2021. Loans and advances with \nmaturity periods of less than one year accounted for 41.10 per cent, compared with 78.89 \nper cent at end-December 2021. \n \nThe deposit structure remained largely short-term, as those of less than one-year maturity \naccounted for 81.33 per cent, a decrease of 5.03 percentage points, from the level of 86.36 \nper cent recorded at end-December 2021. Conversely, deposits of over one-year maturity \naccounted for 18.67 per cent, reflecting an increase of 5.03 percentage points, from the level \nof 13.64 per cent at end-December 2021. \n \nTable 2:7 Maturity Structure of Loans and Advances and Deposit Liabilities \nDec-21 \nJun-22 \nTenor/Period \nLoans and \nAdvances \nDeposits \nTenor/Period \nLoans and \nAdvances \nDeposits \n \n% \n% \n \n% \n% \n0-30 Days \n21.69 \n40.38 \n0-30 Days \n10.32 \n31.90 \n31-60 Days \n7.59 \n7.58 \n31-60 Days \n3.81 \n10.08 \n61-90 Days \n7.86 \n11.99 \n61-90 Days \n4.48 \n11.35 \n91-180 Days \n22.48 \n15.03 \n91-180 Days \n12.25 \n16.56 \n181-360 Days \n19.27 \n11.38 \n181-360 Days \n10.24 \n11.45 \nShort-Term \n78.89 \n86.36 \nShort-Term \n41.10 \n81.33 \nAbove 360 Days \n21.11 \n13.64 \nAbove 360 Days \n58.90 \n18.67 \nTotal \n100 \n100 \nTotal \n100 \n100 \n2.2.5 Capacity Building Programme \nAs part of capacity building efforts, 308 staff of MFBs were certified by the Chartered Institute \nof Bankers of Nigeria (CIBN), on completion of the Microfinance Certification Programme \nduring the review period. Consequently, the total number of certified staff increased to 8,100 \nat end-June 2022, from 7,792 at end-December 2021. \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n48 \n \n \nClassified as Confidential \n2.3 Financial Markets \nThe Bank adopted a contractionary monetary policy stance, in response to the lingering \ninflationary and exchange rate pressures. Thus, the Monetary Policy Committee (MPC) \nincreased the Monetary Policy Rate (MPR) from 11.50 per cent to 13.00 per cent while \nsustaining an asymmetric corridor of +100/-700 basis points for Standing Lending Facility \n(SLF) and Standing Deposit Facility (SDF). The Cash Reserve Ratio (CRR) and Liquidity \nRatio (LR) were also maintained at 27.50 and 30.00 per cent, respectively. \n \n2.3.1 Money Market \nThe major activities that impacted the money market included fiscal flows, conduct of open \nmarket and discount window operations and government securities auctions, foreign \nexchange interventions and cash reserve ratio operations. The open-buy-back (OBB) and \nunsecured interbank call weighted daily average opened at 5.50 and 13.00 per cent on \nJanuary 4 and 11, 2022, respectively, compared with 11.69 per cent and 9.82 per cent on \nJuly 1 and 7, 2021, respectively. The rates peaked at 15.29 and 16.00 per cent for OBB and \nunsecured interbank call on January 17 and 21, 2022, respectively. The rates, thereafter, \nmoderated to 13.63 per cent on June 30, 2022, for OBB, and 14.00 per cent on June 29, \n2022 for unsecured interbank calls. \nThe monthly average OBB and inter-bank call rates closed at 10.89 and 11.10 per cent at \nend-June 2022, compared with 12.59 and 13.42 per cent, respectively, at end-December \n2021. This reflected improved liquidity conditions occasioned by the maturing CBN and NTB \nbills. The OBB weighted daily average rates ranged between 0.57 and 15.29 per cent, \ncompared with a range 3.52 and 21.34 per cent in the second half of 2021. Similarly, the \ninter-bank call rates ranged between 4.50 and 16.00 per cent, compared with 4.00 and 25.00 \nper cent in the second half of 2021. \n \nFigure 2.12 Money Market Rates for First Half of 2022 \n \n \nJAN\nFEB\nMAR\nAPR\nMAY\nJUN\nInter-Bank Call (%)\n14.31\n9.30\n4.50\n8.67\n8.38\n11.10\nOpen-Buy-Back (OBB) (%)\n8.51\n6.10\n6.62\n7.49\n9.39\n10.89\nMPR (%)\n11.50\n11.50\n11.50\n11.50\n11.95\n13.00\nCall NIBOR (%)\n11.05\n8.17\n7.91\n8.40\n10.40\n11.80\n30-day NIBOR\n8.96\n9.24\n8.19\n8.18\n9.51\n8.52\n0.00\n2.00\n4.00\n6.00\n8.00\n10.00\n12.00\n14.00\n16.00\nPer Cent\nFINANCIAL STABILITY REPORT – JUNE 2022 \n49 \n \n \nClassified as Confidential \n2.3.1.1 Developments in Interest Rates \nLending transactions increased by 9.56 per cent to N25,586.61 billion in the review period, \ncompared with N23,354.01 billion in the second half of 2021. The average maximum lending \nrate rose marginally by 0.96 percentage point to 28.47 per cent from, 27.51 per cent in the \nsecond half of 2021. Similarly, the prime lending rate increased by 0.24 percentage point to \n11.91 per cent from, 11.67 per cent in the second half of 2021. The maximum lending rate \nremained above the inflation rate of 18.60 per cent at end-June 2022, while the prime lending \nrate was negative in real terms. \nThe weighted average term-deposit rate dipped by 0.39 percentage point to 3.80 per cent, \nleading to a wider spread between the deposit and lending rates. The spread between the \naverage term deposit and maximum lending rates widened to 26.78 percentage points in the \nfirst half of 2022 from, 25.66 percentage points in the second half of 2021. \nFigure 2.13 Interest Rates Spread \n \n2.3.1.2 Nigerian Treasury Bills \nNigerian Treasury Bills (NTBs) of 91-, 182- and 364-day tenors, totaling N2,415.58 billion, \nwere issued and allotted in the first half of 2022. This indicated a decrease of N54.28 billion \nor 2.20 per cent, compared with the N2,469.86 billion issued in the preceding period. \nSimilarly, total subscription was N4,663.18 billion during the first half of 2022, indicating a \ndecrease of N453.55 billion or 8.86 per cent, compared with N5,116.73 billion recorded in \nthe preceding period. Average marginal rates ranged between 1.7400– 2.5000 per cent for \nthe 91-day, 3.0000 – 3.8900 per cent for the 182-day and 4.000 – 6.4900 per cent for the \n364-day tenors, respectively. \n \n \n \n \n22.00\n23.00\n24.00\n25.00\n26.00\n27.00\n28.00\n29.00\n30.00\n31.00\nPer cent\nInterest rate spread - Max Lending Minus Weighted Av. Savings/Term Rate\nInterest rate spread - Max Lending Minus Weighted Av. Deposit rate(Demand, Saving, Time/Term)\nSavings/Term Rate\nFINANCIAL STABILITY REPORT – JUNE 2022 \n50 \n \n \nClassified as Confidential \nFigure 2.14 Primary Market: Nigerian Treasury Bills Allotment (%) \n \n \nFigure 2.15 Primary Market: Nigerian Treasury Bills Transactions (N'Billion) \n \n \n \nIn the review period, commercial banks took up N1,782.22 billion or 73.78 per cent, \ncompared with N1,696.13 billion or 68.67 per cent in the preceding period. Merchant banks \naccounted for N68.87 billion or 2.85 per cent, as against N89.10 billion or 3.61 per cent, in \nthe preceding period, while mandate and internal funds customers of the CBN took up \nN564.50 billion or 23.37 per cent, compared with N551.38 billion or 22.32 per cent in the \nsecond half of 2021. \nThe NTBs outstanding at end-June 2022 stood at N4,504.80 billion. The holding structure \nindicated that parastatals accounted for N1,212.03 billion (26.91 per cent), commercial banks \nN2,275.12 billion (50.50 per cent), CBN mandate and internal fund customers accounted for \n69%\n4%\n20%\n2%\n5%\nDMBs\nMBs\nMandate & Internal Customers\nCBN Branches\nCBN Take-up\n0\n1\n2\n3\n4\n5\n6\n7\n8\n0\n200\n400\n600\n800\n1000\n1200\n1400\n1600\nJul-21\nJul-21\nAug-21\nAug-21\nAug-21\nAug-21\nSep-21\nSep-21\nSep-21\nSep-21\nSep-21\nOct-21\nOct-21\nOct-21\nOct-21\nNov-21\nNov-21\nNov-21\nNov-21\nDec-21\nDec-21\nDec-21\nDec-21\nDec-21\nJan-22\nJan-22\nJan-22\nJan-22\nFeb-22\nFeb-22\nFeb-22\nFeb-22\nMar-22\nMar-22\nMar-22\nMar-22\nMar-22\nApr-22\nApr-22\nApr-22\nApr-22\nMay-22\nMay-22\nMay-22\nMay-22\nJun-22\nIssues\nSubscription\nRepayment\nAve. Rates %\nFINANCIAL STABILITY REPORT – JUNE 2022 \n51 \n \n \nClassified as Confidential \nN988.26 billion (21.94 per cent), while merchant banks accounted for N29.38 billion (0.65 \nper cent). In the preceding period, the NTBs outstanding amounted to N2,991.87 billion, \ncomprising parastatals N1,566.31 billion (52.35 per cent), commercial banks holdings of \nN728.95 billion (24.36 per cent), CBN mandate and internal fund customers N682.58 billion \n(22.81 per cent) and merchant banks N14.03 billion (0.47 per cent). \nFigure 2.16 NTBs Outstanding at End-June 2022 (Per cent and in N'BN) \n \n \n2.3.1.3 Foreign Exchange Market: US Dollar Sales and Purchases \nThe total foreign exchange sales by the Bank in the first half of 2022 amounted to \nUS$9,229.27 million, compared with US$10,543.52 million in the second half of 2021, \nreflecting a decrease of 12.47 per cent. A breakdown indicated that retail spot sales \namounted to US$622.92 million; invisible trade sales, US$856.81 million; I&E window, \nUS$2,075.45 million; SMEs, US$834.74 million; and Retail forwards sales, US$4,839.35 \nmillion. Furthermore, the Bank purchased US$1,325.43 million, resulting in net sales of \nUS$7,903.83 million. \nForwards contracts, totaling US$7,008.27 million matured, while US$3,846.64 million was \noutstanding at end-June 2022. \n \n \nTable 2:8 Interventions at the Interbank Foreign Exchange Market \nFX Transactions \nEnd-Dec 21 \nEnd-June 22 \n \nSales \nPurchases \nSales \nPurchases \n \n($ million) \n($ million) \n($ million) \n($ million) \n1212.03, 27%\n2275.12, 50%\n988.26, 22%\n29.38, 1%\nParastatals\nCommercial banks\nCBN\nMerchant banks\nFINANCIAL STABILITY REPORT – JUNE 2022 \n52 \n \n \nClassified as Confidential \nSMIS Spot \n615.07 \n622.92 \n \nInvisible Trade \n1,041.00 \n \n856.81 \n \nSME \n793.13 \n834.74 \n \nI&E \n3,316.91 \n2,075.45 \n \nSMIS Forwards \n4,777.42 \n4,839.35 \n \nIOCs \n807.65 \n \n1,325.43 \nTotal \n10,543.53 \n807.65 \n9,229.27 \n1,325.43 \n \n2.3.1.4 Exchange Rate Movement at the Investors’ & Exporters’ Window \nThe rate at the I&E window opened at N417.00/US$ on January 4, 2022 and closed at \nN414.00/US$ at end-June, 2022, reflecting 0.72 per cent appreciation. \n \nFigure 2.17 Investors’ & Exporters’ Rate \n \n412.00\n413.00\n414.00\n415.00\n416.00\n417.00\n418.00\nJan-22\nFeb-22\nMar-22\nApr-22\nMay-22\nJun-22\n(N/US$)\nFINANCIAL STABILITY REPORT – JUNE 2022 \n53 \n \n \nClassified as Confidential \n2.3.1.5 Over-the-Counter Foreign Exchange Futures \nThe notional amount of over-the-counter foreign exchange (OTC FX) futures executed, \nmatured and outstanding during the review period stood at US$1,437.90 million, \nUS$3,001.44 million, and US$3,768.37 million, respectively, at end-June 2022, compared \nwith US$3,577.39 million, US$2,496.85 million and US$5,331.89 million at end-December \n2021. \n \n2.3.1.6 Naira/Yuan Bilateral Currency Swap Agreement \nA total of CNY1,263.51 million was sold at end-June 2022, compared with CNY 2,093.51 \nmillion sold in the second half of 2021. A total of CNY7,043.57 million was sold from inception \nto end-June 2022. \n2.3.2 Capital Market \nThe Nigerian capital market was bullish as evidenced by the positive performance in the \nequities, debt and Exchange Traded Fund (ETF) segments. Consequently, aggregate \nMarket Capitalisation increased by 21.31 per cent to close at N50.18 trillion, at end-June \n2022, from N43.12 trillion at end-December 2021. The equities and debt segments increased \nby 25.29 and 25.31 per cent to N27.94 trillion and N22.23 trillion respectively, and the ETF \ncomponent appreciated by 2.05 per cent to close at N7.45 billion. \nTable 2:9 NGX ASI, Equity and Debt Market Capitalisation \n \nEnd-\nDecember \n2020 \nEnd-June \n2021 \nEnd-\nDecember \n2021 \nEnd-June \n2022 \n% Change \nNGX ASI \n40,270.72 \n37,907.28 \n42,716.44 \n51,817.59 \n21.31 \nAggregate Market Cap (N’Trn) \n39.73 \n38.19 \n43.12 \n50.18 \n16.37 \nEquity Market Cap (N’Trn) \n21.06 \n19.76 \n22.30 \n27.94 \n25.29 \nDebt Market Cap (N’Trn) \n17.50 \n17.39 \n17.74 \n22.23 \n25.31 \n Of which \nGovernment Debt \n \n16.67 \n19.02 \n21.34 \n12.20 \n Corporate Debt \n0.51 \n0.72 \n0.72 \n0.74 \n2.92 \nExchange Traded Funds Market \nCap (N’ Bn) \n20.00 \n12.20 \n7.30 \n7.45 \n2.05 \nSource: NGX \nIn the first half of 2022, 16 new issues valued ₦534.50 billion were approved and listed, \ncomprising six equity issues (₦124.10 billion) and 10 corporate bonds (₦410.40 billion), \ncompared with 9 issues which comprised two equity issues valued (₦7.44 billion) and 7 \ncorporate bonds (₦291.65 billion) in the second half of 2021 (table 2.10). The six equity issues \nincluded one Initial Public Offering (IPO), three rights issues and two public offers. There were \nno supranational bonds issued in the review period. However, there were 17 FGN bonds issued \nat end-June 2022, compared with 15 FGN bonds issued in the preceding period reflecting a \nreduction of 13.33 per cent \nFINANCIAL STABILITY REPORT – JUNE 2022 \n54 \n \n \nClassified as Confidential \n \nTable 2:10 New Issues \nType \nNumber of Issues \nValue of Issues (N’Bn) \n \nDec-21 \nJun-22 Change \n% \nDec-21 \nJun-22 Change \n% \nIPO \n- \n1 \n \n- \n111.8 \n- \nPublic Offer/Offer for Sale \n- \n2 \n- \n- \n9.9 \n- \nPrivate Placement \n1 \n- \n- \n3.3 \n- \nRights \n1 \n3 \n200.00 \n4.14 \n2.5 \n-39.61 \nTotal Equities \n2 \n6 \n200.00 \n7.44 \n124.2 \n1569.35 \nCorporate Bonds \n7 \n10 \n42.86 \n291.65 \n410.4 \n40.72 \nSub-national Bonds \n- \n- \n \n- \n- \n \nFGN Bonds \n17 \n15 \n-11.76 \n1,192.01 \n1,555.70 \n30.51 \nEurobond (415.58/$) \n0 \n1 \n \n- \n519.475 \n \nTotal Debt \n24 \n26 \n8.33 1,483.66 2,485.58 \n67.53 \nTotal (Equities & Debt) \n26 \n32 \n23.08 1,491.10 2,609.78 \n75.02 \nSource: SEC, DMO \n \n2.3.2.1 Equities Market \n2.3.2.1.1 Nigerian Exchange Limited \nThe Nigerian Exchange Limited (NGX) All Share Index (ASI) and equities market \ncapitalisation experienced a bullish trend in the first half of 2022. The NGX ASI rose to \n51,817.59 points at end-June 2022, from 42,716.44 points at end-December 2021, attaining \na level of 53,098.46 points on May 13, 2022, reflecting a 14-year high since 2008. The \nimpressive performance reflected improved earnings, dividends reinvestment and the roll out \nof two exchange traded derivatives, the NGX 30 Index Futures and NGX Pension Index \nFutures. The NGX equities market capitalisation closed at N27.94 trillion, indicating an \nincrease of 25.00 per cent compared with N22.3 trillion at end-December 2021. \nGenerally, sectoral performance was impressive during the review period as 14 out of 17 \nindices closed the half year on a positive note. \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n55 \n \n \nClassified as Confidential \n \n \nTable 2:11 Nigerian Exchange Limited Indices \nIndex \nDec-20 \nJun-21 \nH1 YTD \nDec-21 \nJun-22 \n \nChange \n% \nNGX 30 \n1,640.11 \n1,594.87 \n-2.76 \n1,722.30 \n1,887.62 \n9.60 \nNGX AFR Div. Yield \n2,017.91 \n2,329.50 \n15.44 \n2559.43 \n3,191.06 \n24.68 \nNGX ASeM \n729.87 \n703.94 \n-3.55 \n670.65 \n658.99 \n-1.74 \nNGX Banking \n393.02 \n366.47 \n-6.76 \n406.07 \n397.79 \n-2.04 \nNGX CG \n1,220.61 \n1,199.29 \n-1.75 \n1,278.00 \n1,319.70 \n3.26 \nNGX Consumer Goods \n573.35 \n600.88 \n4.80 \n589.28 \n623.99 \n5.89 \nNGX Growth \n991.89 \n1,028.75 \n3.72 \n1,269.66 \n1,487.20 \n17.13 \nNGX Industrial \n2,052.33 \n1,887.76 \n-8.02 \n2,008.30 \n2,152.24 \n7.17 \nNGX Insurance \n189.50 \n203.84 \n7.57 \n198.11 \n178.33 \n-9.98 \nNGX Lotus Islamic \n2,846.19 \n2,760.73 \n-3.00 \n3,009.51 \n3,251.25 \n8.03 \nNGX Main-Board \n1,725.91 \n1,600.77 \n-7.25 \n1,748.37 \n2,274.79 \n30.11 \nNGX MERI GROWTH \n1,654.15 \n1,789.98 \n8.21 \n1,805.02 \n2,364.94 \n31.02 \nNGX MERI VALUE \n1,851.31 \n1,801.66 \n-2.68 \n2,134.95 \n2,167.09 \n1.51 \nNGX Oil/Gas \n226.20 \n313.08 \n38.41 \n345.01 \n545.34 \n58.06 \nNGX Pension \n1,388.64 \n1,479.77 \n6.56 \n1,624.09 \n1,823.58 \n12.28 \nNGX Premium \n3,470.77 \n3,527.67 \n1.64 \n4,167.78 \n4,924.13 \n18.15 \nNGX-AFR Bank Value \n1,113.18 \n1,057.09 \n-5.04 \n1,038.82 \n925.95 \n-10.87 \nSource: NGX Reports \nForeign Portfolio Investment (FPI) inflows totalled N120.51 billion, while divestments \n(outflows) stood at N122.97 billion, reflecting a net outflow of N2.46 billion in the first half of \n2022. In comparison, inflows in the second half of 2021 amounted to N99.64 billion, while \ndivestments stood at N112.90 billion, reflecting a net outflow of N13.26 billion. \n \nForeign Portfolio flows accounted for 14.65 per cent of total equity transactions in the review \nperiod, compared with 24.58 per cent in the preceding period. Domestic transactions \naccounted for the balance of 85.35 per cent in the equity market, compared with 75.42 per \ncent in the preceding period. The net capital outflow experienced during the period reflected \nthe impact of interest rate hikes in advanced economies. Despite the FPI net outflows, the \nmarket was resilient owing to increased participation of domestic investors following low \ninterest rates in the money market and government securities, as well as impressive \nperformance by listed companies and expected dividend payout. \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n56 \n \n \nClassified as Confidential \n \nTable 2:12 Domestic and Foreign Portfolio Participation in Equities Trading \nPeriod \nH1 2021 \nH2 2021 \nH1 2022 \n% Change \nTotal Equities Transactions N'Billion \n1,034.42 \n864.81 \n1,662.05 \n 92.19 \nForeign Portfolio Transactions N'Billion 221.96 \n212.54 \n243.48 \n 14.56 \nForeign % \n21.46 \n24.58 \n14.65 \n-40.40 \nDomestic Transactions N'Billion \n812.46 \n652.27 \n1,418.54 \n 117.48 \nDomestic % \n78.54 \n75.42 \n85.35 \n 13.17 \nForeign Inflow N'Billion \n105.24 \n99.64 \n120.51 \n 20.95 \nForeign Outflow N'Billion \n116.72 \n112.90 \n122.97 \n 8.92 \nNSE ASI \n37,907.28 \n42,716.44 \n51,817.59 \n 21.31 \nMarket Capitalization \n19,760.39 \n22,296.84 \n27,935.36 \n 25.29 \n \n2.3.2.1.2 National Association of Securities Dealers \nThe National Association of Securities Dealers (NASD) Unlisted Securities Index appreciated \nby 2.74 per cent, to 763.24 points at end-June 2022, from 742.85 points at end-December \n2021. Similarly, the market capitalisation increased by 59.72 per cent to N1,004.74 billion at \nend-June 2022, from N629.03 billion at end-December 2021. Further analysis showed that \n3,225 shares worth N21.30 billion were traded in the first half of 2022, compared with 12,483 \nshares valued N23.69 billion traded in the second half of 2021, reflecting a decrease of \n599.75 and 10.09 per cent, respectively, compared with the level in the preceding period. \nTable 2:13 National Association of Securities Dealers Transactions \n \n2020 \nTotal \nH1 2021 \nH2 2021 \nH1 2022 \nChange \n% \nUnlisted Index (Points) \n733.00 \n754.88 \n742.85 \n763.24 \n1.10 \nMarket Cap (N’Bn) \n525.94 \n536.58 \n629.03 \n1,004.74 \n87.25 \nVolume(N'000) \n7,930 \n466,360 \n12,483 \n3,225 \n599.75 \nValue (N'000) \n12,676 \n9,151 \n23,693 \n21,304.58 \n134.23 \nSource: NASD Reports \n2.3.2.2 Commodities Market \nCommodities exchanges are critical for enabling investment diversification, risk \nmanagement, price discovery and transactional efficiency. The Exchanges provide facilities, \nregulations, and standards for orderly, efficient and transparent trading of designated \ncommodities. At end-June 2022, five commodity exchanges were in operation, trading mostly \nin agricultural produce. \n2.3.2.2.1 AFEX Commodities Exchange \nThe overall value and volume of commodity transactions at the AFEX Commodities \nExchange increased by 97.42 per cent to N88,681.26 billion at end-June 2022, from \nFINANCIAL STABILITY REPORT – JUNE 2022 \n57 \n \n \nClassified as Confidential \nN44,920.15 billion at end-December 2021. The value of cashews traded increased \nsignificantly by 256.98 per cent, while sorghum and sesame also increased by 586.53 and \n649.39 per cent, respectively. The values of maize and cocoa traded increased by 72.02 and \n47.70 per cent, respectively. \n \nTable 2:14 Transactions on AFEX (N’M) \nProduct \nCashew \nGinger \nMaize \nPaddy \nRice \nSoybeans \nCocoa \nSesame \nSorghum \nGrand Total \nH1 \n2021 \n2,037.15 1,165.41 \n64,336.38 \n858.65 \n1,735.07 \n2,121.32 \n384.12 \n5,018.19 \n77,656.37 \nH2 \n2021 \n480.42 \n445.71 \n35,676.73 \n1,263.95 \n2,722.30 \n3,405.04 \n429.84 \n496.35 \n44,920.15 \nH1 \n2022 \n1,710.21 1,496.95 \n61,372.18 \n3,532.79 \n8,911.11 \n5,029.26 3,221.16 \n3,407.59 \n88,681.26 \n% \nChange \n256.98 \n235.86 \n72.02 \n179.50 \n227.34 \n47.70 \n649.39 \n586.53 \n97.42 \n \nTable 2:15 Volume and Value of Transactions on AFEX (N’M) \n2021H1 \n2021H2 \n2022H1 \nTotal Volume \n(kg) \n417,686,542 \n184,960,516 \n311,276,230 \nValue(N’M) \n77,656.37 \n44,920.15 \n88,681.26 \n \n2.3.2.2.2 Gezawa Commodity Market and Exchange \nGezawa Commodity Market and Exchange Limited (GCMX) traded a total of 244,930 metric \ntonnes of maize and soybeans valued ₦55.09 million in the review period. \nTable 2:16 Gezawa Commodity Market and Exchange (GCMX) Transactions \nPRODUCT \nMAIZE \nSOYBEANS \nGRAND \nTOTAL \n(N’M) \nTOTAL \nVOLUME \n(KG) \n2021H2 \n19,360.00 \n- \n19,360.00 \n82,400 \n2022H1 \n45,045.65 \n10,050.00 \n55,095.65 \n244,930 \n \n2.3.2.2.3 Prime Commodity Exchange \nPrime Commodity Exchange Limited (PCX) in the review period reported no trading \nactivities. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n58 \n \n \nClassified as Confidential \n2.3.2.2.4 Nigeria Commodity Exchange \nThere was no trading on the Nigeria Commodity Exchange (NCX) during the review period. \nHowever, the Bank’s efforts in repositioning the NCX to a world-class commodity exchange \nwas sustained. \n \n2.3.2.2.5 Lagos Commodities and Futures Exchange \nTrading activities on the Lagos Commodities and Futures Exchange (LCFE) commenced in \nthe first half of 2021. However, there were no trades recorded in the second half of 2021 and \nfirst half of 2022. At end-June 2021, a total of 556 metric tonnes valued ₦98.26 million was \ntraded in 36 deals. \nTable 2:17 Lagos Commodities and Futures Exchange (LCFE) Transactions (N’M) \nProduct \nMaize \nPaddy Rice \nSoybean \nGrand Total \nTotal Volume \n(Kg) \nH1 2021 \n41.46 \n49.02 \n \n7.77 \n \n98.26 \n556,000 \nH2 2021 \n- \n- \n- \n- \n- \nH1 2022 \n- \n- \n- \n- \n- \n \n2.3.2.3 Bonds \nTotal bonds outstanding at end-June 2022 stood at N16.72 trillion, reflecting an increase of \n1.13 per cent, compared with N20.99 trillion recorded at end-December 2021. This \ncomprised FGN Bonds (N15.19 trillion or 90.87 per cent), FGN Saving Bonds (N20.87 billion \nor 0.13 per cent), FGN Sukuk (N612.56 billion or 3.66 per cent), FGN Green Bonds (N25.69 \nbillion or 0.15 per cent), FRN Treasury Bonds (N75.99 billion or 0.46 per cent), FGN \nPromissory Notes (N475.87 billion or 2.85 per cent), Sub-National Bonds (N65.96 billion or \n0.39 per cent), and Corporate Bonds (N248.89 billion or 1.49 per cent). \n \n2.3.2.4 FGN Bonds \nFGN Bonds new issues and re-openings of N1,125.00 billion were offered during the review \nperiod, indicating an increase of 32.35 per cent above N850.00 billion auctioned in the \nsecond half of 2021. The public subscription and sales decreased to N2,852.56 billion and \nN1,805.45 billion in the first half of 2022, compared with N1,630.92 billion and N1,192.01 \nbillion in the second half of 2021, respectively. \nAlthough the yield curve for the review period was normal, however, there was a downward \nshift compared with the preceding period, which reflected improved investors’ sentiments. \n \nFigure 2.18 Yield Curve \nFINANCIAL STABILITY REPORT – JUNE 2022 \n59 \n \n \nClassified as Confidential \n \nSource: FMDQ-OTC Plc \n \n2.3.2.4.1 FGN Savings Bonds \nA total of ₦7.46 billion was allotted during the review period, indicating an increase of ₦3.92 \nbillion or 111.00 per cent, compared with ₦3.53 billion at end-December 2021. The increase \nwas attributed to a higher subscription from targeted investors. The range of coupon rates \nincreased to 7.2200 to 9.4700 per cent and 8.2200 to 10.4700 per cent for the 2- and 3-year \ntenors, respectively, compared with 7.3220 to 8.8640 per cent and 7.8990 to 9.8640 per cent \nfor the 2- and 3-year tenors respectively, in the preceding period. Consequently, total value \nof FGN Savings Bonds outstanding at end-June 2022 was ₦20.87 billion. \n \n2.3.2.4.2 Green Bonds \nThere was no issue of Green Bonds and six (6) transactions during the review period \ncompared with no transactions in the preceding period. The value of the transactions was \nN1.69 billion. Total Green bonds outstanding at end-June 2022 was N25.69 billion. \n \n2.3.2.4.3 FGN Sukuk Bond \nThere was no issue of FGN Sukuk Bond during the review period, compared with N250 billion \nissued in the preceding period. Consequently, the total outstanding stood at N362.56 billion \nat end-June 2022. Also, Sukuk transactions on the FMDQ exchange were valued at N76.81 \nbillion, in contrast to N115.37 billion traded in the preceding half year. \n \n \n2.00%\n7.00%\n12.00%\n17.00%\n22.00%\n0.00\n5.00\n10.00\n15.00\n20.00\n25.00\n30.00\nYield %\nTime to Maturity\n30/06/2021\n30/06/2022\n31/12/2021\nFINANCIAL STABILITY REPORT – JUNE 2022 \n60 \n \n \nClassified as Confidential \n2.3.2.4.4 Sub-National Bonds \nDuring the review period, one sub-national bond worth N27.19 billion was issued, six state \nbonds amounting to N8.40 billion matured, while N113.34 billion was redeemed by five \nstates. The total outstanding balance stood at N65.96 billion at end-June 2022, compared \nwith N160.51 billion at end-December 2021. \nIn the preceding period, three sub-national bonds amounting to N3.08 billion matured, while \nnine states redeemed bonds amounting to N40.15 billion. \nDuring the review period, total value of transactions in Sub-national bonds on the FMDQ \nexchange amounted to N0.6 billion from N0.29 billion in the preceding half year, representing \nan increase of 107 per cent. However, the total number of deals decreased by 29 per cent \nto 5 from 7. \n \n2.3.2.4.5 Corporate Bonds \nCorporate bonds worth N811.45 billion were outstanding at end-June 2022, compared with \nN767.84 billion at end-December 2021. Corporate Bonds worth N185.80 billion listed, while \nN1.00 billion matured and N658.69 billion were redeemed in the review period. \nIn addition, total value of transactions in corporate bonds on the FMDQ exchange amounted \nto N258 billion up from N27.04 billion in the preceding half year, indicating an increase of \n852.85 per cent. Also, the total number of deals increased by 146.00 per cent to 96 from 12. \n \n2.3.2.4.6 Bonds - Secondary Market \nThe S&P FMDQ Sovereign Bond Index appreciated by 9.00 per cent to 621.69 points at end-\nJune 2022, from 570.38 points at the end of the preceding period. The total debt market \ncapitalisation on the FMDQ Securities Limited (FMDQ) was ₦28.07 trillion at end-June 2022, \nan increase of 7.10 per cent, compared with ₦26.21 trillion in the second half of 2021. \n \nTable 2:18 S&P/FMDQ Sovereign Bond Index \nS&P/FMDQ Nigeria \nSovereign Bond Index \nIndex \nPoints \n% \nChange \nDebt Market \nCapitalisation ₦’Trn) \n% Change \n2021 H1 \n532.98 \n \n24.18 \n \n2021 H2 \n570.38 \n7.02 \n26.21 \n8.40 \n2022 H1 \n621.69 \n9.00 \n28.07 \n7.10 \nSource: FMDQ \nDuring the review period, two new participants were admitted on the Exchange. The value of \nsecurities admitted was N175.05 billion and the value of securities settled was N16.16 billion, \nwhich were mainly corporate bonds and commercial paper. \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n61 \n \n \nClassified as Confidential \n2.3.2.5 Mutual Funds \n \nThe Net Asset Value (NAV) of the Collective Investment Schemes (CIS) rose by 15.45 per \ncent to N1.50 trillion at end-June 2022, compared to N1.30 trillion at end-December 2021, \nreflecting increased investment in the review period. \nTable 2:19 CIS Funds \n \nCIS Net Asset Value (N’Trn) \nPercentage change \nover preceding half \nyear \n(%) \nH2 2020 \n1.49 \n \nH1 2021 \n1.25 \n-15.99 \nH2 2021 \n1.30 \n4.08 \nH1 2022 \n1.50 \n15.45 \n \n \n \n \n \n2.3.2.6 Other Key Developments in the Capital Market \nDuring the review period: \n \ni. \nThe Securities and Exchange Commission (SEC) \n• mandated \nthe \napplication \nof \nRule 95 \non all \nPrivately Managed \nDiscretionary/Non-discretionary portfolios to ensure the protection of investor \nfunds; \n• provided guidance on Rule 465, which amended the contents of Trust Deeds \nregarding the maximum allowable total expenses of a Collective Investment \nSchemes (CIS) from 5.00 per cent to 3.50 per cent of Net Asset Value; and \n• commenced the implementation of 100 per cent custody requirement in the \nCIS to protect investors. Consequently, all clients’ assets are to be held under \nindependent custodial agreements in custodial banks. \nii. \nThe NGX introduced two exchange traded derivatives, the NGX 30 Index Futures and \nNGX Pension Index Futures during the review period. \n \n \n2.4 Real Sector Interventions \nThe Bank’s interventions continued to facilitate the flow of credit to projects with potential to \ncatalyse and transform the productive base of the economy. The interventions are designed \nto stimulate private sector investment to priority sectors, promote the generation of \nsustainable jobs, support households’ income and consumption, boost non-oil exports and \nsustain economic growth. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n62 \n \n \nClassified as Confidential \n2.4.1 Agricultural Policy Support \n2.4.1.1 Agricultural Credit Guarantee Scheme \nIn the first half of 2022, a total of 13,194 loans, valued ₦3.22 billion, were guaranteed under \nthe Scheme, compared with 21,872 loans, valued ₦3.62 billion in the preceding period. This \nindicated decreases of 39.7 and 11.2 per cent in number and value of loans guaranteed, \nrespectively. A total of 11,773 loans, valued ₦2.14 billion, were repaid at end-June 2022, \ncompared with 13,349 loans, valued ₦2.01 billion, repaid at end-December 2021, reflecting \na decrease of 11.81 per cent in number and an increase of 6.47 per cent in value of repaid \nloans. \n2.4.1.2 Commercial Agriculture Credit Scheme \nThe sum of ₦28.30 billion was disbursed in the first half of 2022, reflecting an increase of \n113.26 per cent, compared with ₦13.27 billion in the second half of 2021. A total of ₦32.86 \nbillion was repaid in the review period, indicating a decrease of 31.51 per cent, compared \nwith ₦48.14 billion in the second half of 2021. \n2.4.1.3 Anchor Borrowers’ Programme \nThe sum of ₦35.52 billion was disbursed in the first half of 2022 to 28,876 smallholder \nfarmers for production of major agricultural commodities, compared with ₦246.67 billion \ndisbursed to 679,776 farmers in the preceding period. A total of 128,579 hectares of land \nwere cultivated, compared with 1,123,684 hectares in the second half of 2021, reflecting a \ndecrease of 88.56 per cent. The sum of ₦42.99 billion was repaid in the review period, \ncompared with ₦196.48 billion in the preceding period, reflecting a decrease of 78.12 per \ncent. \n2.4.1.4 Accelerated Agriculture Development Scheme \nThe sum of ₦1.50 billion was disbursed in the first half of 2022, compared with ₦0.04 billion \nin the second half of 2021. Repayments under the Scheme amounted to ₦4.37 billion in the \nreview period, compared with ₦5.31 billion in the preceding period. \n \n2.4.1.5 Paddy Aggregation Scheme \nThe sum of ₦6.20 billion was released in the review period, while no disbursement was made \nin the second half of 2021. There was no repayment as it was not due in the period under \nreview, while the sum of ₦4.66 billion was repaid in the second half of 2021. \n2.4.1.6 National Food Security Programme \nThere were no disbursements in the review and preceding periods under the Programme. \nHowever, repayments of ₦2.03 billion were made in the first half of 2022, compared with \n₦2.30 billion in the second half of 2021, indicating a decrease of 11.74 per cent. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n63 \n \n \nClassified as Confidential \n2.4.2 Small and Medium Enterprises & Industrial Policy Support \n2.4.2.1 Micro, Small and Medium Enterprises Development Fund \nDuring the review period, there was no disbursement, compared with ₦0.69 billion disbursed \nin the second half of 2021. A total of ₦2.52 billion was repaid in the review period, compared \nwith ₦2.81 billion in the second half of 2021, reflecting a decrease of 10.32 per cent. \n2.4.2.2 Agribusiness/Small and Medium Enterprises Investment Scheme \nIn the review period, the sum of ₦1.60 billion was disbursed for 2,720 projects, compared \nwith ₦22.92 billion disbursed for 8,538 projects in the second half of 2021. This indicated \ndecreases of 93.02 and 68.14 per cent in value and number of projects, respectively. \nRepayments in the review period amounted to ₦7.65 billion, compared with ₦1.16 billion in \nthe second half of 2021, indicating an increase of 559.48 per cent. \n2.4.2.3 Creative Industry Financing Initiative \nThere was no disbursement in the first half of 2022, compared with ₦0.26 billion disbursed \nfor 31 projects in the second half of 2021. The sum of ₦0.28 billion was repaid in the period \nunder review, compared with ₦0.25 billion repaid in the second half of 2021, reflecting an \nincrease of 11.98 per cent. \n2.4.2.4 Targeted Credit Facility \nDuring the review period, the sum of ₦24.37 billion was disbursed to 50,302 beneficiaries, \ncompared with ₦69.90 billion disbursed to 136,532 beneficiaries in the second half of 2021, \nreflecting decreases of 65.14 and 63.16 per cent in value and number of beneficiaries, \nrespectively. There was no repayment in the review period. \n2.4.2.5 Nigeria Youth Investment Fund \nDuring the period under review, there was no disbursement, compared with ₦0.88 billion \ndisbursed in the second half of 2021. The sum of ₦0.28 billion was repaid in the period under \nreview, compared with ₦2.61 billion in the preceding period. \n2.4.2.6 Tertiary Institutions Entrepreneurship Scheme \nThe sum of ₦0.26 billion was disbursed to 53 beneficiaries, compared with N0.03 billion \ndisbursed to 6 beneficiaries in the preceding period, indicating an increase of 806.42 per \ncent. There was no repayment as all the facilities were still under moratorium. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n64 \n \n \nClassified as Confidential \n2.4.3 Real Sector Policy Support \n2.4.3.1 Real Sector Support Facility \nThe Real Sector Support Facility (RSSF) had been discontinued since 2018. However, the \nsum of ₦21.65 billion was repaid from outstanding disbursements, compared with ₦6.62 \nbillion in the preceding period. \n \n2.4.3.2 RSSF - Differentiated Cash Reserve Requirement \nThe sum of ₦210.29 billion was disbursed to 34 projects in the first half of 2022, compared \nwith ₦476.30 billion disbursed to 39 projects in the second half of 2021, reflecting decreases \nof 55.85 and 12.82 per cent in terms of total amount disbursed and number of projects \nfinanced, respectively. The sum of ₦18.49 billion was repaid in the review period, compared \nwith ₦0.08 billion in the preceding period. \n2.4.3.3 COVID-19 Intervention for the Manufacturing Sector \nIn the review period, the sum of ₦413.81 billion was disbursed for 50 projects, compared \nwith no disbursement in the second half of 2021. The sum of ₦12.01 billion was repaid, while \nno repayment was made in the preceding period as the facilities were then under moratorium. \n2.4.3.4 Healthcare Sector Intervention Facility \nThe sum of ₦17.21 billion was disbursed for 11 projects in the first half of 2022, compared \nwith ₦11.05 billion in the second half of 2021, representing 55.75 per cent increase. The sum \nof ₦6.12 billion was repaid, while no repayment was made in the preceding period, as most \nfacilities were then under moratorium. \n2.4.3.5 Healthcare Sector Research and Development Intervention (Grant) Scheme \nThe sum of ₦0.02 billion was released in the first half of 2022, compared with ₦0.03 billion \nin the second half of 2021, reflecting a decrease of 46.36 per cent. \n2.4.3.6 Textile Sector Intervention Facility \nThere was no disbursement in the review period, as against the sum of ₦0.90 billion was \ndisbursed to two projects in the second half of 2021. The sum of ₦8.62 billion was repaid in \nthe review period, compared with ₦3.27 billion in the second half of 2021. \n2.4.3.7 CBN-BOI Industrial Facility \nIn the first half of 2022, ₦50.00 billion was released under this intervention to BOI, compared \nwith zero disbursement in the second half of 2021. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n65 \n \n \nClassified as Confidential \n2.4.3.8 Presidential Fertilizer Initiative \nThere were no disbursements in both the review and preceding periods. However, the sum \nof ₦3.00 billion was repaid in the first half of 2022, compared with ₦2.75 billion in the second \nhalf of 2021. \n \n2.4.3.9 Intervention Facility for the National Gas Expansion Programme \nIn the review period, the sum of ₦26.00 billion was disbursed for four projects, compared \nwith ₦24.00 billion for four projects in the second half of 2021. There was no repayment, as \nthe facilities were under moratorium. \n \n2.4.3.10 \n Shared Agent Network Expansion Facility \nThere was no disbursement under the Facility in both the review and preceding periods. The \nsum of ₦0.37 billion was repaid in the first half of 2022, compared with ₦0.14 billion in the \nsecond half of 2021. \n \n2.5 Export Policy Support \n2.5.1 Non-oil Export Stimulation Facility \nThere was no disbursement in the period under review, compared with ₦1.75 billion in the \nsecond half of 2021. The sum of ₦2.00 billion was repaid, compared with ₦3.88 billion in the \npreceding period. \n2.5.2 Export Facilitation Initiative \nThe sum of ₦36.00 billion was disbursed for five projects in the review period, while there \nwas no disbursement in the second half of 2021. There was no repayment as the facilities \nwere under moratorium. \n \n2.6 Energy Policy Support \n2.6.1 Power and Airline Intervention Fund \nThe review period recorded no disbursement, as against ₦0.99 billion in the preceding \nperiod. However, the sum of ₦15.91 billion was repaid, compared with ₦6.56 billion in the \nsecond half of 2021. \n \n2.6.2 Nigerian Electricity Market Stabilisation Facility \nThe sum of ₦34.36 billion was disbursed in the review period, under Phase 2 of the Nigerian \nElectricity Market Stabilisation Facility (NEMSF), compared with ₦96.71 billion in the second \nhalf of 2021. No repayment was made as the facilities were under moratorium. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n66 \n \n \nClassified as Confidential \nMeanwhile, the sum of ₦10.91 billion, was repaid in the first half of 2022, under Phase 1 of \nthe NEMSF, compared with ₦14.53 billion in the second half of 2021. \n2.6.3 Nigeria Bulk Electricity Trading – Payment Assurance Facility \nDuring the review period, ₦26.93 billion was disbursed, compared with ₦301.35 billion to \nNigeria Bulk Electricity Trading Plc (NBET Plc), through BOI in the second half of 2021, \nreflecting a decrease of 91.06 per cent. The sum of ₦322.87 billion was repaid in the first \nhalf of 2022, while there was no repayment in the preceding period. \n2.6.4 National Mass Metering Programme \nIn the first half of 2022, the sum of ₦199.90 million was disbursed, compared with ₦11.79 \nbillion in the second half of 2021, reflecting a decrease of 98.31 per cent. There was no \nrepayment as the facilities were under moratorium. \n2.7 Institutional Support and Financial Inclusion \n2.7.1 National Collateral Registry \nThe performance indicators of the National Collateral Registry (NCR) trended downwards, \nindicating decreased lending against movable assets offered as collateral by individuals and \nMSME borrowers in the review period. \nA total of 44 financial institutions registered 37,444 financing statements valued ₦221.20 \nbillion and US$19.80 million in respect of 38,744 borrowers, compared with 52,085 financing \nstatements valued ₦6.87 trillion and US$827.50 million in favour of 53,291 borrowers \nrecorded in the second half of 2021. In addition, a total of 63,992 searches were conducted \nin the review period, compared with 67,215 in the second half of 2021, reflecting a decrease \nof 4.79 per cent. \nTable 2:20 transactions on the National Collateral Registry Portal \nDebtor \nType \nNumber of \nFinancing \nStatements \nNumber of \nBorrowers \nCurrency \nValue of Financing Statements \n(‘ billion) \n \nH2 \n2021 \nH1 \n2022 \nH2 \n2021 \nH1 \n2022 \n \nH2 2021 \nH1 2022 \nIndividual \n50,245 \n34,061 \n51,154 \n34,919 \nNGN \n6,712.69 \n114.62 \nLarge \nBusiness \n194 \n201 \n249 \n294 \nNGN \n130.13 \n25.70 \nUSD \n0.76 \n0.004 \nEUR \n0.00 \n0.00011 \nMedium \nBusiness \n919 \n1,669 \n1,047 \n1,884 \nNGN \n21.63 \n61.99 \nUSD \n0.07 \n0.02 \nMicro \nBusiness \n58 \n159 \n70 \n172 \nNGN \n1.11 \n1.51 \nUSD \n0.0005 \n0.00 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n67 \n \n \nClassified as Confidential \nSmall \nBusiness \n669 \n1,354 \n771 \n1,475 \nNGN \n10.90 \n17.39 \nTotal \n52,085 \n37,444 \n53,291 \n38,744 \nNGN \n6,876.46 \n221.20 \nUSD \n0.83 \n0.03 \nEUR \n0.00 \n0.00011 \nFurther analysis showed that a total of 17,986 or 48.03 per cent of the total financing \nstatements were in respect of 18,360 women and women-owned enterprises, representing \n47.39 per cent of the total number of borrowers. \n \nTable 2:21 Women and Women-owned Businesses transactions on the National Collateral Registry \nPortal \n \nFrom inception to end-June 2022, a total of 139 financial institutions had registered 248,036 \nfinancing statements valued ₦15,358.44 billion, US$2.43 billion, €0.11 billion, and \n£27,352.00. An analysis of these figures showed that 105,296, representing 42.45 per cent \nof the total financing statements valued ₦267.37 billion and US$4.62 million were registered \nin respect of women and women-owned enterprises by 98 financial institutions. \n2.8 Financial Inclusion \nThe Bank sustained its efforts towards economic recovery post Covid-19 era, by embarking \non initiatives towards building a more inclusive, equitable and resilient economy. In the \nreview period, some bank branches remained closed to customers as a result of the Covid-\n19 containment measures. However, most bank branches and other financial service access \npoints continued to provide in-person services to customers. Similarly, the delivery of \nDebtor Type \nNumber of \nFinancing \nStatements \nNumber of \nwomen and \nWomen-owned \nEnterprises \nCurrency \nValue of Financing Statements \n(‘ billions) \n \nH2 \n2021 \nH1 \n2022 \nH2 \n2021 \nH1 \n2022 \n \nH2-2021 \nH1-2022 \nIndividual \n22,421 \n17,561 \n19,631 \n17,832 \nNGN \n30.85 \n59.33 \nLarge \nBusiness \n22 \n12 \n28 \n32 \nNGN \n0.37 \n0.22 \nMedium \nBusiness \n211 \n260 \n214 \n302 \nNGN \n1.74 \n3.50 \nMicro \nBusiness \n5 \n17 \n4 \n23 \nNGN \n0.06 \n0.05 \nSmall \nBusiness \n114 \n136 \n131 \n171 \nNGN \n1.10 \n1.46 \nTotal \n22,773 \n17,986 \n20,008 \n18,360 \nNGN \n34.12 \n64.56 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n68 \n \n \nClassified as Confidential \nservices through alternative channels, such as ATMs, PoS, Agent locations and mobile \napplications, was maintained. \nUsing the Bank Verification Number (BVN) count as an estimate of the number of new \nentrants into the banking system, it was revealed that a total of 3,577,980 new BVNs were \nissued in the review period, compared with 3,173,274 in the first half of 2021. Out of this \nfigure, 1,370,875 females were registered in the second half of 2022, compared with \n1,461,132 females in the preceding period. \nIn the first half of 2022, the financial sector recorded an increase in the number of agent \nlocations where financial services