FINANCIAL STABILITY REPORT – DECEMBER 2021

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FINANCIAL
STABILITY
REPORT


DECEMBER 2021

FINANCIAL STABILITY REPORT – DECEMBER 2021
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CONTENTS


FINANCIAL STABILITY REPORT – DECEMBER 2021


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FINANCIAL STABILITY REPORT – DECEMBER 2021
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5.1
5.1.1
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5.1.2
5.1.3


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LIST OF FIGURES
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FIGURE 3.13 NUMBER AND PERCENTAGE OF COMPLAINTS BY CATEGORY: JULY TO DECEMBER 2021


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LIST OF TABLES
TABLE 2:7 MATURITY STRUCTURE OF LOANS AND ADVANCES AND DEPOSIT LIABILITIES OF MFBS . 31
TABLE 2:18 TRANSACTIONS IN RESPECT OF WOMEN AND WOMEN-OWNED BUSINESSES ON THE
TABLE 3:1 SELECTED FINANCIAL SOUNDNESS INDICATORS OF THE NIGERIAN BANKING INDUSTRY 53
FINANCIAL STABILITY REPORT – DECEMBER 2021
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FINANCIAL STABILITY REPORT – DECEMBER 2021
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LIST OF BOXES
BOX 1: CBN COUNTER-MEASURES TO MITIGATE THE COVID-19 PANDEMIC.31


FINANCIAL STABILITY REPORT – DECEMBER 2021
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LIST OF ACRONYMS
AMCON
Asset Management Corporation of Nigeria
AML/CFT
Anti-Money Laundering and Combating the Financing of Terrorism
ASI
All Share Index
BDCs
Bureaux de Change
BOA
Bank of Agriculture
BOI
Bank of Industry
BRICS
Brazil, Russia, India, China, and South Africa
BVN
Bank Verification Number
CACS
Commercial Agriculture Credit Scheme
CAR
Capital Adequacy Ratio
CBN
Central Bank of Nigeria
CCP
Central Counterparties
CIS
Collective Investment Scheme
CMOs
Capital Market Operators
COB
Currency Outside Banks
CRMS
Credit Risk Management System
DAX
Deutscher Aktienindex (German stock index of 30 major German
companies)
DCs
Depository Corporations
DFIs
Development Finance Institutions
DMBs
Deposit Money Banks
DVP
Delivery Versus Payment
EBAs
Eligible Bank Assets
ECB
European Central Bank
EGX CASE

Egypt Stock Exchange (Cairo and Alexandria Stock Exchange) 30
Stock Index
ETF
Exchange Traded Funds
FAO
Food and Agriculture Organisation
FATF
Financial Action Task Force
FCs
Finance Companies
FGN
Federal Government of Nigeria
FMBN
Federal Mortgage Bank of Nigeria
FRACE
Financial Regulation Advisory Council of Experts
FSIs
Financial Soundness Indicators
FINANCIAL STABILITY REPORT – DECEMBER 2021
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FSR
Financial Stability Report
FSRCC
Financial Services Regulation Co-ordinating Committee
GDP
Gross Domestic Product
GSE
Ghanaian Stock Exchange
GSI
Global Standing Instruction
HHI
Herfindahl-Hirschman Index
ICE
Intercontinental Exchange
IFRS
International Financial Reporting Standards
IMF
International Monetary Fund
KYC
Know Your Customer
LDR
Loan-Deposit Ration
M1
Narrow Money Supply
M2
Broad Money Supply
M3
M2 plus CBN Bills held by the money holding sectors
MENA
Middle East and North African Countries
MFBs
Microfinance Banks
MSMEs
Micro, Small and Medium Enterprises
MHSs
Money Holding Sectors
MICEX
Moscow Interbank Currency Exchange
MoUs
Memoranda of Understanding
MPR
Monetary Policy Rate
NAICOM
Nigerian Insurance Commission
NAV
Net Asset Value
NBS
National Bureau of Statistics
NCR
National Collateral Registry
NDC
Net Domestic Credit
NDIC
Nigeria Deposit Insurance Corporation
NEXIM
Nigerian Export-Import Bank
NGX
Nigerian Exchange Limited
NIBSS
Nigerian Inter-bank Settlement System
NMRC
Nigeria Mortgage Re-finance Company Plc
NPLs
Non-Performing Loans
NSBP
Nigeria Sustainable Banking Principles

NSE 20
Nairobi Stock Exchange 20-Share Index
FINANCIAL STABILITY REPORT – DECEMBER 2021
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NSE ASI
Nigerian Stock Exchange All-Share Index
NYMEX
New York Mercantile Exchange
OBB
Open Buy Back
ODCs
Other Depository Corporations
OFIs
Other Financial Institutions
OPEC
Organisation of Petroleum Exporting Countries
ORB
OPEC Reference Basket
PAIF
Power and Aviation Infrastructure Fund
PENCOM
National Pension Commission of Nigeria
PFAs
Pension Fund Administrators
PFCs
Pension Fund Custodians
PMBs
Primary Mortgage Banks
PoS
Point of Sale
PSV 2020
Payments System Vision 2020
ROA
Return on Assets
ROE
Return on Equity
RTGS
Real-Time Gross Settlement System
SANEF
Share Agent Network Facilities
SDRs
Special Drawing Rights
S&P/TSX
Standards and Poor’s Composite Index of the Toronto Stock Exchange
SEC
Securities and Exchange Commission
SIF
Securities Issuers Forum
SMEs
Small and Medium Enterprises
SRE
Supervisory Review and Evaluation
WAMZ
West African Monetary Zone
WEO
World Economic Outlook
WTI
West Texas Intermediate


FINANCIAL STABILITY REPORT – DECEMBER 2021
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GOVERNOR’S STATEMENT
This edition of the Financial Stability Report highlights developments in the financial system
during the second half of 2021. The full resumption of economic activities in most jurisdictions
since the advent of the COVID-19 pandemic, coupled with deliberate policy support by fiscal
and monetary authorities as well as increased access to COVID-19 vaccines, resulted in a
projected global output of 5.9 per cent in 2021 as against a 3.1 per cent contraction in 2020.
The GDP growth in advanced economies in 2021 was projected at 5.0 per cent, in contrast
to -4.5 per cent in 2020. For the USA, Japan and the Euro Area, growth was estimated at
5.56, 1.6 and 5.20 per cent respectively, in contrast to -3.4, -4.50 and -6.40 per cent in 2020.
Similarly, growth in Emerging Markets and Developing Economies (EMDEs) was projected
at 6.5 per cent in 2021, in contrast to -2.0 per cent recorded in 2020. Growth for economies
in Sub-Saharan Africa (SSA) was projected at 4.0 per cent, in contrast to -1.7 in 2020.
Inflationary pressures trended upwards owing largely to supply-side constraints, increased
fiscal spending and expansionary monetary policy.

In Nigeria, the economy recorded gradual recovery, as GDP grew by 4.02 per cent in the
second half of 2021, compared with 2.7 per cent in the first half of 2021. This was largely
due to the sustained and targeted interventions by the fiscal and monetary authorities. Total
credit to the private sector continued to grow during the period, reflecting positive impact of
the Bank’s efforts to encourage lending to critical sectors of the economy. The foreign
exchange rate remained stable owing to the Bank’s interventions in the market.

The Bank implemented several supervisory measures to mitigate identified risks and
promote the soundness and stability of the banking system. The adopted measures
improved the overall health of the Nigerian banking system as it remained safe and resilient
as evidenced by the improved financial soundness indicators.

The Nigerian Pension Industry expanded in the review period, with growth in total enrolment
in pension schemes, this is expected to continue as many state and local governments adopt
the contributory pension scheme, and workers in the informal sector take up the micro
pension plan. Also, the Nigerian insurance market continued to grow in size with the various
regulatory reforms implemented within the review period positively impacting many facets of
the industry. Similarly, the capital market recorded positive performance in the second half
of 2021, owing largely to improvements in the equities and debt segments.

The overall economic outlook remained cautiously optimistic, given the robust policy
measures adopted by the fiscal authorities, the Bank and other financial sector regulators
towards mitigating the lingering adverse impact of the pandemic and enhancing the
resilience of the financial system. The Bank will continue to employ innovative strategies in
managing the challenges posed by the COVID-19 pandemic while sustaining its supervisory
and surveillance activities towards promoting a sound, stable and safe banking system.

Godwin I. Emefiele, CON
Governor, Central Bank of Nigeria

FINANCIAL STABILITY REPORT – DECEMBER 2021
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FOREWORD
In the second half of 2021, the sustained fiscal and monetary responses, coupled with the
massive rollout of vaccines, helped mitigate the adverse effects of the COVID-19 pandemic
and boost global growth. However, rising inflationary pressures and other risks to financial
system stability could dampen investors’ confidence.
Nigeria recorded improved economic performance following the easing of COVID-19
restrictions, supported by the Bank’s accommodative monetary policy stance and sustained
interventions in targeted sectors. Consequently, most financial soundness indicators of the
banking system remained compliant with prudential requirements. In addition, the result of
the stress tests showed the resilience of the banking system and its ability to cope with
severe macroeconomic shocks.
This edition of the FSR expands the scope of the Report to include activities in the capital
market, pension and insurance sub-sectors, and is divided into six sections. The first section
examines global and domestic trends. Section 2 discusses financial system developments,
while the third highlights key stability issues as well as regulatory and supervisory activities.
Section 4 discusses key developments in the payments system, while sections 5 and 6 focus
on key risks and the outlook for financial stability.
The Report provides insights on financial system conditions and the near-term outlook
including risks and vulnerabilities, as well as the Bank's continuous efforts at promoting a
safe and resilient financial system in Nigeria.
The public is assured of the Bank’s commitment to ensuring a sound banking system that
supports inclusive growth and sustainable economic development.

Aishah N. Ahmad, CFA
Deputy Governor, Financial System Stability


FINANCIAL STABILITY REPORT – DECEMBER 2021
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Classified as
EXECUTIVE SUMMARY
Global output continued to rebound in the second half of 2021, buoyed by increased access
to COVID-19 vaccines and the sustained implementation of both fiscal and monetary stimuli
leading to increased household spending and investments. The global economy was
projected to grow by 5.9 per cent in 2021 but moderate to 4.9 per cent in 2022.
Growth in sub-Saharan Africa was estimated at 4.0 per cent in 2021, up from negative 1.7
per cent for 2020. In Nigeria, output continued its gradual recovery owing largely to sustained
policy support from the fiscal and monetary authorities, as well as a decrease in the number
of new COVID-19 cases. Growth was 3.4 per cent in 2021 compared with negative 1.9 per
cent in 2020. For the second half of 2021, it was 4.02 per cent compared with 2.7 per cent
in the first half.
Global prices generally trended upward in 2021, reflecting supply-side constraints, increased
fiscal spending and an accommodative monetary policy stance adopted to ameliorate the
lingering effects of the COVID-19 pandemic. Emerging markets also recorded an upward
trend in inflation owing to the lagged effects of the increased spending. Inflationary pressures
in Nigeria eased in the second half of 2021, owing largely to continued improvements in
agricultural output and food supply. This development was attributed to the positive impact
of the Bank's sustained implementation of various agricultural support schemes.
Gross external reserves increased by 21.95 per cent at end-December 2021 to US$40.23
billion from US$32.99 billion at end-June 2021. This was due largely to inflows from the IMF
Special Drawing Rights (SDR) allocation and proceeds of the FGN Eurobond issue.
The Bank continued to implement various supervisory measures including virtual
examinations, consolidated supervision and the Global Standing Instruction (GSI) policy.
This resulted in enhanced safety and soundness of banks as evidenced by the improved
Financial Soundness Indicators (FSIs).
The ratio of non-performing loans net of provisions to capital for commercial, merchant and
non-interest banks declined to 28.41 per cent at end-December 2021, from 30.42 per cent
at end-June 2021. Similarly, the ratio of interest margin to gross income decreased to 48.59
per cent during the review period from 58.71 per cent at end-June 2021. Also, the ratio of
non-interest expenses to gross income declined to 65.14 per cent at end-December 2021,
from 72.57 per cent in the preceding half year. However, the ratio of personnel expenses to
non-interest expenses rose to 29.38 per cent at end-December 2021, from 28.09 per cent at
end-June 2021.
The outcome of stress tests conducted on commercial and merchant banks revealed that
the banking industry could withstand a shock of “up to 50 per cent increase” in the industry
NPLs, as the post-shock CAR was above the regulatory requirement of 10 per cent. The
results also showed resilience to credit concentration risk as the CAR remained above the
10 per cent regulatory threshold under stress test scenarios.
During the review period, households and businesses that were adversely impacted by the
COVID-19 pandemic continued to benefit from the Bank’s development finance interventions
through the Anchor Borrowers’ Programme, Agri-Business/Small and Medium Enterprise
FINANCIAL STABILITY REPORT – DECEMBER 2021
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Investment Scheme, Healthcare Sector Intervention Facility and Targeted Credit Facility,
amongst others. The enforcement of the CBN Regulatory Guidelines on Credit Risk
Management System (CRMS) has enhanced compliance by banks, as signified by improved
credit records. The total number of credit facilities on the database increased by 35.15 per
cent during the review period, compared with the preceding period. Total credit extended to
various sectors of the economy grew by 11.34 per cent to N24,378.19 billion at endDecember 2021, owing to the increases in credits to agriculture, industry and services
sectors by 26.25, 6.87 and 13.45 per cent, respectively.
The Bank continued to strengthen consumer confidence, with the resolution of 1,336 and
closure of 1,095 customers complaints against financial institutions during the review period.
The total complaints resolved/closed increased by 11.98 per cent to 2,431, from 2,171 in the
first half of the year.
The capital market recorded positive performance with aggregate market capitalisation
increasing by 12.91 per cent to N43.12 trillion, at end-December 2021, from N38.19 trillion,
at end-June 2021. The pension industry also grew with total enrolment in the pension
schemes increasing by 1.59 per cent to 9.59 million, from 9.44 million in the previous half
year. The net Pension Assets under Management (AuM) grew by 6.06 per cent to N13.42
trillion, from N12.66 trillion at end-June 2021. Similarly, total assets of the insurance industry
increased by 9.33 per cent to N2.23 trillion, from N2.03 trillion in the previous half year. The
net premium income and total gross claims also rose by 101.86 and 92.99 per cent to
N441.37 billion and N336.79 billion at end-December 2021, from N218.65 billion and
N174.51 billion at end-June 2021, respectively.
The key risks to financial system stability during the review period include elevated inflation,
exchange rate pressures, proliferation of Ponzi schemes and cyber-risk from increased use
of digital financial services. Consequently, the Bank and the other financial sector regulators
implemented appropriate measures to mitigate these risks.

Overall, the outlook for financial stability remained cautiously optimistic, given the robust
policy measures adopted by the Bank and the other financial sector regulators towards
mitigating the lingering impact of the Pandemic and enhancing the resilience of the financial
system.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

ECONOMIC AND FINANCIAL DEVELOPMENTS
1.1 Global Developments
1.1.1 Output
Global output rebounded in 2021, largely on account of increased household spending and
investment as most economies resumed full economic activities, buoyed by increased
access to COVID-19 vaccines and the sustained implementation of both fiscal and monetary
stimuli. Accordingly, global output grew by 5.9 per cent in 2021, in contrast to a contraction
of 3.1 per cent in 2020. These combined efforts, especially the increased fiscal and monetary
support also helped to substantially contain the financial stability risks induced by the COVID19 pandemic.

Growth in the advanced economies was estimated at 5.0 per cent in 2021, in contrast to -4.5
per cent in 2020. In the United States (US), GDP growth was estimated at 5.56 per cent in
2021, against -3.4 per cent in 2020, driven largely by increased fiscal stimulus and the surge
in consumer spending. In Japan, output growth was projected at 1.6 per cent in 2021, in
contrast to -4.50 per cent in 2020, reflecting higher government spending. Growth in the euro
area was estimated at 5.20 per cent in 2021, in contrast to -6.4 per cent in 2020, attributed
to governments’ effort at boosting consumer spending in the economy.

In Emerging Market and Developing Economies, growth was projected at 6.5 per cent, in
contrast to -2.0 per cent in 2020, owing largely to interventions by the fiscal and monetary
authorities. Growth in China was projected to rise by 8.1 per cent, from 2.3 per cent in 2020,
while the Middle East and North Africa (MENA) region recorded GDP growth of 4.1 per cent,
in contrast to -3.2 per cent in 2020.

Growth in sub-Saharan Africa (SSA) was estimated at 4.0 per cent, in contrast to -1.7 per
cent in 2020. In Nigeria, growth was 3.4 per cent in 2021, in contrast to -1.9 per cent in 2020,
driven largely to various interventions by the fiscal and monetary authorities.


FINANCIAL STABILITY REPORT – DECEMBER 2021

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TABLE 1:1 GLOBAL GROWTH
Region/Country
Year-on-Year (%)

World

Advanced Economies

United States

Euro Area

Japan

United Kingdom

Canada

Emerging Market and Developing Economies

China

MENA

Sub-Saharan Africa

*Nigeria

Source: IMF’s World Economic Outlook Update, October 2021, *National Bureau of Statistics (NBS)

1.1.2 Inflation
Global prices generally trended upward in 2021, reflecting supply-side constraints, increased
fiscal spending and accommodative monetary policy stance adopted to ameliorate the
lingering effects of the COVID-19 pandemic. Furthermore, the use of accumulated savings
by private agents contributed to the inflationary pressures during the review period.
Inflation increased in most advanced economies, including the United States, the euro area,
the United Kingdom and Japan. Similarly, the emerging market and developing economies
recorded an upward trend in inflation, owing to the lag effects of the increased spending
associated with the containment of the pandemic.
Inflation in the US accelerated to 4.3 per cent in 2021, from 1.2 per cent in 2020. Similarly,
inflation, which was 0.3 and 0.9 per cent in the euro area and the United Kingdom,
respectively, in 2020, rose to 2.2 per cent apiece in 2021. Japan recorded a transition from
deflation to inflation as inflation rose to 0.8 per cent in 2021, from -1.2 per cent in 2020.
Besides the various monetary easing measures aimed at curtailing the impact of the
Pandemic, the new inflation dynamics in Japan, equally reflected the hike in food and
housing prices.
In Emerging Markets and Developing Economies, inflation rose to 5.5 per cent in 2021, from
5.1 per cent in 2020. Similarly, in the MENA, as well as in SSA, inflation rose to 12.7 and10.7
per cent in 2021, from 10.5 and 10.3 per cent in 2020, respectively.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

In general, the observed global inflationary pressures would continue to pose considerable
risks to macroeconomic and financial stability in view of the dampening effects on investors’
sentiments, especially in the financial markets.
TABLE 1:2 GLOBAL INFLATION
Region/Country

Advanced Economies
1.7

1.4
0.7
2.8
United States

Euro Area

Japan
0.5

0.5
-1.2
0.8
United Kingdom

Emerging Markets and Developing
Economies

Middle East and North Africa


Sub-Saharan Africa

Source: WEO Update, October 2021

1.1.3 Oil Prices
The prices of crude oil recorded a sharp rise during the review period, driven largely by the
recovery of demand which had suffered a severe plunge during the pandemic. The OPEC
Reference Basket (ORB) rose by 88.02 per cent to US$77.97 pb at end-December 2021,
from US$41.47 pb at end-December 2020. The ICE Brent also increased by 70.48 per cent
to US$78.76 pb at end-December 2021, from US$46.2 pb at end-December 2020. Also, the
West Texas Intermediate (WTI) rose by 22.01 per cent to US$52.11 pb at end-December
2021, compared with US$42.71 pb at end-December 2020. Similarly, the Bonny Light rose
by 79.22 per cent to US$74.43 pb at end-December 2021, from US$41.53 pb at endDecember 2020.
TABLE 1:3 OIL PRICES (US$ PER BARREL)

End-Dec.

End-Dec.

End-Dec.

End-Dec.

OPEC Reference Basket (ORB)
(US$)

ICE Brent (US$)

West Texas Intermediate (WTI)
(US$)

Bonny Light (US$)

Source: OPEC and Reuters
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
1.1.4 Food Prices
The Food and Agriculture Organization (FAO) Food Price Index increased by 28.24 per cent
to 125.8 points at end-December 2021, from 98.1 points at end-December 2020. The
development was due mainly to the rise in the prices of meat, dairy, cereals, vegetable oils,
and sugar products.
Similarly, the FAO Meat Price Index increased by 12.88 per cent to 107.8 points in 2021,
from 95.5 points in 2020 while the Dairy Price Index increased by 16.99 per cent, to 119.1
points in 2021.
The Cereals Price Index also increased by 27.26 per cent, to 131.2 per cent in 2021, from
103.1 points in 2020 while the Vegetable Oil and Sugar Price Indices rose by 65.90 and
37.48 per cent, within the same period. The upward trend in the various indices was due to
the gradual return to normalcy and rebound in economic activities after the economic
shutdown occasioned by the Pandemic.

TABLE 1:4 WORLD FOOD PRICE INDEX

End-Dec.

End-Dec.

End-Dec.

End-Dec.

Food Price Index

Meat
94.9

95.5
107.8
Dairy

Cereals

Vegetable Oils

Sugar

Source: Food and Agriculture Organisation (FAO).

1.1.5 International Stock Markets
International stock markets recorded a bullish performance in 2021, influenced largely by the
low returns on money market instruments, resulting in the shift of sentiments to the capital
market.
In North America, the United States S&P 500, the Canadian S&P/TSX Composite and the
Mexican Bolsa indices increased by 27.05, 21.59, and 20.61 per cent, respectively. However,
in South America, the Brazilian Bovespa Stock and the Colombian COLCAP indices
decreased by 11.93 and 1.87 per cent, respectively, while the Argentine Merval index
increased by 63.00 per cent.
In the European stock markets, the UK FTSE 100, France CAC 40 and the Germany DAX
indices increased by 14.30, 28.85 and 15.79 per cent, respectively.
In Africa, all the surveyed stock exchanges recorded improvements, as evidenced by the
increases in the Nigerian NGX All-Share, the South African JSE All-Share, the Kenyan
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

Nairobi NSE 20, Egyptian EGX CASE 30, and Ghanaian GSE All-Share indices of 6.07,
24.07, 1.83, 10.18 and 44.05 per cent, respectively.