could be accessed. At end-June 2022, SANEF reported a \ntotal of 1,249,845 agents under its agent expansion scheme, compared with 1,002,514 \nagents onboarded at end-December 2021. In terms of access points per capita, 1,179 agents \nserved 100,000 adults in the first half of 2022, compared with 946 agents per 100,000 adults \nin the second half of 2021. Furthermore, the number of active PoS and ATMs stood at 19,355 \nand 915,519, respectively, at end-June 2022, compared with 19,156 ATMs deployed and \n638,983 active PoS at end-June, 2021. \n \nThe total number of deposit accounts by regulated financial institutions increased to 198.82 \nmillion at end-December 2021, compared with 185.33 million at end-June 2021. \nIn addition, from the industry data, the total number of credit accounts marginally rose to \n12.33 million (made up of 4.28 million in CMBs and 8.05 million accounts in MFBs) at end-\nDecember 2021, from 11.60 million accounts (made up of 4.33 million in CMBs and 7.27 \nmillion accounts in MFBs) at end-June 2021. \nA total of 247,331 new agents were onboarded during the review period, compared with \n225,854 in the preceding period. A total of 1,249,845 agents were registered under the \nSANEF agent expansion scheme. In terms of access point per capita, 1,179 agents were \nserving 100,000 adults in the first half of 2022, compared with 946 agents per 100,000 adults \nrecorded in the second half of 2021. Furthermore, the number of active PoS at end-March \n2022 stood at 737,502. During the period under review, the number of deposit and credit \naccounts increased to 229.87 million and 15.72 million, from 198.82 million and 12.33 million \nat end-December 2021, respectively. \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n69 \n \n \nClassified as Confidential \n \nTable 2:22 Financial Inclusion Statistics \nINDICATOR \nEND-DECEMBER 2021 \nEND-JUNE 2022 \n New BVN Registration \n3,173,274 \n3,577,980 \n New BVN Registration \n(Female) \n1,461,132 \n1,370,875 \nTotal Agents \n1,002,514 \n1,249,845 \n \nNos Of Onboarded (New) \nAgents \n225,854 \n247,331 \n \nNos \nOf \nAgents \nPer \n100,000 Adults \n946 \n1,179 \n \nActive PoS Deployed \n645,500 \n871,591 \n \nNos Of Deposit Accounts \n(Million) \n198.82 \n229.87 \n \nNos Of Credit Accounts \n(Million) \n12.33 \n15.72 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n70 \n \n \nClassified as Confidential \n \n3 \nREGULATORY AND SUPERVISORY ACTIVITIES \n3.1 Financial Soundness Indicators \n3.1.1 Asset-Based Indicators \n3.1.1.1 Non-Performing Loans Ratio \nThe quality of banks’ assets, measured by the ratio of non-performing loans (NPLs) to gross \nloans, was 4.95 per cent at end-June 2022, compared with 4.93 per cent at end-December \n2021. \nFigure 3.1 Banking Industry NPLs to Gross Loans \n \n3.1.1.2 Core Liquid Assets to Total Assets and Short-term Liabilities \nThe ratio of core liquid assets to total assets decreased by 0.46 percentage point to 20.08 \nper cent at end-June 2022, from 20.54 per cent at end-December 2021. Similarly, the ratio \nof core liquid assets to short-term liabilities declined by 0.34 percentage point to 29.61 per \ncent at end-June 2022, compared with 29.95 per cent at end-December 2021. The decline \nwas due to increased lending to the real sector and households, in line with the Bank’s \npolicies to encourage lending to key sectors of the economy. \nFigure 3.2 Banking Industry Liquidity Indicators (%) \n \n6.41 \n6.02 \n5.70 \n4.93 \n4.95 \n 4.50\n 4.70\n 4.90\n 5.10\n 5.30\n 5.50\n 5.70\n 5.90\n 6.10\n 6.30\n 6.50\n 6.70\n End Jun. 2020\n End Dec. 2020\n End Jun. 2021\n End Dec. 2021\n End Jun. 2022\n18.16 \n22.58 \n20.98 \n20.54 \n20.08 \n27.33 \n32.58 \n30.78 \n29.95 \n29.61 \n -\n 5.00\n 10.00\n 15.00\n 20.00\n 25.00\n 30.00\n 35.00\n End Jun. 2020\n End Dec. 2020\n End Jun. 2021\n End Dec. 2021\n End Jun. 2022\nLiquid assets (core) to total assets*\nLiquid assets (core) to short-term liabilities*\nFINANCIAL STABILITY REPORT – JUNE 2022 \n71 \n \n \nClassified as Confidential \n3.1.1.3 Exposure of Banking System to Real Estate Subsector \nThe banks’ exposure to the real estate sub-sector (residential and commercial) declined \nmarginally in the review period. The ratio of residential real estate loans to total gross loans \ndecreased by 0.01 percentage point to 0.21 per cent at end-June 2022, from 0.22 per cent \nat end-December 2021. Similarly, the ratio of commercial real estate loans to total gross \nloans declined by 0.17 percentage point to 2.50 per cent at end-June 2022, compared with \n2.67 per cent at end-December 2021. \n \nFigure 3.3 Banking Industry Real Estate Indicators (%) \n \n3.1.2 Capital-Based Indicators \nThe banking industry’s solvency, measured by qualifying capital to risk-weighted assets, \ndeclined to 14.11 per cent at end-June 2022, compared with 14.55 per cent at end-December \n2021, owing largely to growth in risk assets and loan loss provisions. Similarly, the regulatory \ntier-1 capital to risk-weighted assets decreased to 12.19 per cent at end-June 2022, from \n12.46 per cent at end-December 2021. \n \n \n \n \n \n \n \n \n0.30 \n0.28 \n0.24 \n0.22 \n0.21 \n3.28 \n2.96 \n2.80 \n2.67 \n2.50 \n -\n 0.50\n 1.00\n 1.50\n 2.00\n 2.50\n 3.00\n 3.50\n 4.00\n End Jun. 2020\n End Dec. 2020\n End Jun. 2021\n End Dec. 2021\n End Jun. 2022\nResidential real estate loans to total gross loans\nCommercial real estate loans to total gross loans\nFINANCIAL STABILITY REPORT – JUNE 2022 \n72 \n \n \nClassified as Confidential \nFigure 3.4 Banking Industry Capital Adequacy Indicators (%) \n \nThe capacity of the banks’ capital to withstand losses declined as the ratio of non-performing \nloans net of provisions to capital increased to 5.18 per cent at end-June 2022, from 1.22 per \ncent at end-December 2021. This was due mainly to some NPLs being written-off against \nprovisions, hence, reducing the quantum of provisions which resulted in a higher indicator at \nend-June 2022. \nFigure 3.5 non-performing loans net of provision to capital Ratio \n \n3.1.3 Income and Expense Based Indicators \nThe ratio of interest margin to gross income decreased marginally by 0.66 percentage point \nto 47.93 per cent during the review period, compared with 48.59 per cent at end-June 2022. \nSimilarly, the ratio of non-interest expenses to gross income declined by 0.10 percentage \npoint to 65.04 per cent at end-June 2022, relative to 65.14 per cent at end-December 2021. \n14.96 \n15.05 \n15.46 \n14.55 \n14.11 \n13.04 \n12.76 \n13.07 \n12.46 \n12.19 \n -\n 2.00\n 4.00\n 6.00\n 8.00\n 10.00\n 12.00\n 14.00\n 16.00\n 18.00\n End Jun. 2020\n End Dec. 2020\n End Jun. 2021\n End Dec. 2021\n End Jun. 2022\nRegulatory capital to risk-weighted assets*\nRegulatory Tier 1 capital to risk-weighted assets*\n2.24 \n1.52 \n0.62 \n1.22 \n5.81 \n -\n 1.00\n 2.00\n 3.00\n 4.00\n 5.00\n 6.00\n 7.00\n 8.00\n End Jun. 2020\n End Dec. 2020\n End Jun. 2021\n End Dec. 2021\n End Jun. 2022\nP\ne\nr\nc\ne\nn\nt\na\ng\ne\ns\nFINANCIAL STABILITY REPORT – JUNE 2022 \n73 \n \n \nClassified as Confidential \nThe ratio of personnel expenses to non-interest expenses declined to 25.47 per cent at end-\nJune 2022, from 29.38 per cent at end-December 2021. \nTable 3:1 Selected Financial Soundness Indicators of the Nigerian Banking Industry \n2020 \n2021 \n2022 \nEnd Jun \nEnd Dec \nEnd Jun \nEnd Dec \nEnd June \nAssets Based Indicators \nNon-performing loans to total gross loans * \n6.41 \n6.02 \n5.70 \n4.93 \n4.95 \nLiquid assets (core) to total assets* \n18.16 \n22.58 \n20.98 \n20.54 \n20.08 \nLiquid assets (core) to short-term liabilities* \n27.33 \n32.58 \n30.78 \n29.95 \n29.61 \nResidential real estate loans to total gross loans \n0.30 \n0.28 \n0.24 \n0.22 \n0.21 \nCommercial real estate loans to total gross loans \n3.28 \n2.96 \n2.80 \n2.67 \n2.50 \nCapital Based Indicators \nRegulatory capital to risk-weighted assets* \n14.96 \n15.05 \n16.46 \n14.55 \n14.11 \nRegulatory Tier 1 capital to risk-weighted assets* \n13.04 \n12.76 \n13.07 \n12.46 \n12.19 \nNonperforming loans net of provisions to capital * \n2.24 \n1.52 \n0.62 \n1.22 \n5.81 \nReturn on assets* \n2.50 \n2.17 \n1.21 \n2.31 \n2.01 \nIncome and Expense Based Indicators \nInterest margin to gross income* \n56.79 \n56.43 \n58.71 \n48.59 \n47.93 \nNoninterest expenses to gross income* \n55.26 \n61.59 \n72.57 \n65.14 \n65.04 \nPersonnel expenses to noninterest expenses \n32.68 \n29.37 \n28.09 \n29.38 \n25.47 \n \n*FSIs are computed based on IMF-FSI Manual. \n \n3.2 The Banking Industry Stress Tests \nThe Bank continued to conduct top-down solvency and liquidity stress testing to identify and \nanalyse banking industry vulnerabilities and risks with a view to assessing the soundness \nand stability of the financial system. \n3.2.1 Solvency Stress Test \n3.2.1.1 Baseline Position \nThe baseline CAR, LR and NPL ratio were 14.11, 42.63 and 4.95 per cent, respectively. \nAlso, Return on Assets (ROA) and Return on Equity (ROE) stood at 1.40 and 17.30 per cent, \nrespectively, at end-June 2022. \n \nTable 3:2 Banking Industry Baseline Selected Key Indicators \n \nCAR \nLR \nNPLs \nROA \nROE \nDec 2021 (%) \n14.53 \n41.33 \n4.80 \n2.31 \n27.47 \nJun 2022 (%) \n14.11 \n42.63 \n4.95 \n1.40 \n17.30 \nPercentage \nPoints \nChange \n-0.42 \n1.30 \n0.15 \n-1.10 \n-13.20 \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n74 \n \n \nClassified as Confidential \nFigure.3.6 Banking Industry CAR (per cent) \n \n \n3.2.1.2 Credit Risk \nAnalysis of general credit risk revealed that shocks of 15, 20, 30 and 50 per cent increases \nin NPLs would result in the banking industry CAR declining to 13.80, 13.64, 13.49 and 13.17 \nper cent, respectively, from the baseline of 14.11 per cent. Similarly, a shock of 100 per cent \nincrease in NPLs would lead to a decrease of banking industry CAR to 10.88 per cent. \nThe stress test revealed that the banking industry could withstand a shock of “up to 100 per \ncent increase” in the industry NPLs, as the industry CAR would remain above the regulatory \nrequirement of 10 per cent. \nTable 3:3 Credit Default Shocks \n \n \n \n \n \n \n \n \n \n \nSimilarly, analysis of obligor credit concentration shocks of five largest corporate credit \nfacilities shifting from performing loans to sub-standard and sub-standard to doubtful would \nresult in banking industry CAR declining to 13.63 and 12.88 per cent, respectively, from 14.11 \nper cent. In addition, a shock of five largest corporate credit facilities shifting from doubtful to \nlost would result in banking industry CAR declining to 11.52 per cent. The result of the tests \nshowed resilience to obligor credit concentration risk as the CAR would remain above the \n10.00 per cent regulatory threshold under stress test scenarios 1, 2 and 3. \n \n \n15.21\n15.27\n14.54 14.93\n14.83\n15.46\n14.53\n14.11\n0.00\n5.00\n10.00\n15.00\n20.00\nDec '18\nJun' 19\nDec' 19\nJun' 20\nDec' 20\nJun' 21\nDec-21\nJun-22\nPer cent\nSingle Factor Shocks \nDecember 2021 \nJune 2022 \nBaseline CAR (%) \n14.53 \n14.11 \n10% NPLs increase \n14.19 \n13.80 \n15% NPLs increase \n14.03 \n13.64 \n20% NPLs increase \n13.86 \n13.49 \n30% NPLs increase \n13.53 \n13.17 \n50% NPLs increase \n12.86 \n12.53 \n100% NPLs increase \n11.13 \n10.88 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n75 \n \n \nClassified as Confidential \nTable 3:4 Credit Concentration Risk \n \nFigure 3.7 Credit Concentration Risk \n \n \n3.2.1.3 Sectoral Credit Concentration Risk \nA breakdown of banking industry total credit by sector at end-June 2022 showed that the Oil \n& Gas sector accounted for 22.04; Manufacturing 16.71; General 10.67; Government 8.83; \nGeneral Commerce 7.37; Agriculture 6.17 and Others 28.21 per cent. \n \n \n \n14.11\n13.63\n12.88\n11.62\n0.00\n2.00\n4.00\n6.00\n8.00\n10.00\n12.00\n14.00\n16.00\nBaseline\nScenario 1: Five largest\ncorporate credit facilities\nshifted from Sub-standard\nto Doubtful (10% provision)\nScenario 2: Five largest\ncorporate credit facilities\nshifted from Doubtful to\nLost (50% provision)\nScenario 3: Five largest\ncorporate credit facilities\nshifted from Doubtful to\nLost (100% provision)\nCAR (%)\n \nDecember \n2021 \nJune 2022 \nBaseline CAR (%) \n 14.53 \n 14.11 \nSingle Factor Credit Concentration Shocks \nScenario 1 \nFive largest corporate credit facilities shifted from performing loans to \nsub-standard (10% provision) \n14.04 \n13.63 \nScenario 2 \nFive largest corporate credit facilities shifted from sub-standard to \ndoubtful (50% provision) \n13.31 \n12.88 \nScenario 3 \nFive largest corporate credit facilities shifted from doubtful to lost (100% \nprovision) \n12.05 \n11.62 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n76 \n \n \nClassified as Confidential \nFigure 3.8 Sectoral Concentration of Credit \n \n \nThe results of sectoral credit concentration risks showed that 20.00 per cent default on total \nexposure to Oil & Gas could result in CAR decreasing to 13.44 per cent, while a 50.00 per \ncent default on total exposure to Oil & Gas could lead to the industry CAR declining to 9.73 \nper cent. Thus, the sector concentration stress test showed that the banking industry could \nwithstand “up to 20.00 per cent shock” to Oil and Gas exposures. \n \nTable3:5 Stress Test on Oil and Gas Exposures \n \nIndustry CAR (%) \nBaseline CAR \n14.11 \n20% Default on total exposure to Oil and Gas \n13.44 \n50% Default on total exposure to Oil and Gas \n9.73 \n \n3.2.1.4 Interest Rate Risk \nThe stress test on the net position of interest-sensitive instruments showed that the industry \ncould maintain a stable solvency position to interest rate shock of “up to 1000 basis points \ndownward shift in yield curve” as the post-shock CAR of 12.12 per cent remained above the \nregulatory threshold of 10.00 per cent. \n \n \n \n \n \n \n22.04%\n16.71%\n8.83%\n10.67%\n7.37%\n6.17%\n28.21%\nOil and Gas\nManufacturing\nGovernment\nGeneral\nGen Comm\nAgriculture\nOthers\nFINANCIAL STABILITY REPORT – JUNE 2022 \n77 \n \n \nClassified as Confidential \nFigure 3.9 Impact of Interest Rate Shocks on CAR \n \n \n3.2.2 Liquidity Stress Test3 \nThe stress test results revealed that after a one-day run scenario, the LR of the industry \ncould decline from the 42.69 per cent baseline position to 32.73 per cent. However, under \nthe 5-day and 30-day scenarios, the LR for the industry could decline to 14.71 and 9.58 per \ncent, which could result in liquidity shortfalls of N3.87 trillion and N4.84 trillion, respectively. \n \nFigure 3.10 Industry Liquidity Ratios at Periods 1-5 and cumulative 30-day Shocks \n \n \n \n \n3 Liquidity