TABLE 1:5 INDICES OF SELECTED STOCK MARKETS
Country
Index
End-Dec
2019 (1)
End-Dec
2020 (2)
End-Dec
2021 (3)
% Change
(1) & (3)
% Change
(2) & (3)
AFRICA
Nigeria
NGX
All-Share
Index

South Africa
JSE
All-Share
Index

Kenya
Nairobi NSE 20
Share index

Egypt
EGX CASE 30

Ghana
GSE
All-Share
Index

NORTH AMERICA
US
S&P 500

Canada
S&P/TSX
Composite

Mexico
Bolsa

SOUTH AMERICA
Brazil
Bovespa Stock

Argentina
Merval

Columbia
COLCAP

EUROPE
UK
FTSE 100

France
CAC 40

Germany
DAX

ASIA
Japan
NIKKEI 225

China
Shanghai SE A

India
BSE Sensex


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

1.1.6 Foreign Exchange Markets
The major currencies depreciated against the US dollar in 2021, owing largely to the positive
US economic data. In Europe, most currencies depreciated against the US dollar, due to the
attributable deteriorating economic outlook in the zone during the review period. The British
pound sterling, Euro and Russian ruble depreciated by 1.35, 6.82 and 1.61 per cent,
respectively.
In Asia, the Japanese yen and Indian rupee depreciated by 10.24 and 1.71 per cent,
respectively, while the Chinese renminbi appreciated by 2.67 per cent. The depreciation of
the rupee against the US dollar was further accentuated by significant capital flow reversals,
given concerns about the omicron virus variant in the country.
In North America, the Mexican peso depreciated by 2.26 per cent, while the Canadian dollar
remained stable during the period. In South America, the Brazilian real, the Argentine peso
and the Colombian peso depreciated by 6.82, 18.09 and 15.74 per cent, respectively.
In Africa, the Nigerian naira, South African rand, Kenyan shilling and Ghanaian cedi
depreciated against the US dollar by 10.26, 8.02, 7.61 and 4.40 per cent, respectively, while
the Egyptian pound appreciated by 0.06 per cent.
TABLE 1:6 TRENDS OF SELECTED CURRENCIES
Country/Region
Currency
EndDecember
2019 (1)
EndDecember
2020 (2)
EndDecember
2021 (3)
% Change
(App/Dep)
(2) & (3)
Y-on-Y %
(App/Dep)
(1) & (3)
AFRICA
Nigeria
Naira


South Africa

Rand

14.00

14.69

15.97

(8.02)
(12.34)

Kenya

Shilling

101.36

102.66

111.11

(7.61)

(8.78)

Egypt

Pound

16.04

15.73

15.72

0.06

2.04

Ghana

Cedi

5.75

5.87

6.14

(4.40)

(6.35)
NORTH AMERICA
Canada

Dollar

1.30

1.27

1.27
-

2.36

Mexico

Peso

18.94

19.88

20.34

(2.26)

(4.73)
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
SOUTH AMERICA
Brazil
Real

Argentina
Peso

Colombia
Peso

EUROPE
UK
Pound

Euro Area
Euro

Russia
Ruble

ASIA
Japan
Yen

China
Renminbi

India
Rupee

PTP= Period to Period ; YTD = Year to Date
Source: Bloomberg

1.1.7 Monetary Policy Rates
Developments in monetary policy were mixed during the period. Most central banks retained
their policy rates to complete the transmission of monetary impulses to the real sector of the
economy. The expansionary policy stance was intended to accelerate economic recovery,
following the COVID-19 pandemic. However, some central banks shifted to a tightening
mode in response to the inflationary effect of the COVID-19 monetary stimulus.
In the advanced economies, the Bank of Japan, the European Central Bank, Bank of
England, Bank of Canada and Reserve Bank of Australia maintained policy rates at -0.10,
0.00, 0.10, 0.25 and 0.10 per cent, respectively. In the United States, the policy rate was
retained at 0.25 per cent in 2021. The Bank of Korea kept its policy rate at 0.50 per cent,
from January to July 2021. The rate was then reviewed upward to 0.75 in July through
August, and 1.00 for the rest of the year. The Reserve Bank of New Zealand also kept its
policy rate at 0.25 per cent, from January to September 2021, then reviewed it to 0.50 per
cent in October and 0.75 per cent for the rest of the year.
In Asia, Bank Indonesia maintained its policy rate at 3.50 per cent throughout the year.
Similarly, Bank Negara of Malaysia retained its rate at 1.70 per cent for most of the period
but increased it to 1.75 per cent in December 2021.
In the BRICS, the Central Bank of Brazil, Reserve Bank of India, Peoples’ Bank of China and
South African Reserve Bank kept policy rates unchanged at 2.75, 4.00, 3.80 and 3.75 per
cent, respectively, in 2021. In Russia, the policy rate started at 4.50 per cent but was
increased to 5.00, 5.50, 6.50 and 7.50 per cent, in April, June, July and October 2021,
respectively.
FINANCIAL STABILITY REPORT – DECEMBER 2021

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In the emerging market economies, the Bank of Mexico increased the policy rate from 4.00
per cent to 4.25, 4.50, 4.75 and 5.00 per cent in June, August, September and November
2021, respectively. Similarly, the Central Bank of Chile increased the rate from 0.75 to 1.50,
2.75 and 4.00 per cent in August, October, and December 2021, respectively. The Banco
Central de Colombia maintained its rate at 2.00 per cent for most of the year before
increasing it to 2.50 and 3.00 per cent in October and December 2021, respectively.
In Africa, the central banks of Egypt and Nigeria retained policy rates at 8.25 and 11.50 per
cent, respectively, in 2021, while the Bank of Ghana increased the policy rate from 13.50 per
cent to 14.50 per cent in November 2021.

TABLE 1:7 POLICY RATES OF SELECTED COUNTRIES

Country/Region
Jan-

Feb-

Mar-

Apr-

May-

Jun-

Jul-

Aug-

Sep-

Oct-

Nov-

Dec-

Developed Economies
Japan

Europe

UK

US

Canada

South Korea

New Zealand

Australia

Asia
Indonesia

Malaysia

BRICS
Brazil

Russia

India

China

South Africa

Other Emerging Economies & South America
Mexico

Chile

Columbia

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
Africa
Egypt

Ghana
13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 13.50 14.50 14.50
Nigeria
11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Source: www.cbrates.com, www.tradingeconomics.com, relevant central bank websites.

1.2 Domestic Macroeconomic Developments
1.2.1 Output Growth
The Nigerian economy recorded a gradual recovery following sustained interventions by the
fiscal and monetary authorities, as well as the decline in new COVID-19 cases. These factors
were reinforced by the accommodative monetary policy stance, boosting credit to the real
sector. Shocks arising from the spread of mutating strains of the virus, exchange rate
pressures, as well as, structural rigidities, constituted headwinds to growth in the second half
of 2021. Nevertheless, output grew by 4.01 per cent in the second half of 2021. This reflected
improved economic activities and increased investors’ confidence in the economy, driven by
the optimism surrounding the sustained administration of COVID-19 vaccines.

FIGURE 1.1 GROSS DOMESTIC PRODUCT (GROWTH %)

Source: National Bureau of Statistics
The growth in GDP was driven, mainly, by the non-oil sector, which contributed 4.65
percentage points to output in the second half of 2021. However, the oil sector contracted in
the review period, contributing negative 0.64 percentage point to the growth in GDP.


H2 2018
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
PER CENT
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 1:8 SECTORAL CONTRIBUTIONS TO REAL GDP


The Agriculture and Services sub-sectors improved relatively, contributing 0.68 and 3.50
percentage points, respectively, to the GDP growth. The improvements were due to the
increase in crop production and the growth in ICT. The contribution of the industry sector,
however, was negative (-0.17 percentage point). Despite the improved performance of the
economy, lingering security challenges, power supply shortages, and relatively high food
prices continued to pose challenges to growth.
1.2.2 Inflation
Inflationary pressures moderated in the second half of 2021, driven largely by the continued
improvement in agricultural output and food supply chain. The development was attributed
to the positive impact of sustained implementation of various agricultural support
programmes and schemes. Thus, headline inflation (year-on-year) declined to 15.63 per
cent in December 2021, compared with 17.95 per cent in the first half of 2021. The 12-monthmoving-average headline inflation stood at 16.95 per cent at end-December 2021, compared
with 15.93 per cent at end-June 2021.

Food inflation (year-on-year) declined to 17.37 per cent, compared with 21.83 per cent in the
preceding half year. The moderation was attributed, mainly, to improvement in agricultural
output, owing to increased crops harvest, and supply chain network, as well as the continued
positive impact of various CBN interventions in the real sector, especially in agriculture. Core
inflation, however, inched up to 13.87 per cent, compared with 13.09 per cent in the first half
of 2021, owing to increases in the prices of gas, liquid fuel, footwear, and clothing materials.


Sector
H2 2020
H1 2021
H2 2021
Agriculture
0.66
0.41
0.68
Of which: Crop Production
0.63
0.38
0.67
Industry
-1.42
-0.02
-0.17
Of which: Oil
-1.34
-0.65
-0.64
Manufacturing
-0.13
0.32
0.29
Services
-0.94
2.31
3.50
Of which: ICT
1.81
0.95
1.02
GDP Growth
-1.70
2.70
4.01
Source: National Bureau of Statistics
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 1.2 INFLATIONARY TREND (YEAR-ON-YEAR)


1.2.3 Fiscal Operations
Provisional data on Federal Government Retained Revenue, at N2,129.08 billion in the
second half of 2021, fell short of the budget benchmark by 46.7 per cent, reflecting the
subsisting revenue challenge, which was exacerbated by the COVID-19 pandemic.
Provisional aggregate expenditure, at N6,003.52 billion, in the second half of 2021, was
below the prorated budget benchmark by 11.64 per cent, owing to the decline in capital
expenditure.
Consequently, the fiscal operations of the Federal Government resulted in overall deficit of
N3,874.44 billion. The deficit was indicative of Government’s policy stance to stimulate
growth, finance critical infrastructure and cushion the adverse impact of the pandemic on the
economy.

FIGURE 1.3 FEDERAL GOVERNMENT FISCAL OPERATIONS (N BILLION)

Source: OAGF & CBN Staff Estimate


2020 H2
2021 H1
2021 H2
Headline (y-on-Y)
Core (Y-on-Y)
Food (Y-on-Y)
-6000
-4000
-2000

Second half 2019
First half 2020
Second half 2020
First half 2021
Second half 2021
Retained Revenue
Aggregate Expenditure
Overall Balance
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

The gap between receipts and expenditure was bridged through both domestic and external
sources. The consolidated debt stock of the Federal Government at end-December 2021
stood at N35,097.79 billion, comprising 54.8 and 45.2 per cent domestic and external debt
respectively. The debt stock at end-December 2021 indicated an increase of 12.0 per cent
over the level at end-June 2021; and at 20.2 per cent of GDP, was below the Medium-Term
Debt Strategy (MTDS) threshold of 40.0 per cent of GDP. Total domestic debt at endDecember 2021 was ₦19,242.56 billion, reflecting an increase of ₦1,610.8 billion or 9.14 per
cent, when compared with ₦17,631.80 billion at end-June 2021. The increase was driven
mainly by Nigerian Treasury Bills, FGN Bonds and FGN Sukuk.

FIGURE 1.4 FEDERAL GOVERNMENT DOMESTIC DEBT STOCK

1.2.4 External Reserves
Gross external reserves at end-December 2021, increased by 21.95 per cent to US$40.23
billion, compared with US$32.99 billion at end-June 2021. A breakdown of the external
reserves indicated that the CBN, FGN and Federation holdings were 94.41, 5.44 and 0.15
per cent, respectively. Further analysis showed that 75.25 per cent of the reserves was held
in US dollars, 10.63 per cent in Chinese renminbi, 13.22 per cent in International Monetary
Fund (IMF) Special Drawing Rights (SDRs) and 0.90 per cent in other currencies, at endDecember 2021.
Total inflow to the external reserves stood at US$26.00 billion in the second half of 2021,
compared with US$14.06 billion in the first half of 2021, reflecting an increase of 84.92 per
cent. The major drivers of this increase were proceeds of FGN Eurobonds and increase in
IMF SDRs Allocation to Nigeria.
Total outflow increased by 5.22 per cent to US$18.56 billion, compared with US$17.64 billion
in the first half of 2021. This was driven majorly by the Bank’s FX intervention in the
Secondary Market Intervention Sales (SMIS) and Investors’ & Exporters’ (I&E) windows.


FGN Bonds
NTBills
NTBonds
FGN Savings Bonds
FGN Sukuk
FGN Green Bonds
Promisory Note
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 1.5 EXTERNAL RESERVES POSITION (USD MILLIONS)


TABLE 1:9 FOREIGN EXCHANGE FLOWS THROUGH THE CBN (US$ BILLION)


1.2.5 Risks to the External Reserves
Given the critical role of external reserves adequacy in ensuring financial system stability,
the following downside risks to reserve accretion have been identified:
• Low Inflow from Crude Oil & Gas: The persistent decline in inflow from crude oil &
gas revenue impacted negatively on accretion to the reserves. This was attributed to
reduction in crude oil production, rising under-recovery costs, limited investment in
the oil industry, among others. There is a risk that the decline in inflow would persist
for the foreseeable future.
• Rising Foreign Loan Repayment Obligation: As the country’s foreign debt stock
rises, debt service obligations would continue to rise, with negative implications for
the external reserves.

• Declining Global GDP: A more transmissible Covid-19 variant such as Omicron
could dampen global economic confidence, affect demand, growth and global
commodity prices which would ultimately affect accretion to reserves.


Period
Inflow
Outflow
Net flow
H2 – 2021
26.00
18.56
7.44
H1 – 2021
14.06
17.64 (3.58)
H2- 2020
15.15
14.92
0.23
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

DEVELOPMENTS IN THE FINANCIAL SYSTEM
2.1 Monetary and Credit Developments
Broad money supply (M3) grew by 12.63 per cent to N43,818.47 billion at end-December
2021, above the indicative benchmark of 9.99 per cent for 2021. This development reflected
the expansion in domestic claims (17.25 per cent), arising from the 15.96 per cent growth in
net claims on the central government and the 17.75 per cent increase in claims on ‘other’
sectors. The increase in claims on ‘other’ sectors reflected improved credit delivery to the
real economy in line with the Bank’s accommodative monetary policy stance.

The corresponding growth in total monetary liabilities stemmed from the rise in currency
outside depository corporations (17.74 per cent), transferable deposits (14.15 per cent) and
other deposits (16.63 per cent). The growth in other deposits was hinged on the rise in
savings and time deposits, resulting from higher yields on deposits. Similarly, the increase
in currency outside depository corporations and transferable deposits, owing to increased
demand for cash for the yuletide season, resulted in a growth in narrow money supply (M1)
by 14.72 per cent to N18,169.30 billion at end-December 2021, compared with N16,024.39
billion at end-June 2021.
TABLE 2:1 GROWTH RATES OF MONETARY AGGREGATES
% Change (Over preceding December)
Jun 20
Dec 20
Jun 21
Dec 21
Foreign Assets (Net)

Net Domestic Asset

Domestic Claims

Claims on Central Government (Net)

Claims on Other Sectors

Other Items (Net)

Currency Outside Depository Corporations

Transferable Deposits

Narrow Money Supply (M1)

Other Deposits

Monetary Liabilities (M2)

Securities Other than Shares

Total Monetary Liabilities (M3)


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.1.1 Market Structure of the Banking Industry
During the review period, six banks accounted for 63.88 and 63.79 per cent of total deposits
and assets, respectively, reflecting a decrease in concentration, compared with 66.43 and
68.76 per cent in the first half. This was consistent with the Herfindahl Hirschman Indices
(HHI)1 of 847.43 and 854.24, for deposits and assets, respectively, compared with 936.66
for deposits and 907.93 for assets at end-June 2021. The share of individual banks ranged
from 0.10 to 13.84 per cent in deposits and 0.11 to 15.85 per cent in assets in the review
period.

FIGURE 2.1 CONCENTRATION RATIOS OF THE BANKING INDUSTRY ASSETS AND DEPOSITS

2.1.2 Consumer Credit
Consumer credit outstanding rose by 6.7 per cent to ₦2,073.76 billion, at end-December
2021, compared with N1,840.24 billion at end-June 2021, accounting for 8.5 per cent of
total credit to the private sector. The increase in consumer credit accounted for the rise in
private sector credit to ₦24,464.18 billion, at end-December 2021. The rise was due, largely,
to the fall in the maximum lending rate, inducing an increase in the volume of extended
loans.
FIGURE 2.2 CONSUMER CREDIT

1 on a scale of 100 to 10,000


Dec 19
Jun 18
Dec-20
Jun-21
Dec-21
HHI
Concentration Ratio
CR(Deposits)
CR( Assets)
CR( Largest-Deposits)
CR (Largest-Assets)
HHI (Deposits) (rhs)
HHI (Assets) (rhs)

Dec_19
Jun-20
Dec_20
Jun_21
Dec_21
₦'Billion
Ratio (%)
Ratio to claims on private sector (lhs)
Consumer credit (rhs)
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as


2.1.3 Sectoral Distribution of Credit
Total credit extended to various sectors of the economy grew by 11.34 per cent to
N24,378.19 billion at end-December 2021, owing, largely, to the increased credit to the
Services Sector. Credit to Agriculture, Industry and Services sectors, increased by 26.25,
6.87 and 13.45 per cent, to ₦1,457.82 billion, ₦9,911.14 billion and ₦13,009.23 billion,
respectively.
Further analysis revealed that Industry and Services remained the dominant sectors,
accounting for 40.66 and 53.36 per cent of the total credit, respectively, compared with 42.36
and 52.37 per cent at end-June 2021. The share of Agriculture sector increased by 0.71
percentage point to 5.98 per cent, compared with 5.27 per cent, at end-June 2021. The
improved flow of credit to the Real Sector reflected the positive impact of the Bank’s
sustained implementation of various policies to encourage lending to the economy,
especially the Loan-to-Deposit ratio (LDR) and Global Standing Instruction (GSI) policies.
TABLE 2:2 SECTORAL ALLOCATION OF CREDIT
ITEM
Dec-20
Jun-21
Dec-21

Percentage Share in
Total
% Change Between
(=N='m)
(=N='m)
(=N='m)

Dec-

Jun-

Dec-

(2) &(3)
(1) &(3)
(1)
(2)
(3)

(4)
(5)
(6)


SECTORAL CREDIT ALLOCATION
[a] Agriculture


26.25
38.88
[b] Industry


6.87
16.03
of which Construction

965,188.0

1,096,192.9


(2.43)
10.81
[c] Services

10,781,857.9

11,466,570.9


13.45
20.66
of which Trade/General
Commerce

1,343,587.3

1,376,319.7


24.13
27.15
TOTAL PRIVATE SECTOR CREDIT

20,373,488.3

21,895,310.3

24,378,193.4

100.0
100.0
100.0

11.34
19.66

2.2 Other Financial Institutions
The total number of Other Financial Institutions (OFIs) stood at 6,682 at end-December
2021, comprising 7 Development Finance Institutions (DFIs), 866 Microfinance Banks
(MFBs), 100 Finance Companies (FCs), 34 Primary Mortgage Banks (PMBs) and 5,675
Bureaux-de-change (BDCs). Thus, there was a net increase of 62 new OFIs, compared with
6,620 institutions at end-June 2021. The change in the number of OFIs was attributed to the
merger of 15 MFBs and the licensing of 5 MFBs, 9 FCs and 62 BDCs.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 2:3 BREAKDOWN OF OTHER FINANCIAL INSTITUTIONS
S/N
Type
Total Number of Institutions
at end-December, 2021
Total
Number
of
Institutions at endJune, 2021

Microfinance Banks

Bureaux De Change
5,675
5,613

Finance Companies

Development
Finance
Institutions

Primary Mortgage Banks

Total
6,682
6,620

The total assets of the OFIs, excluding the BDCs, increased marginally by 0.91 per cent to
N5,223.66 billion at end-December 2021, compared with N5,176.36 billion at end-June 2021.
This was attributed mainly to increase in shareholders’ funds, as a result of compliance with
the increased minimum capital requirement for MFBs; and increases in deposits and other
liabilities.

Further analysis indicated that net loans and advances increased by 15.70 per cent to
N2,930.06 billion, at end-December 2021, from N2,532.38 billion, at end-June 2021, while
cash and bank balances decreased by 25.02 per cent to N227.37 billion, at end-December
2021, from N303.24 billion, at end-June 2021.
Similarly, placements and investments decreased by 17.80 per cent and 8.86 per cent to
N671.07 billion and N1,015.71 billion at end-December 2021, from N816.38 billion and
N1,114.39 billion, respectively, at end-June 2021. The decreases in placements and
investments due to repayment of borrowings and long-term liabilities.

Other liabilities increased by 28.53 per cent to N979.72 billion, at end-December 2021, from
N762.26 billion, at end-June 2021, while deposit liabilities increased by 6.95 per cent to
N1,106.79 billion, at end-December 2021, compared with N1,034.85 billion, at end-June
2021. However, borrowings and long-term liabilities decreased by 8.47 per cent and 18.04
per cent to N1,819.87 billion, and N581.25 billion, at end-December 2021, from N1,988.25
billion, and N709.22 billion, respectively, at end-June 2021.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.3 CONSOLIDATE BALANCE SHEET OF OFIS

2.2.1 Development Finance Institutions
The total assets of the sub-sector decreased by 2.03 per cent to N3,054.33 billion at endDecember 2021, compared with N3,117.74 billion at end-June 2021. The decline was due
largely to decreases in cash and bank balances and placements by 98.66 per cent and 18.59
per cent to N0.97 billion and N428.81 billion at end-December 2021, from N71.99 billion and
N526.75 billion, respectively, at end-June 2021.
Investments increased by 10.26 per cent to N1,002.36 billion at end-December 2021,
compared with N909.04 billion at end-June 2021, while loans and advances increased by
14.39 per cent to N1,585.39 billion at end-December 2021, from N1,385.95 billion at end-
June 2021, driven mainly by increase in deposit liabilities.
DFI:
N3117.74
Billion
PMB:
N501.3
Billion
FC:
N333.43
Billion
MFB:
N1223.89
Billion
Total Assets of OFIs at End- Jun. 2021
DFI
PMB
FC
MFB
DFI:
N3,054.3
3 Billion
PMB:
N505.61
Billion
FC:
N362.62
Billion
MFB:
N1,301.11
Billion
Total Assets of OFIs at End-Dec. 2021
DFI
PMB
FC
MFB


N'Billions
Assets and Liabilities
Jun-21
Dec-21
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