stress tests were conducted at end-June 2022 using the Implied Cash Flow Analysis and Maturity Mismatch/Rollover Risk \napproaches to assess the resilience of individual banks and the banking industry to liquidity and funding shocks. \n14.11\n13.11\n12.12\nBaseline CAR\n500 bps downward shift in yield\ncurve\n1000 bps downward shift in yield\ncurve\n42.69\n32.73\n28.58\n24.28\n19.69\n14.71\n9.58\n0.00\n5.00\n10.00\n15.00\n20.00\n25.00\n30.00\n35.00\n40.00\n45.00\n50.00\nPre-Shock\nAfter Day 1\nAfter Day 2\nAfter Day 3\nAfter Day 4\nAfter Day 5\nAfter cum 30\ndays\nPer cent\nDec-20\nJun-21\nDec-21\nJun-22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n78 \n \n \nClassified as Confidential \nTable 3:6 Liquidity Stress Test Results \nScenario \nBanks with \nLiquidity Ratios (LR) < 30% \nDecember 2021 \nDecember \n2021 \nJune 2022 \nIndustry LR \n(%) \nShortfall to 30% LR \nthreshold \n (N’ billion) \nTest 1.1: Implied Cash Flow Test \nTest 1.1: Implied Cash \nFlow Test \nDay 1 \n9 \n13 \n32.73 \nNil \nDay 2 \n14 \n19 \n28.58 \n431.96 \nDay 3 \n19 \n21 \n24.28 \n1,623.78 \nDay 4 \n20 \n21 \n19.69 \n2,760.48 \nDay 5 \n21 \n23 \n14.71 \n3,865.63 \nImplied Cash Flow Test \n(30 Days) \n22 \n24 \n9.58 \n4,836.98 \n \n \n \n \n \n \n3.2.3 Maturity Mismatch \nThe industry’s baseline assets and liabilities maturity profile at end-June 2022 showed an \nexcess of N1,427.74 trillion in assets over liabilities. Further analysis revealed that the short-\nend of the market (≤90 day bucket) was adequately funded. \nTable 3:7 Maturity Profile of Assets and Liabilities at End-June 2022 \nBucket \nLiabilities \nAssets \nMismatch \nCumulative \nMismatch \nN Billion \n≤30 days \n 33,948.91 \n 20,530.76 \n13,428.21 \n13,428.21 \n 31-90 days \n 4,933.13 \n 3,839.70 \n1,099.74 \n14,527.95 \n91-180 days \n 1,584.54 \n 3,904.52 \n(2,296.94) \n12,231.01 \n181-365 days \n 1,168.38 \n 4,099.75 \n(2,912.36) \n9,318.65 \n1-3 years \n 2,200.01 \n 5,529.72 \n(3,310.55) \n6,008.11 \n>3 years \n 3,185.51 \n 10,543.78 \n(7,320.42) \n(1,312.31) \nTotal \n47,020.48 \n48,448.23 \n(1,427.74) \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n79 \n \n \nClassified as Confidential \nTable 3:8 Test Results for System-wide Maturity Mismatch at End-June 2022 \n \nTest 2A \nDescriptive Maturity \nMismatch. \n(No consideration of \nrollover) \nTest 2B \nStatic Rollover risk Analysis. \n(No possibility to close liquidity \ngaps in other buckets) \nTest 2C \nDynamic Rollover risk test. \n(Free assets used to close \nliquidity gaps in other buckets) \nN ‘billion \nNo of banks \nwith \nmismatch \nN ’billion \nNo of banks \nwith \nmismatch \nN ‘billion \nNo of banks \nwith mismatch \n≤30 days \n18,704.88 \n4 \n11,915.10 \n4 \n(36.96) \n4 \n31-90 days \n6,380.16 \n5 \n(287.84) \n15 \n(175.46) \n6 \n91-180days \n2,966.75 \n10 \n(2,636.89) \n26 \n(495.59) \n9 \n181-365days \n2,355.37 \n14 \n(3,281.88) \n28 \n(484.58) \n10 \n1-3 Years \n1,957.03 \n18 \n(3,989.71) \n29 \n(1,248.85) \n14 \nAbove 3 years \n(2,071.54) \n29 \n(7,358.27) \n29 \n(5,392.04) \n23 \nTotal \n30,292.64 \n(5,639.50) \n(7,833.49) \n \nThe test results under 2A revealed that the banking industry was adequately funded except \nfor the “above 3 years” bucket, while under Tests 2B and 2C the industry had mismatches \nof N5.64 trillion and N7.83 trillion, respectively. These indicated increases of N1.27 trillion \nand N0.13 trillion under the Test 2B and Test 2C, respectively, relative to end-December \n2021 test result. \n3.2.4 Contagion Risk Analysis \nThe contagion risk analysis depicted an increase in interconnectedness through inter-bank \nplacements and takings. The total exposure increased by 49.04 per cent to ₦597.49 billion \nat end-June 2022, from ₦352.86 billion at end-December 2021. Further analysis revealed \nthat six banks accounted for ₦387.30 billion or 64.82 per cent of total placements, while \nanother six banks accounted for ₦432.14 billion or 72.33 per cent of total takings. The \nexposures were within the safety corridor of the inter-bank market operations and therefore \ndid not pose any significant threat to financial system stability, as all placements were \nsecured. \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n80 \n \n \nClassified as Confidential \nFigure 3.11 Network Analysis based on Interbank Exposures \n \n \n \n \nBox 2: Liquidity Stress Test Assumptions \nImplied Cash Flow Analysis \nThe Implied Cash Flow Analysis (ICFA) assessed the ability of the banking \nsystem to withstand unanticipated substantial withdrawals of deposits, short-\nterm wholesale and long-term funding over 5 days and cumulative 30 days, \nwith specific assumptions on fire sale of assets. \nThe test assumed gradual average outflows of 3.8, 5.0 and 1.5 per cent of \ntotal deposits, short-term funding and long-term funding respectively, over a \n5-day period and a cumulative average outflow of 22.0, 11.0 and 1.5 per cent \nof total deposits, short-term funding and long-term funding respectively, on a \n30-day balance. It also assumed that the assets in Table 3.10 would remain \nunencumbered after a fire sale. \n \n \n \n \nThe Maturity Mismatch/Rollover Risk \nThis assessed funding maturity mismatch and rollover risk for assets and \nliabilities in the 1-30 and 31-90 day buckets, with assumptions of availability \nof funding from the CBN and intra-group as described below: \n \nNode colour representation \nBlue = Placement only \nDeep Blue = Net Placement \nRed = Takings only \nPurple = Net Takings \nFINANCIAL STABILITY REPORT – JUNE 2022 \n81 \n \n \nClassified as Confidential \ni. Test 2a: Descriptive Maturity Mismatch assumed that the baseline \nmismatch remained, but 5 per cent of total deposits would be made available \nby the CBN and the intra-group; \n \nii. Test 2b: Static Rollover Risk assumed that 80.0 and 72.0 per cent of the \nfunding in the 1-30 and 31-90 day buckets would be rolled over, with no \npossibility to close the funding gap from other buckets. However, 5 per cent \nof the total deposits would still be available from the CBN and the intra-\ngroup; and \n \niii. Test 2c: Dynamic Rollover Risk made the same assumption as in 2b \nabove, but with the option of closing the liquidity gap from other buckets. \n \nTable 3:9 Percentage of Assets Unencumbered after Fire Sales \nItem \nNo \nAssets \n% \nUnencumbered \n1. \nCash and cash equivalents \n100 \n2. \nCurrent account with CBN \n100 \n3. \nGovernment bonds, treasury bills and other \nassets with 0% risk-weighting \n66.5 \n4. \nCertificates of deposit held \n66.5 \n5. \nOther short-term investments \n49 \n6. \nCollateralized placements and money at call \n49 \n7. \nCRR \n100 \n \n \n \n \n \n3.3 Supervision of Banks \nThe Bank maintained its supervisory and surveillance activities in the banking sector towards \npromoting a safe, stable and sound financial system. These activities included offsite \nappraisal of banks’ requests and periodic returns, regular onsite assessments and issuance \nof guidance notes to banks. \n3.3.1 Examination \nThe joint CBN and NDIC Risk Asset Examination (RAE) of 31 banks (commercial, merchant \nand non-interest) was carried out in the review period to evaluate the quality of the banks’ \nassets and ensure the adequacy of loan loss provisioning. The banks were generally \ncompliant with extant regulations. However, some infractions were observed and regulatory \nactions taken. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n82 \n \n \nClassified as Confidential \nThe CBN also monitored the banks’ implementation of the recommendations from the \nprevious risk-based supervision reports during the period. The findings showed that banks \nhad largely implemented the recommendations. \n3.3.2 Foreign Exchange Examination \nA routine examination of 29 Authorised Dealers (ADs), consisting of 25 commercial and four \nmerchant banks, was carried out on banks’ foreign exchange activities to assess compliance \nwith extant regulations, identify and address anomalies, customer complaints, and other \nemerging issues. \nIn addition, spot checks on customers’ applications under the RT200 scheme and utilisation \nof Invisibles were conducted. In line with extant regulations, appropriate regulatory actions \nwere taken where infractions were observed. \n \n3.3.3 Non-Interest Banks \nDuring the review period, a non-interest microfinance bank (MFB) was licensed, bringing the \ntotal number of Non-interest Financial Institutions (NIFIs) in operation to nine, comprising \nthree banks, two non-interest windows and four MFBs. \n \nA compendium of the Resolutions of the Financial Regulation Advisory Council of Experts \n(FRACE) Series 1 was published during the review period to engender comprehensive \nunderstanding of NIFIs products and services. \n \nThe total assets of non-interest banks (NIBs) stood at N547.08 billion at end-June 2022, \nrepresenting 0.84 per cent of total banking industry assets. Additionally, their total deposits \nand total credits of N199.35 billion and N208.20 billion represented 0.47 and 0.77 per cent \nof the industry deposit and credit, respectively. \n3.3.4 Supervision of Domestic Systemically Important Banks \nIn the review period, the Bank conducted a bi-annual assessment of banks in accordance \nwith the Framework for the Regulation and Supervision of Domestic Systemically Important \nBanks (D-SIBs). Five banks maintained the designation as D-SIBs and continue to be \nsubjected to enhanced supervision in view of the significant impact of the failure of any of \nthe institutions on the financial system. \n \nAt end-June 2022, the five D-SIBs accounted for N37.73 trillion (57.62 per cent) of the \nindustry’s total assets of N65.48 trillion, compared with N34.20 trillion (57.73 per cent) in the \npreceding period. Similarly, D-SIBs held N25.41 trillion (60.45 per cent) of total industry \ndeposits of N42.03 trillion, as against N23.06 trillion (60.02 per cent) of total industry deposits \nin the preceding period. Also, D-SIBs accounted for N15.22 trillion (56.25 per cent) of the \naggregate industry credit of N27.06 trillion, compared with N13.78 trillion (56.05 per cent) of \nFINANCIAL STABILITY REPORT – JUNE 2022 \n83 \n \n \nClassified as Confidential \nthe aggregate industry credit in the preceding period. The D-SIBs were compliant with the \nprudential requirements during the review period. \n3.3.4.1 Recovery and Resolution Plans \nThe D-SIBs submitted their Recovery and Resolution Plans (RRPs) in compliance with the \nD-SIB Supervisory Framework. Some lapses were observed in the RRPs, and the affected \nD-SIBs were required to address them in their subsequent submissions. \n3.3.5 Asset Management Corporation of Nigeria \nThe value of AMCON’s liabilities increased marginally to N5.72 trillion at end-June 2022, \nfrom N5.54 trillion at end-December 2021. Of this amount, the combined value of the \nAMCON Note of N3.86 trillion and Loan of N500.00 billion represented 76.26 per cent of the \ntotal liabilities. The Note would mature on December 27, 2023, while the N500.00 billion Loan \nis due for redemption on December 30, 2022. The Corporation’s total assets, net of \nimpairment, stood at N896.49 billion at end-June 2022, representing 15.58 per cent of the \ntotal liabilities. \nDuring the review period, cash recoveries stood at N17.08 billion, while total assets forfeited \nin settlement of loans was N633.22 million. These brought the cumulative recoveries to \nN971.13 billion, comprising cash of N549.89 billion, and asset and shares forfeiture of \nN421.24 billion. \n3.3.6 Cross Border Supervision of Nigerian Banks \n3.3.6.1 Foreign Subsidiaries of Nigerian Banks \nAt end-June 2022, the number of offshore entities of Nigerian banks was 64, comprising 55 \nsubsidiaries, four representative offices, one affiliate, three international branches and one \nagent banking arrangement. \nThe virtual risk-based supervision (RBS) examination of four offshore banking subsidiaries \nof a bank was conducted during the review period. The examination of the entities was a \nmeans of assessing the financial soundness of the banks and their compliance with extant \nlaws and regulations, validating the returns submitted by the parent bank and addressing \nsupervisory concerns noted in the operations of the offshore subsidiaries. \n \n3.3.7 Credit Risk Management System \nThe Credit Risk Management System (CRMS) database remained a veritable source of \ncredit information and an additional risk management tool for the banking industry. \nAt end-June 2022, total number of credit facilities on the CRMS database stood at \n34,344,280 reflecting an increase of 17.56 per cent over the end-December 2021 position of \n29,213,129. The number comprised 33,491,862 credit facilities to individuals and 852,418 to \nnon-individuals. \nHowever, the total number of facilities with outstanding balances on the CRMS database, \nincreased by 9.12 per cent to 5,344,602 at end-June 2022, from 4,898,075 at end-December \nFINANCIAL STABILITY REPORT – JUNE 2022 \n84 \n \n \nClassified as Confidential \n2021. The former number was made up of 5,260,750 credit facilities to individuals and 83,852 \nto non-individuals. \n \nTable 3:10 Credit Risk Management System \nBorrowers from the Banking Industry (Commercial, Merchant and Non-Interest Banks) \nDescription \n \n \nDecember 2021 \nJune 2022 \nAbsolute \nChange: \nIncrease/ \n(decrease) \n% \nChange \n \n* Total No. of Credit/facilities \nreported on the CRMS: \n29,213,129 \n34,344,280 \n5,131,151 \n17.56 \nIndividuals \n28,338,562 \n33,491,862 \n5,153,300 \n18.18 \nNon-Individuals \n874,567 \n852,418 \n-22,149 \n-2.53 \n* Total No. of Outstanding \nCredit facilities on the CRMS: \n4,898,075 \n5,344,602 \n446,527 \n9.12 \nIndividuals \n4,779,565 \n5,260,750 \n481,185 \n10.07 \nNon-Individuals \n118,510 \n83,852 \n-34,658 \n-29.24 \n* The figures include borrowers with multiple loans and/or credit lines \n3.3.8 Credit Bureaux \nThe number of licensed credit bureaux remained three at end-June 2022. The aggregate \ncredit records in the databases of the credit bureaux stood at 186.51 million, reflecting an \nincrease of 25.27 million (15.67 per cent) from 161.24 million at end-December 2021. Also, \nthere was a 6.44 per cent increase in the average number of subscribers which was \nattributed mainly to credit growth, increased coverage of the credit reporting system and \nimproved awareness of the role of credit bureaux in the management of credit risk. The Bank \ncontinued to conduct routine offsite and onsite supervisory activities of the bureaux