The aggregate shareholders’ funds increased by 7.34 per cent to N453.24 billion at endDecember 2021, from N422.26 billion at end-June 2021, due to accretion of N30.98 billion
to reserves of BOI, DBN and NMRC. Deposit liabilities also increased by 6.37 per cent to
N514.85 billion at end-December 2021, from N484.01 billion at end-June 2021, while other
liabilities increased by 11.54 per cent to N438.60 billion at end-December 2021, compared
with N393.22 billion at end-June 2021. However, borrowings decreased by 10.46 per cent to
N1,582.32 billion at end-December 2021, from N1,767.22 billion at end-June 2021.
A disaggregation of the total assets by institution, indicated that the BOI, DBN, FMBN,
NEXIM, BOA, NMRC and TIB accounted for 56.85, 16.35, 14.44, 6.20, 3.31, 2.78 and 0.07
per cent, respectively. The BOI, DBN, FMBN, NEXIM, BOA and NMRC accounted for 48.03,
20.29, 18.40, 7.18, 4.77 and 1.33 per cent, of total net loans and advances, respectively.
FIGURE 2.4 CONSOLIDATED BALANCE SHEET OF DFIS
FIGURE 2.5 TOTAL ASSETS OF DFIS


Jun-21
Dec-21
Periods
Total Assets of DFIs (N'Bn)


Assets and Liabilities
Consolidated Balance Sheet of DFIs (N'Bn)
Jun-21
Dec-21
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.6 TOTAL ASSETS AND LIABILITIES OF DFIS

2.2.2 Primary Mortgage Banks
The total assets of the sub-sector increased by 0.86 per cent to N505.61 billion, at endDecember 2021, compared with N501.30 billion at end-June 2021, owing largely to
increases in net loans and advances as well as placements with banks. Net loans and
advances and placements with banks increased by 4.27 per cent and 5.08 per cent to
N276.03 billion, and N73.93 billion, at end-December 2021, compared with N264.74 billion
and N70.35 billion, respectively, at end-June 2021.
However, investments decreased by 6.93 per cent to N58.97 billion at end-December 2021,
compared with N63.35 billion at end-June 2021. Also, other assets decreased by 11.78 per
cent to N53.42 billion, at end- December 2021, from N60.56 billion, at end-June 2021.
Similarly, the shareholders’ funds decreased by 11.86 per cent to N32.53 billion at endDecember 2021, from N36.91 billion at end-June 2021, owing to further depletion of
reserves.

Cash &
Bank
Balances
2.31%
Placements
16.90%
Investment
32.15%
Net Loans &
Advances
44.45%
Other
Assets
2.11%
Fixed
Assets
2.08%
Assets of DFIs at End- Jun. 2021
Cash &
Bank
Balances
0.03%
Placement
s
14.04%
Investmen
t
29.76%
Net Loans &
Advances
51.91%
Other
Assets
2.22%
Fixed
Assets
2.04%
Assets of DFIs at End- Dec. 2021
Paid-up
Capital
7.66%
Reserves
5.88%
Deposits
15.52%
Borrowings
56.69%
Due to
Banks
0.00%
Other
Liabilities
12.61%
Long-term
Liabilities
1.63%
Liabilities of DFIs at End- Jun. 2021
Paid-up
Capital
7.82%
Reserves
7.02%
Deposits
16.86%
Borrowings
51.81%
Due to
Banks
0.37%
Other
Liabilities
14.36%
Long-term
Liabilities
1.76%
Liabilities of DFIs at End- Dec. 2021
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

Deposit liabilities also decreased by 1.46 per cent to N180.20 billion, at end-December
2021, from N182.87 billion, at end-June 2021. However, Due-to-other-banks and other
liabilities increased to N21.56 billion and N194.26 billion as at end-December 2021, from
N14.39 billion and N190.17 billion, respectively, at end-June 2021, indicating increases of
49.83 per cent and 2.16 per cent, respectively.
FIGURE 2.7 CONSOLIDATED BALANCE SHEET OF PMBS (N'BN)

FIGURE 2.8 TOTAL ASSETS OF PMBS


Jun-21
Dec-21
Periods
Total Assets (N'Bn)
-100
-50

Assets and Liabilities
Jun-21
Dec-21
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.9 COMPOSITION OF ASSETS AND LIABILITIES OF PRIMARY MORTGAGE BANKS


Cash & Bank
Balances
4.55%
Placements
14.03%
Investment
12.64%
Net Loans &
Advances
52.81%
Other
Assets
12.08%
Fixed
Assets
3.89%
Assets of PMBs at End- Jun. 2021
Cash &
Bank
Balances
4.65%
Placement
s
14.62%
Investmen
t
11.66%
Net Loans &
Advances
54.60%
Other
Assets
10.57%
Fixed
Assets
3.90%
Assets of PMBs at End- Dec. 2021
Paid-up
Capital,
21.69%
Reserves, -
14.32%
Deposits,
36.48%
Due to
Banks,
2.87%
Long-term
Liabilities,
15.35%
Other
Liabilities,
37.93%
Liabilities of PMBs at End- Jun. 2021
Paid-up
Capital,
21.50%
Reserves,
-15.02%
Deposits,
35.64%
Due to
Banks,
4.27%
Long-term
Liabilities,
15.24%
Other
Liabilities,
38.42%
Liabilities of PMBs at End- Dec. 2021
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 2:4 FINANCIAL HIGHLIGHTS OF PMBS

End-June 2021
(N’ billion)
End-December

(N’ billion)
Change
(N’ billion)
% Change
Total Assets

Loans and Advances

Investments

Other Assets

Placements with Banks

Due to Banks

Reserves

Deposit liabilities

Other liabilities

Long-term Liabilities

Shareholders’ funds


The capital adequacy ratio of PMBs declined to 9.95 per cent at end-December 2021,
compared with 11.29 per cent at end-June 2021. The decline in the CAR was attributed
mainly to the losses recorded by some PMBs that negatively impacted their shareholders’
funds. The liquidity ratio declined to 43.65 per cent at end-December 2021, compared with
48.31 per cent at end-June 2021. The non-performing loan ratio of the subsector improved
significantly to 28.99 per cent at end-December 2021, compared with 48.91 per cent at endJune 2021. However, the non-performing loans ratio of 28.99 per cent remained far above
the regulatory maximum of 10 per cent.

2.2.3 Finance Companies
During the period under review, the Bank granted operating licences to nine institutions,
bringing the total number of FCs to 100 at end-December 2021, compared with 91 at endJune 2021. Total assets of FCs increased by 8.75 per cent to N362.62 billion, at endDecember 2021, from N333.43 billion, at end-June 2021. The development was attributed
largely to increases in balances with banks and net loans and advances by 23.09 per cent
and 17.02 per cent to N27.32 billion and N166.98 billion, respectively, at end-December
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2021, compared with N22.20 billion and N142.69 billion, respectively, at end-June 2021.
Furthermore, placements increased by 10.93 per cent to N41.89 billion, at end-December
2021, from N37.76 billion, at end-June 2021, while fixed assets decreased by 6.17 per cent
to N46.15 billion, at end-December 2021, compared with N49.18 billion, at end-June 2021.

Total borrowings and other liabilities increased by 7.47 per cent and 34.07 per cent to
N237.55 billion and N82.38 billion, respectively, at end-December 2021, from N221.03 billion
and N61.44 billion at end-June 2021. However, shareholders’ funds, decreased by 14.43 per
cent to N40.84 billion at end-December 2021, from N47.72 billion at end-June 2021, owing
largely to decline in reserves by 24.11 per cent.

TABLE 2:5 FINANCIAL POSITION OF FCS


End-June 2021
(N’ billion)
End-December

(N’ billion)
Change
(N’ billion)
% Change

Total Assets

Cash in Vault

Balances with Banks

Net Loans and
Advances

Investments

Placements

Fixed Assets

Borrowings

Other Liabilities

Shareholder’s Funds

Paid up capital

Reserves

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.11 TOTAL ASSETS OF FINANCE COMPANIES


Jun-21
Dec-21
Periods
Total Assets of FCs (N'Bn)

Assets and Liabilities
Consolidated Balance Sheet of FCs (N'Bn)
Jun-21
Dec-21
FIGURE 2.10 CONSOLIDATED BALANCE SHEET OF FCS
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.12 COMPOSITION OF ASSETS AND LIABILITIES OF FCS


Investible funds available to the FC sub-sector at end-December 2021 amounted to N42.17
billion. The funds were sourced mainly from increases in borrowings and other liabilities by
N16.52 billion and N20.93 billion, respectively. The funds were utilised mainly to increase
loans and advances, as well as placements.

The capital adequacy ratio declined by 4.38 percentage points to 11.12 per cent at endDecember 2021, compared with 15.50 per cent at end-June 2021. The decline in CAR was
due largely to 17.02 per cent and 23.09 per cent increases in loans and advances and
balances with banks, respectively, which led to a substantial increase in Risk Weighted
Assets.


Cash & Bank
Balances,
7.26%
Placements,
11.32%
Investments,
6.01%
Net Loans &
Advances,
42.80%
Other
Assets,
17.86%
Fixed
Assets,
14.75%
Assets of FCs at End- Jun. 2021
Cash & Bank
Balances
8.19%
Placement
s
11.55%
Investmen
t
5.45%
Net Loans &
Advances
46.05%
Other
Assets
16.04%
Fixed
Assets
12.73%
Assets of FCs at End- Dec. 2021
Paid-up
Capital,
8.31%
Reserves,
6.00%
Borrowings
66.29%
Long-term
Liabilities,
0.97%
Other
Liabilities,
18.43%
Liabilities of FCs at End- Jun. 2021
Paid-up
Capital,
7.07%
Reserves,
4.19%
Borrowings
65.51%
Long-term
Liabilities,
0.51%
Other
Liabilities,
22.72%
Liabilities of FCs at End- Dec. 2021
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

However, the NPL ratio decreased by 4.51 percentage points to 19.91 per cent, at endDecember 2021, compared with 24.42 per cent at end-June 2021, reflecting an improvement
in asset quality and loan repayment.

2.2.4 Microfinance Banks
During the review period, seven MFBs were licensed, while 15 MFBs merged into one,
bringing the total to 866 (9 National, 134 State and 723 Unit MFBs), compared with 875 (9
National, 132 State and 734 Unit MFBs) at end-June 2021.