in the \nreview period. \n \nTable 3:11 Credit Bureaux Statistics \nS/N \nCRC \nCredit \nBureau Ltd \nCR \nServices \nCredit Bureau \nPlc \nFirst \nCentral \nCredit Bureau \nLtd \nTotal \n1 \nNumber \nof \ncredit \nrecords \n66,732,752 \n64,100,565 \n55,681,214 \n186,514,531 \n2 \nValue of Credit Facilities \n(N’Tn) \n36.84 \n27.65 \n33.63 \n 98.12 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n85 \n \n \nClassified as Confidential \n3 \nNumber of borrowers \n27,892,377 \n17,842,523 \n20,323,840 \n66,058,740 \n4 \nNumber of subscribers \n1,667 \n691 \n1,394 \n3,752 \n \n3.4 Supervision of Other Financial Institutions \nDuring the review period, the Bank conducted target examination and Anti-Money \nLaundering, Combating the Financing of Terrorism (AML/CFT) examination of 204 OFIs. The \ntarget examination was conducted on 114 MFBs to ascertain their capital in line with the re-\ncapitalisation deadline of April 2022. \nThe onsite AML/CFT examination of 90 OFIs, comprising 48 MFBs, four DFIs, 26 FCs and \n12 PMBs, was conducted to ascertain their compliance with the extant AML/CFT regulations. \nFurthermore, the Money Laundering and Financing of Terrorism (ML/FT) risks of the OFIs \nwere evaluated in line with the Inter-Governmental Action Group against Money Laundering \nin West Africa (GIABA) assessment requirements. The examination revealed some \ninfractions and appropriate regulatory actions were taken on the affected institutions. \n \n3.5 Other Developments in the Financial System \n3.5.1 Anti-Money Laundering, Combating the Financing of Terrorism \nThe Bank, in collaboration with relevant agencies, sustained efforts aimed at maintaining a \nrobust and effective Anti-Money Laundering, Combating the Financing of Terrorism and \nCountering Proliferation Financing (AML/CFT/CPF) regime equipped to respond to evolving \nrisks and vulnerabilities in the financial system. \nDuring the review period, the following laws and regulations came into effect to strengthen \nAML/CFT/CPF regime in Nigeria: \n▪ The Money Laundering (Prevention and Prohibition) Act (MLPPA), 2022; \n▪ The Terrorism (Prevention and Prohibition) Act (TPPA), 2022; \n▪ The Proceed of Crimes Act (POCA), 2022; \n▪ Regulations for the Implementation of Targeted Financial Sanctions on Terrorism \nFinancing; and \n▪ Regulations for the Implementation of Targeted Financial Sanctions on Proliferation \nFinancing. \nThe Bank also issued the “CBN Anti-Money Laundering, Combating the Financing of \nTerrorism and Countering Proliferation Financing of Weapons of Mass Destruction in \nFinancial Institutions Regulations 2022”, which replaced the CBN AML/CFT Regulations \n2013. The new regulation aims to safeguard financial institutions from being used for \nfinancial crimes through: adoption of appropriate policies to comply with AML/CFT/CPF \nregulations; formulation and implementation of internal controls and procedures to deter \ncriminals; and adoption of risk-based approach in identification, assessment and \nFINANCIAL STABILITY REPORT – JUNE 2022 \n86 \n \n \nClassified as Confidential \nmanagement of money laundering, terrorist financing and proliferation financing risks, among \nothers. \n \nIn addition, the Bank issued a guidance note on the CBN AML/CFT/CPF Regulations 2022 \nto OFIs to address challenges in the sub-sector and enable OFIs develop and implement \neffective risk-based AML/CFT/CPF programmes in line with the provisions of extant \nAML/CFT/CPF laws and regulations. \n \n3.5.2 Capacity Building and Collaboration on AML/CFT/CPF \nIn the first half of 2022, the Bank conducted AML/CFT/CPF training for 630 staff of CMBs, \nMFBs, PMBs, DFIs, FCs and BDCs, and participated in the Financial Action Task Force \n(FATF) Standard Training to promote and deepen implementation of AML/CFT/CPF \nmeasures. \nThe Bank also participated in the 37th Plenary organised by the GIABA held in Saly, Senegal, \nas part of its collaborative effort with domestic and international stakeholders. \n \n3.5.2.1 Anti-Money Laundering, Combating the Financing of Terrorism Cross-Border \nExamination \nDuring the review period, on-site cross-border examination was conducted on two foreign \nsubsidiaries of Nigerian banks to assess their compliance with home and host countries’ \nAML/CFT laws and regulations. The examination revealed no issues of regulatory concern. \n3.5.3 Activities of the Financial Services Regulation Coordinating Committee \nThe Financial Services Regulation Coordinating Committee (FSRCC) is an inter-agency \nbody set-up by the CBN Act 2007 to promote financial system stability. Section 44 of the Act \nmandates the FSRCC, amongst others, to co-ordinate the supervision of financial institutions \nespecially conglomerates; reduce arbitrage opportunities usually created by differing \nregulation and supervision standards amongst supervisory authorities; and eliminate any \ninformation gap encountered by any regulatory agency in its relationship with any group of \nfinancial intermediaries. \nThe FSRCC comprises of the CBN, SEC, Nigeria Deposit Insurance Corporation (NDIC), \nNational Insurance Commission (NAICOM), Corporate Affairs Commission (CAC), National \nPension Commission (PenCom), Federal Ministry of Finance, Budget and National Planning, \nand other observer members. \nDuring the review period, the FSRCC continued its sensitisation against the activities of \nPonzi schemes and illegal fund operators (IFOs). It published notices on the websites of all \nmember agencies, and in ten National Dailies including one television station, cautioning the \ngeneral public against patronising IFOs. \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n87 \n \n \nClassified as Confidential \n3.5.4 eNaira \n3.5.4.1 Developments on eNaira Implementation \nIn the first half of 2022, the Bank sustained the implementation of eNaira, Africa’s first \nCentral Bank Digital Currency (CBDC). The Bank extended the charges-free regime \nfor transactions to promote eNaira adoption, and embarked on “Project Jaeger” aimed \nat upgrading the eNaira technology stack for efficiency, robustness, scalability, in-\nhouse control, and cyber and operational resilience. \n \nA combo version of eNaira speed wallet app was developed for flexibility and ease of \naccessibility. Web merchant wallet was also developed with functionalities that meet \nusers’ \nrequirements, \nincluding \ndashboard \nanalytics, \ncentralised \naccount \nmanagement, payment approval workflows, and sub-wallets for big merchants. \nFurthermore, the Bank developed an in-house Compliance & Anti-Money Laundering \n(CAML) solution for eNaira operations, and referral functionality with incentives to \nencourage eNaira wallet holders to onboard potential users and drive adoption of the \ndigital currency. \nThe Bank sustained its collaboration with domestic and international organisations \ntowards continuous improvement of the eNaira services, and hosted delegates from \nthe Bank of Uganda and Central Bank of Zimbabwe on eNaira study tour. \n \n3.5.4.2 eNaira Statistics and Trends \nThe number of eNaira wallet downloads, onboarded customers and activated wallets \nwere 807,920; 244,340; and 182,790, respectively at end-June 2022, reflecting \nincreases of 32.45, 35.52, and 45.11 per cent over the preceding period figures. \nTable 3:12 eNaira Wallet Holders \n \nDec-21 \nJun-22 % Change \n \n \n \neNaira Wallets Downloads \n610,000 \n807,920 \n32.45 \nOnboarded Customers \n180,300 \n244,340 \n35.52 \nActivated Wallets \n125,970 \n182,790 \n45.11 \n \nThe total eNaira minted remained N2 billion, while eNaira in circulation stood at N1.55 \nbillion, leaving the balance of N0.45 billion with the CBN at end-June 2022. Of the \ntotal eNaira in circulation, N0.86 billion was held by financial institutions while N0.68 \nbillion was with consumers and merchants. \nTable 3:13 Minting and Holdings of eNaira \n \nDec-21 \nJun-22 % Change \nFINANCIAL STABILITY REPORT – JUNE 2022 \n88 \n \n \nClassified as Confidential \neNaira Minted \nN2 Billion \nN2 Billion \neNaira in Circulation: \n940,450,000 \n1,545,350,000 \n64.32 \n In FIs' wallets \n866,080,000 \n861,570,000 \n-0.52 \nIn \nConsumers \n/ \nMerchants' \nwallets \n74,370,000 \n683,780,000 \n819.43 \n - In Stock with CBN \n1,059,550,000 \n454,650,000 \n-57.09 \n \n3.5.5 Risk- Based Cybersecurity Assessment \nThe report of the CBN/NDIC Supervisory Review and Evaluation (SRE) of the annual \ncybersecurity self-assessment of the relevant Financial Institutions as stipulated in the CBN \nRisk-based Cybersecurity Framework and Guidelines was issued during the review period. \nBanks were required to correct observed lapses and provide appropriate updates. \n3.5.6 Nigeria Sustainable Banking Principles \nAt end-June 2022, the total number of women in the banking industry was 25,997, \nrepresenting 43.69 per cent of the total employees in the industry. Similarly, women had a \ntotal of 892 (34.76 per cent) top management positions, and 82 (23.63 per cent) board \npositions in the industry, compared with total female representation of 34,352 (36.90 per \ncent) in the industry, with 662 (32.00 per cent) at senior management and 91 (29.55 per cent) \nat board at end-December 2021. \nTable 3:14 NSBP Statistics at end-June 2022 \n \nFEMALE REPRESENTATION IN THE BANKING INDUSTRY AS AT END-JUNE 2022 \nS/N \nItem \nBanking Industry \nFemale Representation \nPercentage \nof \nFemale \nRepresentation (%) \n1 \nTotal Employees \n 59,505 25,997 \n43.69 \n2 \nStaff \nin \nManagement \nPosition \n 2,566 892 \n34.76 \n3 \nBoard Members \n 347 82 \n23.63 \n \nThe banking industry has made considerable progress in its response to the needs of the \nplanet, human rights and support to the disadvantaged groups since the adoption of the \nNSBP. Banks have also continued to develop capacity of staff and board members on \nsustainability and collaborate in developing the right governance structure to implement the \nNSBP. \n \n3.5.7 Post IFRS Implementation \nThe Bank wound down the four-year IFRS 9 transitional arrangement on December 31, \n2021. The transitional programme mitigated the day-one impact of the implementation of the \nFINANCIAL STABILITY REPORT – JUNE 2022 \n89 \n \n \nClassified as Confidential \nExpected Credit Loss (ECL) model of credit impairment, thereby engendering financial \nsystem stability. Consequently, audited financial statements of banks at end-June 2022 did \nnot contain the IFRS 9 day-one impact on capital adequacy ratio (CAR). \n \n3.5.8 Implementation of Basel III \nThe parallel run for the implementation of Basel III continued in the review period. The \nparallel run entails the rendition of returns by banks on the Basel III requirements alongside \nthe Basel II returns. The feedback from the banks and other stakeholders recommended for \nfurther review of the Guidelines and reporting templates to enhance clarity and regulatory \nexpectations. \n \n3.5.9 Internal Capital Adequacy Assessment Process \nThe CMBs submitted their 2022 Internal Capital Adequacy Assessment Process (ICAAP) \nreports during the review period for the annual Supervisory Review and Evaluation Process \n(SREP). The SREP was completed and the outcome would be integrated in the respective \nbanks’ Risk Based Supervisory Reports for 2022. The SREP revealed increased significance \nand complexity of cyber security, climate and sustainability risks in banks. The analysis of \nthe reports also revealed that banks deployed various techniques for risk identification and \nmateriality assessment; including stress testing methodologies to ensure capital adequacy. \nIn all, the ICAAP documents substantially met the regulatory expectations. \n \n \n3.6 Financial Literacy and Consumer Education \nThe Bank sustained the implementation of several initiatives in its efforts to deepen financial \nliteracy and consumer education during the review period, including: Financial Literacy \nAwareness Workshops in collaboration with the Shared Agent Network Expansion Facility \n(SANEF); Global Money Week in collaboration with Bankers’ Committee; Training of Trainers \nProgrammes for various segments of the society such as faith-based organisations, youth \ngroups and market associations. \n \n \n3.7 Consumer Protection Compliance Examination of OFIs \nThe Bank conducted on-site Consumer Protection Compliance Examination of 18 OFIs to \nassess compliance with the provisions of the 2020 Guide to Charges by Banks, Other \nFinancial Institutions and Non-Bank Financial Institutions, and the Consumer Protection \nRegulations (CPR). Non-compliant banks were notified of the violations and directed to make \nrefunds to all affected customers as well as adopt measures to prevent reoccurrence. \n \n3.8 Complaints Management and Resolution \nThe total number of complaints received against financial institutions in the period under \nreview were 2,432, indicating a 2.05 per cent decrease from 2,483 in the second half of 2021. \nOut of the complaints received, 2,261 (93.00 per cent) were against banks and 171 (7.00 per \ncent) were against OFIs. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n90 \n \n \nClassified as Confidential \n \nFurther analysis indicated that Electronic/Cards related complaints constituted the highest at \n845 (34.75 per cent), followed by Fraud with 697 (28.66 per cent), Account Management 644 \n(26.48 per cent), Excess Charges 115 (4.73 per cent), while Others accounted for 131 (5.38 \nper cent). \n \nFigure 3.12 Number of Complaints Received \n \nFigure 3.13 Distribution of Complaints by Category: January to June 2022 \n \n \n \nDuring the review period, a total of 1,399 complaints were resolved with refunds to the \ncomplainants, an increase of 63 (4.71 per cent) over the 1,336 recorded in the preceding \nperiod. Also, complaints closed increased by 226 (20.64 per cent) to 1,321, as against the \nELECTRONIC/CARDS\n35%\nFRAUD 29%\nACCOUNT MGT 26%\nEXCESS CHARGES \n5%\nOTHERS 5%\nELECTRONIC/CARDS\nFRAUD\nACCOUNT MGT\nEXCESS CHARGES\nOTHERS\n-100\n100\n300\n500\n700\n900\n1100\n1300\n984\n681\n547\n134\n137\n845\n697\n644\n115\n131\nJul to Dec 21\nJan to Jun 22\nFINANCIAL STABILITY REPORT – JUNE 2022 \n91 \n \n \nClassified as Confidential \n1,095 recorded in the preceding period. The resolved cases included outstanding complaints \nfrom the preceding period. \n \n \n \n \n \n \nFigure 3.14 Complaints Resolved and Closed \n \n \n \n \nFigure 3.15 Complaints Resolved/Closed \n \n173\n278\n227\n212\n307\n202\n1399\n137\n419\n205\n166\n230\n164\n1321\n310\n697\n432\n378\n537\n366\n2720\n0\n500\n1000\n1500\n2000\n2500\n3000\nJAN\nFEB\nMAR\nAPR\nMAY\nJUN\nTOTAL\nNO. OF CASES RESOLVED\nNO. OF CASES CLOSED\nTOTAL\nELECTRONIC/CARDS\n34%\nFRAUD 28%\nACCOUNT MGT \n24%\nEXCESS CHARGES \n6%\nOTHERS 8%\nELECTRONIC/CARDS\nFRAUD\nACCOUNT MGT\nEXCESS CHARGES\nOTHERS\nFINANCIAL STABILITY REPORT – JUNE 2022 \n92 \n \n \nClassified as Confidential \n \nTotal claims in respect of the complaints stood at N8.13 billion and US$0.01 million in the \nfirst half of 2022, compared with N15.88 billion and US$50.89 million in the second half of \n2021, while total refunds amounted to N3.36 billion and US$0.03 million, compared with \nN6.04 billion and US$0.94 million in the second half of 2021. \n \nA total of 10 penalties were imposed on 5 financial institutions for various infractions during \nthe period under review, compared with 24 imposed on 11 financial institutions in the \npreceding period. \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n93 \n \n \nClassified as Confidential \n4 \nDEVELOPMENTS IN THE PAYMENTS SYSTEM \nThe Bank continued to implement policies and initiatives to improve the safety and efficiency \nof the Nigerian payments system. \n4.1 Bank Verification Number Operations \nThe Bank conducted an assessment of 28 banks and the Nigerian Interbank Settlement \nSystem (NIBSS) to ascertain compliance with the Regulatory Framework for BVN Operations \nand Watch-List for the Nigerian Banking Industry in the review period. The assessment \nrevealed some infractions and regulatory actions were taken. \n \nAlso, 2,722,518 BVNs were enrolled, bringing total BVN enrolment to 54,651,086, reflecting \nan increase of 5.24 per cent over 51,928,568 enrolments at end-December 2021. The \nnumber of accounts linked with BVNs was 130,569,656 out of 148,462,947 active customer \naccounts, while the number of watch-listed BVNs associated with fraud and deceased \npersons stood at 6,047 and 11,871, respectively. \n \nTable 4:1 BVN Statistics \n \nEnd-December 2021 \nEnd-June 2022 \n% \nBVN enrolment \n51,928,568 \n54,651,086 \n5.24 \nAccounts linked with BVN \n117,551,302 \n130,569,656 \n11.07 \nActive Accounts \n134,007,725 \n148,462,947 \n10.79 \nWatch-listed BVNs (Fraudulent) \n5,347 \n6,047 \n13.09 \nWatch-listed BVNs (Deceased) \n9,300 \n11,871 \n27.65 \n \n4.2 Nigeria Electronic Fraud Forum \nDuring the first half of 2022, the Steering Committee of the Nigeria Electronic Fraud Forum \nmet once. The Forum sustained its efforts at reducing the incidence of fraud, enriching the \nquality of regulatory reporting by banks and Payments Service Providers (PSPs), as well as \nimproving time taken to conclude investigations, prosecution and adjudication of reported e-\nfraud cases. \n \n4.3 Licensing of Payments System Participants \nIn the review period, 47 companies were issued with Approvals-in-Principle, comprising 43 \nin Payment Solution Services (PSS), two in Switching & Processing, and two in Mobile \nMoney Operator (MMO) categories. In addition, 21 companies were issued with commercial \nlicences, consisting of 17 in the PSS and four in the Switching & Processing categories. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n94 \n \n \nClassified as Confidential \nFurthermore, two new Payment Service Banks (PSBs) were issued commercial licences, \nbringing the total number of licensed PSBs to five. \n \nTable 4:2 Payments System Participants \nLicence Type \nDec 2021 \nJun 2022 \nAccredited Cheque Printers \n8 \n8 \nCard Schemes \n8 \n47 \nMobile Money Operator Licence Category \n15 \n16 \nSwitching/Processing Licence Category \n9 \n13 \nPayment Solution Services Licence Category \nPayment Terminal Services Provider (PTSP) Authorisation \n \n15 \n19 \nPayment Solution Service Provider (PSSP) Authorisation \n30 \n39 \nSuper-Agent Authorisation \n \n16 \n20 \nTotal \n101 \n122 \n \n4.3.1 Examination of Payments System Participants \nAs part of efforts to sustain a safe, reliable and efficient payments system, the Bank assessed \npayments service providers to ascertain the institutions’ compliance with the relevant \nframework and guidelines for the payments system. \nAlso, during the review period, onsite assessments were carried out on one Switch, one \nMMO and two PSSPs, while off-site assessments were conducted on six PSPs. \nFurthermore, the Bank facilitated the resolution of disputes among banks, government \nagencies and PSPs. \n \n \n4 Reduction in the number of card scheme participant is as a result of re-categorisation of one of the scheme – leading to \nremoval of Genesis Card \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n95 \n \n \nClassified as Confidential \n4.4 Cheque Standards and Cheque Printers Accreditation Scheme \nIn line with the provisions of the Nigeria Cheque Printers’ Accreditation Scheme (NICPAS), \nthe Bank conducted accreditation of the Nigeria cheque printers. At the end of the exercise, \nfive security printing companies were re-accredited, while the number of cheque \npersonalisers remained seven. \n \n4.5 Other Payments System Initiatives \nDuring the review period, the Bank issued the following two circulars: \n• Review of Operations of the NIBSS Instant Payment and Other Electronic Payment \nOptions with Similar Features, to increase allowable limit subject to enhanced \nsecurity; and \n• Review of the Industry Quick Response (QR) Code Presentment Options to clarify \nthat QR code for payment shall be based on merchant or consumer presented mode. \n \nThe Pan African Payments and Settlement System (PAPSS) was also launched to facilitate \ncross border transactions in local currency, reduce cost and enhance efficiency of cross \nborder payments within Africa. The Bank completed integration with the system and issued \nGuidelines for the operation of PAPSS in Nigeria. \n4.6 Payments System Statistics and Trend \n4.6.1 Large Value Payments \nThe volume of inter-bank fund transfers through the RTGS system increased to 149,035 at \nend-June 2022, from 145,919 at end-December 2021, reflecting an increase of 2.14 per cent. \nAlso, the value of inter-bank fund transfers increased to N36,913.90 billion at end-June 2022, \nfrom N32,329.86 billion at end-December 2021, reflecting an increase of 14.18 per cent. The \nincrease was due largely to bulk upload of government payments through the system. \n \n4.6.2 Retail Payments \n4.6.2.1 Cheque Clearing \nThe volume and value of cheques cleared, decreased to 2,077,679 and N1,593.43 billion at \nend-June 2022, from 2,201,288 and N1,623.60 billion at end-December 2021, respectively. \nThese outcomes indicated decreases of 5.62 and 1.86 per cent in volume and value, \nrespectively, reflecting customers’ preference for electronic transactions. \n \n4.6.2.2 Electronic Transactions \nThe volume and value of electronic transactions increased by 7.40 per cent and 21.83 per \ncent to 10,680,942,112 and N719,936.06 billion, respectively, during the review period. The \nincreased usage of electronic payments for banking transactions was due to the convenience \nprovided by the channels and increased public confidence in the banking system. \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n96 \n \n \nClassified as Confidential \nTable 4:3 Electronic Transactions \n \n \n \n \nPayment Channel \nNumber of Connected \nTerminals \nVolume of Transactions \n% Change \nVolume \nIncrease/ \n(decrease) \nValue N’ Billion \n% Change \nValue \nIncrease/ \n(decrease) \nDec \nJun \nJul-Dec 2021 \nJan-Jun 2022 \nJul-Dec 2021 \nJan-Jun 2022 \n2021 \n2022 \nATMs \n19,355 \n19,355 \n835,543,307 \n 711,706,025 \n-14.82 \n11,979.56 \n 12,638.70 \n5.50 \nPOS \n915,519 \n1,299,738 \n1,605,676,367 \n 1,710,287,421 \n6.52 \n14,497.23 \n 15,757.58 \n8.69 \nMobile Money \nN/A \nN/A \n907,635,620 \n 610,140,165 \n-32.78 \n9,845.08 \n 13,955.42 \n41.75 \nOnline \nTransfers \n(Internet/Web) \nN/A \nN/A \n5,686,501,437 \n 6,487,165,303 \n14.08 \n299,607.75 \n 348,298.64 \n16.25 \nMobile App \nN/A \nN/A \n456,086,385 \n 803,155,047 \n76.10 \n28,883.64 \n 51,405.12 \n77.97 \nUSSD \nN/A \nN/A \n273,941,359 \n 267,040,368 \n-2.52 \n2,490.45 \n 2,270.28 \n-8.84 \nDirect Debit \nN/A \nN/A \n52,200,105 \n 51,924,429 \n-0.53 \n12,629.20 \n 14,583.09 \n15.47 \nACH/NEFT \nN/A \nN/A \n127,735,908 \n 39,523,354 \n-69.06 \n210,993.92 \n 261,027.23 \n23.71 \nTotal \n \n \n9,945,320,488 \n10,680,942,112 \n7.40 \n590,926.83 \n 719,936.06 \n21.83 \nFINANCIAL STABILITY REPORT – JUNE 2022 \n97 \n \n \nClassified as Confidential \n5 \nPENSIONS \nDuring the review period, the National Pension Commission (PenCom) sustained its efforts \nat promoting the adoption of the Contributory Pension Scheme (CPS) by sub-national \ngovernments and the informal sector. Pension fund assets were diversified to include \ninvestments in infrastructure and other alternative asset classes. Also, PenCom continued \nits drive to improve operational efficiency, effectiveness and quality of service delivery of the \nPension Funds Administrators (PFAs) as well as enhance public enlightenment. \n \nTotal membership of the Scheme grew by 0.12 million to 9.71 million at end-June 2022, from \n9.59 million at end-December 2021. The growth was largely driven by the increased adoption \nof the CPS by States and Local Governments as well as the steady uptake of the Micro \nPension Plan in the informal sector. \n \nThe net Pension Assets under Management (AuM) grew by 6.30 per cent to N14.27 trillion \nat end-June 2022, from N13.42 trillion at end-December 2021. The growth in AuM resulted \nfrom returns on Investment and contributions received during the review period. The assets \nwere predominantly invested in FGN securities, while the balance was invested in other asset \nclasses such as State Government Securities, Ordinary Shares, Corporate Debt Securities, \nLocal Money Market Instruments, Supranational Bonds, Mutual Funds, Infrastructure Funds \nand Private Equity Funds. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n98 \n \n \nClassified as Confidential \nTable 5:1 PENSION ASSETS \n \n \n \n5.1 Other Developments in the Nigerian Pension Industry \n \n5.1.1 Revised \nShare \nCapital \nRequirement \nfor \nLicensed \nPension \nFund \nAdministrators \nAt the expiration of the deadline of April 2022 for the implementation of the new Minimum \nRegulatory Capital (Shareholders’ Funds), requirement of N5.00 billion for Pension Fund \nAdministrators (PFAs), all the PFAs had complied. However, the number of the PFAs \nreduced to 20 from 22 owing to mergers and acquisitions. \nASSET CLASSES\nASSET CLASSES\nEXISTING \nSCHEMES\nCPFAs\nFUND I\nFUND II\nFUND III\nFUND IV\nFUND V\nFUND VI \nActive\nFUND VI \nRETIREE\nTOTAL PENSION \nFUND ASSETS\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\n₦ 'Million\nDOMESTIC ORDINARY SHARES\n110,336.64\n32,459.37\n6,231.47\n668,327.43\n138,842.38\n12,002.05\n0.03\n915.20\n40.35\n826,358.91\nFOREIGN ORDINARY SHARES\n0.00\n99,905.99\n0.00\n0.00\n0.00\n0.00\n0.00\n0.00\n0.00\n0.00\nTOTAL FGN SECURITES\n795,408.08\n761,352.21\n25,672.04\n3,991,622.80\n2,657,565.81\n761,515.71\n96.94\n13,120.96\n1,540.25\n7,451,134.52\n * FED. GOVT BONDS\n748,487.73\n414,793.74\n18,535.30\n3,823,854.31\n2,575,044.18\n729,917.91\n23.78\n7,513.98\n1,235.20\n7,156,124.66\n * TREASURY BILLS\n39,835.54\n300,796.28\n6,847.37\n68,841.41\n40,159.55\n18,660.03\n70.05\n297.31\n128.83\n135,004.56\n * AGENCY BONDS (NMRC)\n0.00\n583.86\n30.01\n8,542.84\n3,507.64\n1,161.16\n0.00\n0.00\n0.00\n13,241.65\n * SUKUK BONDS \n6,402.24\n630.28\n258.32\n76,061.81\n31,322.90\n10,767.40\n3.11\n5,309.67\n176.22\n123,899.42\n * GREEN BONDS\n682.57\n44,548.05\n1.04\n14,322.43\n7,531.54\n1,009.22\n0.00\n0.00\n0.00\n22,864.23\nSTATE GOVT SECURITIES\n16,531.62\n18,959.52\n731.04\n60,153.32\n49,694.42\n14,895.32\n0.00\n0.00\n0.00\n160,965.25\nCORP. DEBT SECURITIES\n108,436.96\n238,143.11\n9,263.22\n428,932.42\n296,716.74\n107,352.34\n3.04\n696.91\n69.79\n1,189,614.52\n * CORPORATE BONDS (HTM)\n95,202.33\n13,087.92\n9,243.46\n397,301.86\n285,498.15\n105,930.25\n3.04\n696.91\n69.79\n907,033.70\n * CORPORATE BONDS (AFS)\n11,646.44\n221,738.55\n0.00\n11,423.90\n4,174.47\n806.03\n0.00\n0.00\n0.00\n249,789.39\n * CORPORATE INFRASTRUCTURE BONDS\n1,588.19\n3,316.64\n19.76\n15,794.90\n4,687.29\n616.06\n0.00\n0.00\n0.00\n26,022.85\n * CORPORATE GREEN BONDS\n0.00\n0.00\n0.00\n4,411.75\n2,356.83\n0.00\n0.00\n0.00\n0.00\n6,768.58\nMONEY MKT INSTR.\n254,431.83\n193,946.85\n11,981.68\n843,083.86\n631,509.32\n205,435.81\n137.37\n7,684.68\n1,283.39\n1,701,116.11\nFIXED DEPOSIT/ BANK ACCEPTANCE\n224,325.03\n174,622.82\n11,050.64\n730,283.01\n564,372.30\n185,416.40\n121.86\n7,610.35\n1,277.89\n1,899,080.32\nCOMMERCIAL PAPERS\n29,223.65\n6,075.64\n931.04\n112,800.85\n67,137.02\n20,019.40\n15.51\n74.33\n5.49\n236,282.93\nFOREIGN MONEY MKT INSTR.\n883.15\n13,248.39\n0.00\n0.00\n0.00\n0.00\n0.00\n0.00\n0.00\n14,131.54\nMUTUAL FUNDS\n2,619.98\n21,305.88\n782.72\n27,392.94\n3,021.30\n507.41\n0.00\n411.11\n90.41\n56,131.74\nOPEN/CLOSE FUNDS\n2,500.77\n20,960.88\n782.72\n25,740.51\n2,860.27\n507.41\n0.00\n411.11\n90.41\n53,854.07\nREITs\n119.21\n345.00\n0.00\n1,652.43\n161.03\n0.00\n0.00\n0.00\n0.00\n2,277.67\nSUPRA-NATIONAL BONDS\n512.99\n0.00\n39.13\n3,207.33\n3,540.88\n766.28\n0.00\n0.00\n0.00\n8,066.61\nINFRASTRUCTURE FUNDS\n5,222.02\n10,600.87\n990.08\n71,067.68\n290.59\n200.48\n0.00\n0.00\n0.00\n88,371.71\nREAL ESTATE \n111,398.44\n124,195.75\n0.00\n620.00\n6.01\n0.00\n0.00\n0.00\n0.00\n236,220.19\nPRIVATE EQUITIES\n338.78\n13,608.25\n1.13\n24,626.79\n291.10\n0.00\n0.00\n0.00\n0.00\n38,866.05\nCASH & OTHER ASSETS\n31,910.90\n10,053.87\n2,885.75\n118,482.39\n75,464.18\n21,689.13\n47.92\n1,985.50\n342.56\n262,862.19\n CURRENT NET ASSET VALUE \n1,437,148.24\n1,524,531.67\n58,578.24\n6,237,516.96\n3,856,942.72\n1,124,364.53\n285.31\n24,814.36\n3,366.74\n14,267,548.79\nUNAUDITED REPORT ON PENSION FUNDS INDUSTRY PORTFOLIO FOR THE PERIOD ENDED 30 JUNE 2022\nAPPROVED EXISTING SCHEMES, CLOSED PENSION FUND ADMINISTRATORS AND RSA FUNDS (INCLUDING UNREMITTED CONTRIBUTIONS @CBN & LEGACY FUNDS) \nFINANCIAL STABILITY REPORT – JUNE 2022 \n99 \n \n \nClassified as Confidential \n5.1.2 Revised Regulation for the Administration of Retirement and Terminal \nBenefits \nDuring the review period, the PenCom issued revised Regulation for the \nAdministration of Retirement and Terminal Benefits, which is aimed at enhancing the \nefficiency of pension administration in the Country. \n \n5.1.3 Operational Framework for Co-Investment \nDuring the review period, the PenCom also issued the Operational Framework for Co-\nInvestment by PFAs aimed at establishing standards and procedures, enhancing \ndiversification of AuM and improving returns on investment. \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n100 \n \n \nClassified as Confidential \n \n6 \nINSURANCE \nDevelopments in the insurance industry sector were mixed in the review period as \ntotal assets grew, while premium income declined. The industry, however, remained \nstable as solvency, liquidity and other key indicators were in healthy position. \n6.1 Assets and Premium Income \nThe total assets of the insurance industry increased by 2.41 per cent to ₦2.28 trillion at end-\nJune 2022, from ₦2.23 trillion at end-December 2021. Also, gross premium income \nincreased by 19.62 per cent to ₦369.21 billion in the first half of 2022, above the \nN308.65 billion recorded in the second half of 2021. Furthermore, net premium income \ngrew by 16.89 per cent to N260.34 billion at end-June 2022, from ₦222.72 billion at end-\nDecember 2021, while gross claims rose by 7.71 per cent to ₦174.78 billion in the review \nperiod, from ₦162.27 billion in the preceding period. The growth in assets and premium \nincome was due to increased uptake of insurance policies. \n \nTable 6:1 Key indicators \nPeriod \nSecond Half of 2021 \nFirst Half of 2022 \n% Change \nGross Premium Income \n308,645,033,675.40 \n369,210,079,717.00 \n19.62 \nNet Premium Income \n222,720,012,192.40 \n260,335,407,430.00 \n16.89 \nTotal (Gross) Claims \n162,274,280,542.00 \n174,782,571,381.00 \n7.71 \nTotal Assets \n2,230,165,942,794.00 \n2,283,895,468,476.00 \n2.41 \n \n6.2 Key Insurance Industry Financial Soundness Indicators \n6.2.1 Capital Adequacy Ratio \nThe industry remained solvent in the review period as the CAR, measured by capital to total \nassets, was above the regulatory threshold of 40 per cent. However, the CAR declined by \n0.69 percentage points to 42.21 per cent at end-June 2022, from 42.90 per cent at end-\nDecember 2021, driven largely by the recognition of the IFRS 9 impairment charges. \n6.2.2 Liquidity Ratio \nThe industry maintained adequate liquidity position in the review period, with liquidity ratio \nstaying above the regulatory benchmark of 100.00 per cent. The liquidity ratio, measured by \nratio of liquid assets to current liabilities, was 116.65 per cent at end-June 2022, a decrease \nof 4.40 percentage points from the level of 121.05 per cent at end-December 2021. \nFINANCIAL STABILITY REPORT – JUNE 2022 \n101 \n \n \nClassified as Confidential \n6.2.3 Combined Ratio of the Insurance Industry \nThe combined ratio of the industry, expressed as the sum of claims and expenses divided \nby the earned premium, was within the regulatory limit of 75.00 per cent. It decreased by \n6.89 percentage points to 66.38 per cent at end-June 2022, from 73.34 per cent at end-\nDecember 2021, indicating improved profitability of the industry. \n \n6.2.4 Premium Debtors \nPremium debtors, measured as a percentage of gross premium, deteriorated by 3.63 \npercentage points to 8.69 per cent at end-June 2022, from 5.06 per cent at end-December \n2021. The increase was due largely to the higher volume of insurance cover in the first half \nof the year. \n6.2.5 Retention Ratio \nThe retention ratio, measured as the percentage of insurance premium retained to total \npremium generated, declined marginally by 0.27 percentage points to 71.87 per cent at end-\nJune 2022, from 72.14 per cent at end-December 2021. \n \nTable 6:2 Insurance Industry Dashboard \nKEY INDICATORS \nDec-21 \nJun-22 \nCAR (Capital/Total Asset) \n42.90 \n42.21 \nLiquidity Ratio (liquid assets/current liabilities) \n121.05 \n116.65 \nClaims Ratio % \n41.65 \n33.59 \nExpense Ratio % \n31.68 \n32.79 \nCombined Ratio % \n73.34 \n66.38 \ninvestment to Total Assets Ratio % \n70.19 \n64.82 \nChange in Gross Written Premium (in %) \n23.82 \n36.96 \nChange in Net Written Premium (in %) \n29.82 \n35.57 \nChange in Capital & Surplus (in %) \n14.47 \n3.03 \nPremium Debtors as a % of Equity \n2.34 \n5.74 \nPremium Debtors as a % of Total Assets \n1.30 \n2.93 \nPremium Debtors as a % of Gross Premium \n5.06 \n8.69 \nRetention Ratio (in %) \n72.14 \n71.87 \nReturn on Assets (in %) \n1.09 \n1.33 \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n102 \n \n \nClassified as Confidential \n6.3 Key Insurance Industry Regulatory/Supervisory Developments \nDuring the review period, key development in the Nigerian insurance industry included: \ni. \nThe commissioning of the National Insurance Commission (NAICOM) reporting \nportal (portal.naicom.gov.ng) by the Honourable Minister of Finance, Budget and \nNational Planning in May 2022; \nii. \nThe notification for the cancellation of certificates of registration of two insurance \ncompanies by NAICOM; \niii. \nGrant of licences by NAICOM to seven micro-insurance companies to boost \ninsurance penetration; and \niv. \nConduct of onsite Risk Based examination by NAICOM on seven insurance \ncompanies. The examinations focused on corporate governance, risk \nmanagement and internal controls, solvency and liquidity of insurance institutions. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n103 \n \n \nClassified as Confidential \n7 \nRISKS TO THE FINANCIAL SYSTEM \n7.1 Credit Risk \n \n \nRisk Rating (Medium Risk, Stable) \n \nBanking industry credit risk remained stable during the review period. Although the non-\nperforming loans ratio remained below the regulatory limit of 5 per cent, there was a marginal \nincrease to 4.95 per cent at end-June 2022, from 4.85 per cent at end-December 2021. \nCredit risks is expected to remain stable in the second half of 2022. However, there are \ndownside risks due to the lingering challenges in the business environment and the imminent \ntransition to a full interest rate regime on loans that were granted forbearance in the wake of \nthe Covid-19 pandemic. Sustained implementation of various regulatory and supervisory \nmeasures, including the Global Standing Instruction (GSI) and Guidelines for Regulation and \nSupervision of Credit Guarantee Companies in Nigeria, is expected to moderate the risks in \nthe short to medium-term. \n \n7.2 Liquidity Risk \nRisk Rating (Low Risk, Stable) \n \nIndustry liquidity remained healthy and stable during the review period and was above the \nregulatory threshold of 30.00 per cent. Banking industry liquidity ratio increased to 42.6 per \ncent at end-June 2022, compared with 41.33 per cent at end-December 2021. The liquidity \ncoverage ratio for the industry stood at 42.60 per cent at end-June 2022, compared with \n41.30 per cent at end-December 2021, driven by the increase in high quality liquid assets \nduring the period. The weighted average Open Buy Back rate stood at 10.89 per cent at end-\nJune 2022, compared with 12.75 per cent at end-December 2021, reflecting higher liquidity \nin the banking system. \n15.02\n14.82\n14.97\n11.67\n9.33\n6.1\n6.41\n6.02\n5.7\n4.85\n4.95\n3\n4\n5\n6\n7\n8\n9\n10\n11\n12\n13\n14\n15\n16\nJun-17\nDec-17\nJun-18\nDec-18\nJun-19\nDec-19\nJun-20\nDec-20\nJun-21\nDec-21\nJun-22\nNPL RATIO\nFINANCIAL STABILITY REPORT – JUNE 2022 \n104 \n \n \nClassified as Confidential \n \n \nLiquidity risk is expected to remain low and stable in the short to medium-term and the \nbanking industry is expected to maintain a robust liquidity position and resilience to short-\nterm liquidity shocks. However, downside risks persisted, including rollover risk, asset and \nliability mismatches and funding gaps at the short-term maturity buckets. \n7.3 Market Risk \nRisk Rating (Medium Risk, Trending up) \nExchange rates remained generally stable at the Investors and Exporters (I&E) window \nduring the period under review. The naira depreciated slightly against the United States \ndollar to N414.72/US$1 at end-June 2022, compared with N412.99/US$1 at end-December \n2021. \n \n \nAlthough the Nigerian capital market recorded significant gains during the period under \nreview, market risk could trend upwards in the short term, owing to the risk of continued \ncapital reversal, oil price shocks, rising inflation and the steepening of the yield curve driven \n0\n2\n4\n6\n8\n10\n12\n14\n16\n18\nOPEN BUY BACK (OBB) RATE (%)\n0\n100\n200\n300\n400\n500\n600\n700\n08/01/2022\n7/21/2022\n07/08/2022\n6/29/2022\n6/20/2022\n06/07/2022\n5/27/2022\n5/18/2022\n05/06/2022\n4/25/2022\n04/12/2022\n3/30/2022\n3/22/2022\n03/11/2022\n03/02/2022\n2/21/2022\n02/10/2022\n02/01/2022\n1/21/2022\n01/12/2022\n12/31/2021\n12/20/2021\n12/09/2021\n11/30/2021\n11/19/2021\n11/10/2021\n11/01/2021\n10/21/2021\n10/11/2021\n9/29/2021\n9/20/2021\n09/09/2021\n8/31/2021\n8/20/2021\n08/11/2021\n08/02/2021\n7/19/2021\n07/08/2021\nExchange Rate Movements at the I and E Window\nUSD\nEuro\nPound Sterling\nFINANCIAL STABILITY REPORT – JUNE 2022 \n105 \n \n \nClassified as Confidential \nby the hike in policy rates. The regulatory measures put in place would moderate this trend \nin the short-to medium term. \n \n7.4 Operational Risk \nRisk Rating (High, Trending up) \n \nLingering structural rigidities continued to pose threats in the review period. The rise in \noperating cost as a result of security and power challenges, as well as high energy prices \nheightened operational risks. Cybersecurity challenges also remained elevated during the \nperiod, with incidents of social engineering, unauthorised access to confidential information, \ninsider threats and third-party risks. Reported losses from cases of fraud and forgeries in \nbanks increased to N2.71 billion in the first half of 2022, from N1.64 billion in the second half \nof 2021. The banks reported 67,878 cases of fraud and forgeries in the first half of 2022, \ncompared with 46,761 cases in the preceding period. \nOperational risk could remain high with an upward trend in the short to medium term. \n7.5 Macroeconomic Risk \nRisk Rating (High Risk, Trending up) \nDuring the review period, the global economy witnessed an unprecedented rise in inflation \nfollowing sustained increases in the prices of food, energy, and other commodities. These \nconditions were exacerbated by the Russian-Ukraine crisis, which resulted in supply chain \ndisruptions and the lingering headwinds associated with the Covid-19 pandemic. The \noutbreak of the Marburg virus disease (MVD) and Monkey Pox virus, as declared by the \nWorld Health Organisation (WHO), posed additional risk to the global macroeconomic \nenvironment. \nAvailable data indicated that global investors rebalanced their portfolios away from gold and \nequities to fixed income securities, to take advantage of rising yields in the advanced \neconomies, with adverse implications for access to global capital by developing economies. \nThis would further slow global economic recovery and increase the risk of tightened global \nfinancial conditions. \nMacroeconomic risks remained elevated in the short to medium-term, with heightened debt \ndefault risks in EMDEs and increasing risk of broad economic slowdown or global recession. \n \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n106 \n \n \nClassified as Confidential \n8 \nOUTLOOK \nThe medium-term economic outlook for the global and domestic economies is uncertain \nowing to the effects of the Russian-Ukraine crisis, elevated global inflation and the lingering \nimpact of the Covid-19 pandemic and the threat of Marburg and Monkey Pox virus diseases. \nAlso, rising levels of corporate and public debt in most economies as well as the broad \nshocks to foreign capital flows following the sustained interest rate hike by most central banks \ncontinued to depress the outlook. Though aggregate global demand remained robust, the \nsupply-side constraints continued to undermine the recovery effort, at least in the short to \nmedium-term. Global growth is thus confronted with significant headwinds which could \nfurther derail current growth projections. \n \nOn the domestic front, the Nigerian economy is expected to sustain its growth trajectory, \nowing largely to the increasing contribution of the non-oil sector, and the sustained policy \nsupport. However, the trend in key macroeconomic variables indicate the likelihood of \nsubdued output growth in 2022 owing to strong headwinds, including the shocks from the \nexternal environment, persisting security challenges, and infrastructure deficit. Furthermore, \ninflationary pressures are expected to continue in the build-up to the 2023 general elections, \ngiven to the likelihood of increased spending. However, appropriate policy measures put in \nplace by the monetary and fiscal authorities are expected to moderate the risks. \n \nTo contain inflationary pressures many central banks will continue with tighter monetary \npolicy stance. This will reduce credit origination and increase non-performing loans, with \nincreasing financial system vulnerability in the short-to medium term. Financial regulators \nneed to continuously assess and monitor existing and emerging risks, and vulnerabilities to \nthe financial system with a view to deploying appropriate macro and micro prudential tools \nto mitigate them. \n \n \n \nFINANCIAL STABILITY REPORT – JUNE 2022 \n107 \n \n \nClassified as Confidential \nACKNOWLEDGEMENTS \nLIST OF MAJOR CONTRIBUTORS \n1. V.O. Ururuka (PhD.) \nFinancial Policy and Regulation Department \n2. J. A. Mohammed \nDitto \n3. M.L. Garo \nDitto \n4. \nA. Sylvanus-Dannana \nDitto \n5. L. Mohammed \nDitto \n6. \nO. Abraham \nDevelopment Finance Department \n7. \nV.U Oboh \nMonetary Policy Department \n8. \nJ. Yakubu \nResearch Department \n9. \nN.A. Akwashiki \nBanking Supervision Department \n10. \nA. Gambo \nStatistics Department \n11. \nI. P. Akinbolaji \nRisk Management Department \n12. \nE.O. Shonibare \nDitto \n13. \nPhebian N. Bewaji \nFinancial Markets Department \n14. \nV. A. Martins \nOther Financial Institutions Supervision Department \n15. \nL.A. Sawa \nReserve Management Department \n16. M.K. Muazu \nConsumer Protection Department \n17. \nH. Abdullahi \nBanking Services Department \n18. \nA. A. Isa-Olatinwo \nPayments System Management Department \n19. O. Umeano \nSecurities and Exchange Commission \n20. \nM. Mammada \nNigerian Insurance Commission \n21. \nP. Aghahowa \nNational Pension Commission \n \nThe Report is produced and supervised by the Financial Policy and Regulation Department \n \nCHIBUZO A. EFOBI \nDirector, Financial Policy and Regulation Department", "source": "BOG", "stratum": "cb_requests", "fetch_date": "2026-05-11", "url": "file:///CBN/Financial_Stability_Reports/FSR JUNE 2022 -  COMPLETED.pdf"}
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