Total assets of the MFBs increased by 6.31 per cent to N1,301.11 billion, at end-December
2021, from N1,223.89 billion, at end-June 2021. The increase was due to a significant rise
in net loans and advances by 22.10 per cent to N901.66 billion, at end-December 2021,
compared with N739.00 billion, at end-June 2021. However, placements with banks
decreased by 30.34 per cent to N126.45 billion, at end-December 2021, compared with
N181.51 billion, at end-June 2021, while fixed assets decreased by 47.20 per cent to N14.65
billion, at end-December 2021, from N27.75 billion, at end-June 2021.
The shareholders’ funds increased by 10.91 per cent to N159.86 billion at end-December
2021, from N144.41 billion at end-June 2021, owing largely to capital injection and accretion
to reserves from ploughed back profits. Similarly, other liabilities increased by 14.68 per cent
to N264.49 billion at end-December 2021, from N230.63 billion at end-June 2021. Total
deposit liabilities increased by 11.90 per cent to N411.74 billion at end-December 2021,
compared with N367.97 billion at end-June 2021.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 2:6 HIGHLIGHTS OF FINANCIAL POSITION OF MFBS


End-June 2021
(N’ Billion)
End-December

(N’ Billion)
Change
(N’ Billion)
% Change

Total Assets

Placement with Banks

Net Loans and Advances

Fixed Assets

Paid up capital

Reserves

Shareholder’s Funds

Deposits

Long
Term
Loans/Onlending

Other Liabilities

FIGURE 2.13 CONSOLIDATED BALANCE SHEET OF MFBS

Assets and Liabilities
Jun-21
Dec-21
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 2.14 TOTAL ASSETS OF MFBS


FIGURE 2.15 COMPOSITION OF ASSETS AND LIABILITIES OF MFBS


Jun-21
Dec-21
Cash & Bank
Balances
15.05%
Placements
14.83%
Investment
2.34%
Net Loans &
Advances
60.38%
Other
Assets
5.13%
Fixed
Assets
2.27%
Assets of MFBs at End- Jun. 2021
Cash &
Bank
Balances... Placement
s
9.72%
Investmen
t
2.15%
Net Loans &
Advances
69.29%
Other
Assets
4.40%
Fixed
Assets
1.13%
Assets of MFBs at End- Dec. 2021
Paid-up
Capital,
7.62%
Reserves,
4.16%
Deposits,
30.07%
Takings
from Other
Banks,
1.33%
Long-term
Liabilities,
37.98%
Other
Liabilities,
18.84%
Liabilities of MFBs at End- Jun. 2021
Paid-up
Capital,
7.20%
Reserves,
5.08%
Deposits,
31.65%
Takings
from
Other
Banks,
1.27%
Long-term
Liabilities,
34.47%
Other
Liabilities,
20.33%
Liabilities of FCs at End- Dec. 2021
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

Investible funds at end-December 2021 amounted to N183.67 billion. The funds were
sourced mainly from increases of N43.77 billion in deposits, N33.86 billion in other liabilities
and N15.27 billion in reserves, as well as decreases of N55.89 billion in placements with
banks, N13.10 billion in fixed assets and N11.06 billion in bank balances. The funds were
utilised mainly to increase net loans and advances by N162.66 billion and reduce long-term
liabilities by N16.44 billion.

The capital adequacy and liquidity ratios of MFBs were 15.42 per cent and 78.01 per cent at
end-December 2021, compared with 18.80 per cent and 105.50 per cent, respectively, at
end-June 2021. However, the average Portfolio-At-Risk (PAR) was 5.94 per cent at endDecember 2021, compared with 6.62 per cent at end-June 2021. The regulatory
requirements are minimum of 10 per cent and 20 per cent for CAR and liquidity ratios,
respectively, while a maximum of 5 per cent is for PAR.
2.2.4.1 New Capital Regime for Microfinance Banks
The initial recapitalisation deadlines for MFBs for first and second phases were April 2020
and April 2021, respectively. In response to the impact of COVID-19 pandemic on the
recapitalisation exercise, the Bank extended the deadlines to April 2021 and April 2022 for
the first and second phases, respectively. Following the expiration of the April 2021 deadline
for the first phase, the Bank conducted a capital verification exercise to ascertain the level of
compliance of MFBs with the first phase of recapitalisation requirement. The capital
verification exercise revealed that economic challenges slowed down the MFBs’ efforts to
increase their capital to the required minimum, with 263 MFBs meeting the 2021 capital
requirement deadline. In addition, the Bank granted approval for 15 Unit MFBs to merge
during the review period. However, an additional 382 MFBs had adequate capital to either
downgrade to a lower authorisation, opt to relocate to Tier 2 areas or adopt merger and
acquisitions options.

2.2.4.2 Maturity Structure of Loans and Advances and Deposit Liabilities
Short-term credits dominated the microfinance market in the second half of 2021, as they
accounted for 78.67 per cent of the total loans and advances at end-December 2021,
representing an increase of 38.38 percentage points, compared with 40.29 per cent at endJune 2021. Loans and advances with maturity period of over 360 days accounted for 21.33
per cent, compared with 59.71 per cent at end-June 2021.

The deposit structure also remained largely short-term, as deposits of less than one (1) year
maturity accounted for 86.19 per cent, an increase of 6.14 percentage points, compared with
80.05 per cent at end-June 2021. On the other hand, deposits of over one (1) year maturity
accounted for 13.81 per cent, reflecting a decrease of 6.14 percentage points, compared
with 19.95 per cent at end-June 2021.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 2:7 MATURITY STRUCTURE OF LOANS AND ADVANCES AND DEPOSIT LIABILITIES OF
MFBS
Jun-21
Dec-21
Tenor/Period
Loans and
Advances
Deposits
Tenor/Period
Loans and
Advances
Deposits

%
%

%
%
0-30 Days
10.22
31.47
0-30 Days
21.69
40.38
31-60 Days
3.77
9.94
31-60 Days
7.59
7.58
61-90 Days
4.43
11.2
61-90 Days
7.86
11.99
91-180 Days
12.13
16.34
91-180 Days
22.48
15.03
181-360 Days
10.14
11.28
181-360 Days
19.27
11.38
Short-Term
40.69
80.23
Short-Term
78.89
86.36
Above

Days
59.31
19.77
Above 360 Days
21.11
13.64
Total

Total

2.2.5 Capacity Building Programme
As part of the capacity building efforts, 301 staff of MFBs were certified by the Chartered
Institute of Bankers of Nigeria (CIBN), on completion of the Microfinance Certification
Programme during the review period. Consequently, the total number of certified staff
increased to 7,792 at end-December 2021, from 7,403 at end-June 2021.
A workshop was also organised by the Bank for External Auditors with a view to enhancing
the quality of audited financial statements.


2.2.6 Bureaux De Change
The total number of BDCs stood at 5,675 at end-December 2021, compared with 5,613 at
end-June 2021, indicating an increase of 62 new institutions licensed before the suspension
of issuance of new BDC licenses.

In July 2021, the Bank suspended issuance of new BDC licenses as well as sale of forex to
the BDCs because of concerns stemming from some activities of the BDCs which also placed
a significant financial burden on the Bank. The concerns included:

▪
the gradual dollarisation of the Nigerian economy with consequent adverse impact
on the conduct of monetary policy and subtle evasion of the Bank’s cashless policy
initiative
▪
ownership of multiple BDCs by some promoters, in their bid to illegally procure
foreign exchange multiple times from the Bank, in contravention of the regulatory
guidelines.
▪
financing of unauthorized transactions with the foreign exchange procured from the
Bank, and

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

▪
incidences of patronage of the BDCs, through illegal forex dealers, by some
international institutions to fund their local operations in Nigeria.
2.3 Financial Markets
2.3.1 Money Market

The Bank maintained its accommodative monetary policy stance as reflected in the decision
of the Monetary Policy Committee (MPC) to hold the Monetary Policy Rate (MPR) at 11.50
per cent, with an asymmetric corridor of +100/-700 basis points for Standing Lending Facility
(SLF) and Standing Deposit Facility (SDF). Cash Reserve Ratio (CRR) and Liquidity Ratio
(LR) were also maintained at 27.50 and 30.00 per cent, respectively, in the review period.
Sales of CBN bills, maintenance of cash reserve requirements and foreign exchange
constituted major withdrawals from the system. The open-buy-back (OBB) and unsecured
interbank call weighted daily average opened at 11.69 and 9.82 per cent, respectively. The
rates peaked at 21.34 and 25.00 per cent for OBB and unsecured interbank calls on August
20 and October 29, 2021, respectively, owing to reduced banking system liquidity. The rates
moderated to 18.00 per cent on November 30, 2021 for unsecured inter-bank calls and 9.47
per cent on December 31, 2021 for OBB.

The monthly average OBB and inter-bank call rates closed at 12.59 and 13.42 per cent at
end-December 2021, compared with 16.39 and 16.87 per cent, respectively, at end-June
2021, owing to improved liquidity conditions in the market occasioned by maturing CBN bills
and NTBs. The OBB weighted daily average rates ranged between 3.52 and 21.34 per cent,
while the inter-bank call rates ranged between 4.00 and 25.00 per cent, compared with 0.36
and 32.91 per cent and 2.00 and 30.00 per cent, respectively, in the first half of 2021.

FIGURE 2.16 MONEY MARKET RATES FOR 2021


JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Inter-Bank Call (%)
4.40
11.65 10.10 30.00 15.95 16.87 12.38 13.45 13.21 13.33 11.53 13.42
Open-Buy-Back (OBB) (%)
3.28
8.67
12.61 16.61 16.18 16.39 11.91 12.65 11.11 12.81 10.61 12.59
MPR (%)
11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50
Call NIBOR (%)
3.18
8.42
12.75 14.30 15.91 17.20 13.39 13.70 12.38 13.89 12.37 13.78
30-day NIBOR

Per Cent
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
2.3.1.1 Developments in Interest Rates
The volume of lending transactions, which surged by 11.64 per cent to N23,354.01 billion in
the review period, reflected improvement in banking system liquidity in the second half of
2021. Thus, the average maximum lending rate dipped by 1.10 percentage point to 27.51
per cent, from 28.61 per cent in the first half of 2021. However, the prime lending rate
increased marginally by 0.37 percentage point to 11.67 per cent and was negative in real
terms, while the maximum lending rate remained above the inflation rate of 15.63 per cent
in December 2021.
The weighted average term-deposit rate rose by 1.04 percentage point to 3.80 per cent,
leading to a narrowed spread between the deposit and lending rates. The spread between
the average term deposit and maximum lending rates narrowed by 2.15 percentage points
to 23.71 per cent in the second half of 2021.
2.3.1.2 Nigerian Treasury Bills
Nigerian Treasury Bills (NTBs) for 91-, 182- and 364-day maturities totalling N2,469.86 billion
were issued and allotted during the second half of 2021. This reflected an increase of
N804.24 billion or 48.28 per cent, compared with N1,665.62 billion in the preceding period.
The average marginal rate for the review period ranged between 2.4900- 2.5000 per cent for
the 91- day, 3.4500- 3.5000 per cent for the 182- day and 4.900-9.1500 per cent for the 364day tenors.
The holding structure of NTB allotted during the review period indicated that commercial
banks (including foreign investors) held N1,696.13 billion or 68.67 per cent, merchant banks
N89.10 billion or 3.61 per cent, while mandate and internal funds customers held N551.38
billion or 22.32 per cent.
The total stock of NTBs outstanding at end-December 2021 stood at N3.78 trillion. The
holdings structure indicated that parastatals accounted for N681.06 billion (0.47 per cent);
commercial banks, N1,614.20 billion (53.95 per cent); merchant banks, N14.03 billion (22.76
per cent); and CBN held the balance of N682.58 billion (22.82 per cent).
During the review period, total value of transactions in NTBs on the FMDQ exchange
amounted to N15,550.53 billion, up from N13,116.03 billion in the preceding half year,
representing an increase of 18.56 per cent. Also, the total number of Deals increased by
38.34 per cent to 16,958 from 12,258.
2.3.1.3 Foreign Exchange Market
The Bank sustained its foreign exchange interventions in the retail Secondary Market
Intervention Sales (SMIS) window for agriculture, airline, petroleum products, raw materials
and machinery transactions. Similarly, the Bank increased sales of foreign exchange for
invisible trade transactions, such as basic personal and business travels, medical bills, and
school fees. The SMEs, oil companies and the Investors & Exporters (I&E) windows
broadened access to foreign exchange, while sales to the BDC segment was discontinued.
The Bank also continued its participation in the Naira-Settled OTC Futures Market.

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
2.3.1.4 Foreign Exchange Market US Dollar Sales and Purchases
The total US dollar sales by the Bank in the second half of 2021 amounted to US$10,543.52
million, compared with US$ 5,831.01 million in the first half of 2021, reflecting an increase of
44.69 per cent. A breakdown indicated that retail spot sales amounted to US$615.07 million;
invisible
trade
sales,
US$1,041.00
million;
I&E
window,
US$3,316.91 million; SMEs, US$793.13 million; and Retail forwards sales, US$4,772.42
million. Furthermore, the Bank purchased US$198.07 million, resulting in net sales of
US$9,735.87 million.
Forwards contracts, totalling US$5,175.53 million matured during the review period, while
contracts valued US$2,815.95 million were outstanding at end-December 2021.
Table 2:8 Interventions at the Interbank Foreign Exchange Market
FX Transactions
End-Jun 21
End-Dec 21

Sales
Purchases
Sales
Purchases

(N million)
(N million)
(N million)
(N million)
SMIS Spot

Invisible
336.49
1,041.00

SME
734.36
793.13

I&E
1,375.00

3,316.91

Forwards
2,950.13
4,777.42


Total

2.3.1.5 Exchange Rate Movement at the Investors’ & Exporters’ Window
The rate at the I&E window opened at N410.70/US$ on July 1, 2021 and closed at
N435.00/US$ on December 31, 2021, reflecting a 5.58 per cent depreciation.
FIGURE 2.17 INVESTORS’ & EXPORTERS’ RATES


Jan-21
Feb-21 Mar-21 Apr-21 May-21 Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21 Dec-21
(N/US$)
Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
I&E 394.13

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.3.1.6 OTC FX Futures
The notional amounts of OTC FX Futures contracts executed, matured and outstanding
during the review period stood at US$3,577.39 million, US$2,496.85 million and
US$5,331.89 million, respectively, compared with US$3,145.09 million, US$6,987.38 million
and US$4,251.38 million at end-June 2021.
2.3.1.7 Naira/Yuan Bilateral Currency Swap Agreement
During the review period, CNY2,093.51 million (Chinese Renminbi) was sold in 11 auctions,
compared with CNY1,217.09 million sold in the preceding period. A total of CNY5,780.06
million had been sold from inception to end-December 2021.
2.3.2 Capital Market
In the second half of 2021, the capital market showed positive performance, with
improvements in the equities and debt segments but a decline in the Exchange Traded Fund
(ETF) segment. The aggregate Market Capitalisation increased by 12.91 per cent to close
at N43.12 trillion, at end-December 2021, from N38.19 trillion, at end-June 2021. The
equities and debt segments increased by 12.85 per cent and 2.01 per cent to N22.30 trillion
and N17.74 trillion, respectively. The ETF component however declined by 41.67 per cent to
N0.01 trillion.

TABLE 2:9 NGX ASI, EQUITY AND DEBT MARKET CAPITALISATION

EndDecember

End-June

EndDecember

% Change (B &
C)
NGX ASI

Aggregate Market Cap (N’Trn)

Equity Market Cap (N’Trn)

Debt Market Cap (N’Trn)

Of which Government Debt

Corporate Debt

Exchange Traded Funds Market Cap
(N’ Bn)

Source: NGX Reports

2.3.2.1 Equities Market
2.3.2.1.1 NGX
The Nigerian Exchange Limited (NGX) All Share Index (ASI) and Equities Market
Capitalisation experienced a bullish trend in the second half of 2021, owing largely to assets
switch from fixed income and other alternative investments to equities. The NGX ASI closed

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

at 42,716.44 at end-December 2021, reflecting an increase of 12.69 per cent compared with
37,907.28 at end-June 2021. Similarly, the equities market capitalisation closed at
N22,296.84 billion, indicating an increase of 12.84 per cent, compared with N19,760.39
billion at end-June 2021.
The performances of the sectoral indices were generally positive in the second half of 2021,
as 14 out of 17 indices closed the year on a positive note. The NGX Oil/Gas index recorded
the highest growth at 52.52 per cent, while NGX ASeM recorded the lowest at -8.11 per cent.
The banking, pension and insurance indices recorded positive performances with 3.32, 16.96
and 4.54 per cent growth, respectively. Comparatively, in the first half of 2021, eight out of
17 indices ended the period on a positive note, with NGX Oil/Gas index recording the highest
increase of 38.41 per cent.

TABLE 2:10 NGX INDICES
Description
December

June 2021
H1 YTD
December 2021
H2 YTD
%
NGX 30 Index
1,640.11

1,594.87

-2.76

1,722.3

5.01
NGX AFR Div Yield Index
2,017.91

2,329.50

15.44

2559.43

26.84
NGX ASeM INDEX

729.87

703.94

-3.55

670.65

-8.11
NGX Banking Index
393.02

366.47

-6.76

406.07

3.32
NGX CG Index
1,220.61

1,199.29

-1.75

4.70
NGX Consumer Goods Index
573.35

600.88

4.80

589.28

2.78
NGX Growth Index
991.89

1,028.75

3.72

1,269.66

28.00
NGX Industrial Index
2,052.33

1,887.76

-8.02

2008.3

-2.15
NGX Insurance Index
189.50

203.84

7.57

198.11

4.54
NGX Lotus Islamic Index
2,846.19

2,760.73

-3.00

3,009.51

5.74
NGX Main-Board Index
1,725.91

1,600.77

-7.25

1,748.37

1.30
NGX MERI GROWTH INDEX
1,654.15

1,789.98

8.21

1,805.02

9.12
NGX MERI VALUE INDEX
1,851.31

1,801.66

-2.68

2,134.95

15.32
NGX Oil/Gas Index
226.20

313.08

38.41

345.01

52.52
NGX PENSION INDEX
1,388.64

1,479.77

6.56

1,624.09

16.96
NGX Premium Index
3,470.77

3,527.67

1.64

4,167.78

20.08
NGX-AFR Bank Value Index
1,113.18

1,057.09

-5.04%

1,038.82

-6.68%
Source: NGX Reports
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

Foreign Portfolio Investment (FPI) inflows totalled N99.64 billion, while divestments
(outflows) stood at N112.9 billion, reflecting a net outflow of N13.26 billion in the second half
of 2021. In comparison, inflows in the first half of 2021 amounted to N105.24 billion, while
divestments stood at N116.72 billion, reflecting a net outflow of N11.48 billion.

FPIs accounted for 24.58 per cent of total equity transactions in the review period, compared
with 21.46 per cent in the preceding period. Domestic investments accounted for the balance
of 75.42 per cent transactions, compared with 78.54 per cent in the preceding period.
TABLE 2:11 DOMESTIC AND FOREIGN PORTFOLIO PARTICIPATION IN EQUITIES TRADING
Period
H1 2020
H2 2020
H1 2021
H2 2021
Total

Foreign N'Billion

Foreign %

Domestic N'Billion

Domestic %

Foreign Inflow N'Billion

Foreign Outflow N'Billion

NSE ASI

Market Capitalisation


2.3.2.1.2 NASD
The NASD Unlisted Securities Index declined by 1.59 per cent, from 754.88 at end-June
2021, to 742.85 points at end-December 2021. However, the Market Capitalisation increased
by 17.23 per cent to N629.03 billion at end-December 2021, from N536.58 billion at endJune 2021. Further analysis showed that 12.48 billion shares worth N23.69 billion were
traded in 2,323 deals in the second half of 2021, compared with 466 million shares valued
N9.15 billion traded in 2,665 deals in the preceding half year. The Volume of shares traded
increased by 2,576.72 per cent, while Value traded increased by 158.89 per cent, compared
to the previous year.
TABLE 2:12 NASD TRANSACTIONS
2020 Total
H1
H2
2021 Total
YTD
Unlisted Index
(Points)

754.88
742.85

1.34%
Market Cap
(N’Bn)

536.58
629.03

19.60%
Deals
1,498

2,665.00

2,323.00
4,988
232.98%
Volume('000)

Value (N'000)

12,676,360

9,151,780.82

23,693,687.34

32,848,125

159.13%
Source: NASD Reports
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.3.2.2 Commodities Market
During the review period, the number of commodities exchanges increased to 5, with the
licencing of Lagos Commodities and Futures Exchange, and Prime Commodities Exchange
Limited. Commodities exchanges provide facilities, regulations and standards for the orderly,
efficient and transparent trading of designated commodities. By efficiently linking producers,
commodities and industries, the exchanges facilitate job creation, improve living standards
and unlock the economic potentials of the agricultural and other commodities value chain.
2.3.2.2.1 AFEX Commodities Exchange
The overall value and volume of commodity transactions at the AFEX commodities
exchanges declined by 42.16 and 55.72 per cent, to N44.92 billion and 184 million kg,
respectively, at end-December 2021, from N77.65 billion and 417 million kg, respectively, at
end-June 2021. The value of Cocoa traded increased significantly by 60.52 per cent, while
Soybean and Paddy Rice also increased by 56.90 and 47.20 per cent respectively. However,
the value of Cashew and Ginger traded declined by 76.42 and 61.76 per cent, respectively.
TABLE 2:13 AFEX TRANSACTIONS (N’M)
Product
Cashew
Ginger
MaizeWhite
Paddy
Rice
Soybeans
Cocoa
Sesame
Sorghum
Grand
Total
H1

H2

Change


TABLE 2:14 AFEX TRANSACTIONS VOLUME AND VALUE (N’M)

H1
H2
% Change Volume
Total Volume
(kg)
417,686,542
184,960,516
-125.82
Value(N’M)
77,656.37
44,920.15
-72.88

2.3.2.2.2 Other Commodities Exchanges
Gezawa Commodities Market and Exchange Limited (GCMX) traded a total of 82.40 metric
tonnes of maize valued ₦19.36 million in 14 deals in the review period.
Trading activities on the Lagos Commodities and Futures Exchange (LCFE) resumed in
2021, however, there were no trades recorded in the second half of the year. At end-June
2021, a total of 556 metric tonnes valued at ₦98.26 million was traded in 36 deals. Paddy
rice was the most traded commodity, accounting for 49.90 per cent of the total turnover.
Prime Commodity Exchange Limited (PCX) was registered in the review period but is yet to
commence trading activities. There was no trading on the Nigeria Commodity Exchange
(NCX) during the year. The CBN injected ₦50 billion capital to reposition the NCX to a worldclass commodity exchange that would galvanize the agricultural value chain, economically
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

empower farmers and unleash the significant export potential of the Nigerian agricultural
sector.

2.3.2.3 Bonds
2.3.2.3.1 FGN Bonds
New issues and re-openings valued N850.00 billion FGN bonds were offered during the
review period, indicating a decrease of 5.56 per cent from the N900.00 billion auctioned in
the first half of 2021. Public subscriptions and sales decreased to N1,630.92 billion and
N1,192.01 billion in the second half of 2021, compared with N1,726.40 billion and N1,451.00
billion in the first half of 2021, respectively.
During the review period, total value of transactions in FGN bonds on the FMDQ exchange
amounted to N12,156.83 billion, down from N12,967.03 billion in the preceding half year,
representing a decrease of 6.25 per cent. Also, the total number of Deals decreased by 15.05
per cent to 19,099 from 22,483.

The yield curve shifted slightly downward at the short and long ends of the curve, compared
with the levels in the preceding period. This development depicted lower yields at both ends
of the curve in the review period, resulting in reduced investors’ appetite for government
securities.

FIGURE 2.18 YIELD CURVE

Source: FMDQ-OTC Plc

2.3.2.3.2 FGN Savings Bonds (FGNSB)
A total of ₦3.53 billion was allotted during the review period, indicating a decrease of ₦1.33
billion or 27.36 per cent when compared with ₦4.86 billion at end-June 2021. The decrease
was attributable to a lower amount of savings bond offered by the government. The coupon
rate applied ranged from 6.8990 to 8.8640 per cent and 7.8990 to 9.8640 per cent for the 2-
and 3- year bonds, respectively. The ranges of coupon rates in the preceding period were

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

lower, between 2.1970 to 8.8890 per cent and 3.1970 to 9.8890 for the 2- and 3- years
respectively.

2.3.2.3.3 Green Bonds
There was no issue of Green Bonds during the review period. However, the total outstanding
at end-December 2021 remained N25.69 billion.
There were no transactions in the Green Bonds on the FMDQ exchange during the review
period.

2.3.2.3.4 FGN Sukuk
There was a new issue of FGN Sukuk Bond of N250 billion during the review period.
Consequently, the total outstanding stood at N612.56 billion at end-December 2021.
During the review period, total value of transactions in FGN Sukuk on the FMDQ exchange
amounted to N115.37 billion, down from N354.31 billion in the preceding half year,
representing a decrease of 67.44 per cent. Also, the total number of Deals decreased by
14.76 per cent to 231 from 271.

2.3.2.3.5 Sub-National Bonds
*During the review period, three sub-national bonds amounting to N3.08 billion, matured,
while nine states redeemed bonds totalled N40.15 billion. Outstanding sub-national bonds
stood at N160.51 billion at end-December 2021.
During the review period, total value of transactions in Sub-national bonds on the FMDQ
exchange amounted to N0.29 billion, up from N0.08 billion in the preceding half year,
representing an increase of 262.50 per cent. Also, the total number of Deals increased by
250.00 per cent to 7 from 2.

2.3.2.3.6 Corporate Bonds
During the review period, corporate bonds totalling N225.80 billion and N65.78 billion were
issued and redeemed, respectively. Corporate bonds worth N874.78 billion were outstanding
at end-December 2021, compared with N714.77 billion at end-June 2021.
During the review period, total value of transactions in corporate bonds on the FMDQ
exchange amounted to N27.04 billion, up from N15.26 billion in the preceding half year,
indicating an increase of 77.20 per cent. Also, the total number of Deals increased by 225.00
per cent to 39 from 12.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.3.2.3.7 Bonds - Secondary Market

TABLE 2:15 S&P/FMDQ SOVEREIGN BOND INDEX
S&P/FMDQ Nigeria
Sovereign Bond Index
Index
Points
QTD
YTD
H1
532.98
(4.62)
(20.48)
H2
569.79
0.97
(14.99)
Source: FMDQ Reports

2.3.2.4 Mutual Funds

The Collective Investment Schemes (CIS) industry is yet to fully recover from the effect of
the Covid-19 pandemic as investments in the year under review witnessed decline in most
of the fund categories.
On an annual basis, the aggregate Net Asset Value (NAV) of all authorised CIS fell by 12.8
per cent, from N1.49 trillion in 2020. However, on a semi-annual basis, the NAV improved
by 4.08 per cent to N1.30 trillion at end-December 2021, from N1.25 trillion at end-June 2021.

TABLE 2:16 CIS FUNDS

Mutual Funds/Cis Net
Asset Value (N’Trn)
Percentage
change over
preceding half
year
(%)
YTD (% change)
H2 2020
1.488

H1 2021
1.250
-15.99
-16.00
H2 2021
1.301
4.08
-13.00


2.3.2.5 Other Key Developments in the Capital Market
There were many key developments in the capital market during the review period including:
i.
The reintroduction by Securities and Exchange Commission (SEC) of the requirement
for Capital Market Operators (CMOs) to renew their registration annually to ensure,
only fit and proper CMOs are in the market.
ii.
The SEC, in collaboration with Nigeria Employers' Consultative Association, launched
the Securities Issuers Forum (SIF) in August 2021 to serve as an interactive platform
to encourage more listings, deepen the market and enhance its contribution to
economic growth.
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

iii.
To increase investor confidence, the SEC introduced mandatory custody
requirements for all funds and portfolios.
iv.
The first wholly electronic public offering of equities was approved by SEC with the
combined feature of price discovery through a book-building exercise to qualified
institutional investors, and subsequent offer to retail investors at the determined price.
v.
For the first time, twenty-one derivatives contracts were registered on the Nigerian
Exchange Limited (NGX) and FMDQ Securities Exchange Limited (FMDQ) platforms
with the potential of improving risk management, market depth and liquidity.
vi.
Rules and Guidelines on the following were issued: Robo-Advisory services; Trade
Repositories; Regulatory Incubation; Central Counterparties (CCP); Investmentbased Crowdfunding; Mandatory Registration of Private Funds (Discretionary and
Non-Discretionary); and Annual Renewal of Registration of Capital Market Operators.


2.4 Real Sector Interventions
The Bank increased its interventions in the real sector, with emphasis on agriculture, youth
entrepreneurship and domestic productive capacity development to consolidate the gains
recorded in the first half of the year.
2.4.1 Agricultural Policy Support
2.4.1.1 Agricultural Credit Guarantee Scheme
In the second half of 2021, a total of 21,947 loans, valued ₦3.75 billion were guaranteed
under the Scheme, compared with 9,719 loans, valued at ₦2.17 billion in the first half of the
year. These outcomes indicated increases of 125.82 and 72.81 per cent in the number and
value of loans guaranteed, respectively. Also, ₦2.01 billion loans were repaid, compared
with ₦1.75 billion repaid in the first half of 2021 representing an increase of 14.86 per cent,
while the number of loans repaid declined from 17,742 at end-June 2021 to 13,349, reflecting
a decrease of 24.76 per cent.
2.4.1.2 Commercial Agriculture Credit Scheme
Under the Scheme, ₦14.35 billion was disbursed in the second half of 2021, reflecting a
decrease of 11.69 per cent, compared with ₦16.25 billion in the first half of 2021. On the
other hand, a total of ₦53.28 billion was repaid in the review period, showing an increase of
156.27 per cent, compared with ₦20.01 billion in the first half of 2021.
2.4.1.3 Anchor Borrowers’ Programme
The sum of ₦215.01 billion was disbursed in the second half of 2021 to 384,617 smallholder
farmers for the production of major agricultural commodities, compared with ₦179.35 billion
disbursed to 1,008,457 farmers in the preceding period. Furthermore, a total of 472,843
hectares of land were cultivated, compared with 1,061,892 hectares in the first half of 2021,
reflecting a decrease of 55.47 per cent. The sum of ₦53.09 billion was repaid in the review
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

period, compared with ₦15.47 billion in the preceding period, representing an increase of
243.18 per cent.
2.4.1.4 Accelerated Agriculture Development Scheme
The sum of ₦3.37 billion was disbursed in the second half of 2021, compared with ₦1.50
billion in the first half of 2021. Repayments under the Scheme amounted to ₦5.43 billion in
the review period, compared with ₦0.25 billion repaid in the preceding period.

2.4.1.5 Paddy Aggregation Scheme
No disbursement was made under the Scheme in the review period, compared to ₦4.17
billion released for an integrated rice milling project in the first half of 2021. The sum of ₦4.66
billion was repaid during the review period. No repayment in the preceding half year because
of the moratorium granted.
2.4.1.6 Maize Aggregation Scheme
No disbursement was made under the Scheme in the review period, compared to ₦0.35
billion released for two (2) projects in the first half of 2021 under the scheme. There were no
repayments as all facilities were under moratorium.
2.4.1.7 National Food Security Programme
There were no disbursements in 2021 under the Programme. Repayments totalled ₦2.30
billion in second half of 2021, compared with ₦0.60 billion repaid in first half of 2021,
indicating a 283.33 per cent increase.
2.4.2 Small and Medium Enterprises & Industrial Policy Support
2.4.2.1 Micro, Small and Medium Enterprises Development Fund
The sum of ₦0.68 billion was disbursed during the second half of 2021, compared with ₦0.05
billion disbursed in the first half of 2021. Repayments during the review period stood at ₦2.77
billion, compared with ₦3.52 billion in the first half of 2021, reflecting a decrease of 21.31 per
cent.
2.4.2.2 Agribusiness/Small and Medium Enterprises Investment Scheme
In the review period, the sum of ₦2.86 billion was disbursed for 8,538 projects, compared
with ₦9.79 billion disbursed for 1,067 projects in the first half of 2021. These changes
indicated decreases of 70.79 and 700.19 per cent in value and number of projects,
respectively, compared with the first half of 2021. Repayments in the review period amounted
to ₦0.03 billion, compared with ₦0.02 billion in the first half of 2021.

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.4.2.3 Creative Industry Financing Initiative
In the second half of 2021, the sum of ₦0.26 billion was disbursed for 30 projects, compared
with ₦0.07 billion for 21 projects in the first half of 2021. This reflected increases of 367.86
and 42.86 per cent in value and number of projects financed, compared with the levels in the
preceding period. The sum of ₦0.21 billion was repaid in the second half of 2021, compared
with ₦0.05 billion in the first half of 2021.
2.4.2.4 Targeted Credit Facility
During the period under review, the sum of ₦44.90 billion was disbursed to 64,008 projects,
compared with ₦144.93 billion released for 323,654 projects during the first half of 2021.
These changes reflected decreases of 69.02 per cent and 80.22 per cent in value and
number of projects, respectively. There was no repayment as all the facilities were under
moratorium.
2.4.2.5 Nigeria Youth Investment Fund
During the period under review, the sum of ₦0.88 billion was disbursed for 909 beneficiaries,
compared with ₦2.81 billion for 5,855 beneficiaries in the first half of 2021. There were no
repayments as the facilities were under moratorium.
2.4.2.6 Tertiary Institutions Entrepreneurship Scheme
The Tertiary Institutions Entrepreneurship Scheme (TIES) was introduced in August 2021 to
create a paradigm shift among undergraduates and graduates of Nigerian polytechnics and
universities from seeking white collar jobs to a culture of entrepreneurship geared towards
job creation, economic growth and sustainable development. In the review period, the sum
of ₦0.03 billion was disbursed for 6 beneficiaries.
2.4.3 Real Sector Policy Support
2.4.3.1 RSSF - Differentiated Cash Reserve Requirement
The sum of ₦304.20 billion was disbursed for thirty-nine projects in the second half of 2021,
compared with ₦164.81 billion for twenty-three projects in the first half of 2021, reflecting
increases of 84.58 and 69.56 per cent in terms of total amount disbursed and the number of
projects funded, respectively. The sum of ₦12.20 billion was repaid in the second half of
2021, compared with ₦7.12 billion in the preceding period, indicating an increase of 71.35
per cent.
2.4.3.2 COVID-19 Intervention for the Manufacturing Sector
In the review period, the sum of ₦172.10 billion was disbursed for forty-four projects,
compared with ₦35.03 billion for 16 projects in the first half of 2021, indicating increases of

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

391.29 per cent and 175 per cent in terms of total amount disbursed and the number of
projects funded, respectively.
2.4.3.3 Healthcare Sector Intervention Facility
The sum of ₦11.05 billion was disbursed for 23 projects in the second half of 2021, compared
with ₦25.16 billion for 23 projects in the first half of 2021. The sum of ₦4.89 billion was repaid
in the second half of 2021, compared with ₦5.93 billion in the first half of 2021.
2.4.3.4 Healthcare Sector Research and Development Intervention (Grant) Scheme
The sum of ₦0.03 billion was disbursed in the second half of 2021 as against no
disbursement in the first half of 2021.
2.4.3.5 Textile Sector Intervention Facility
In the review period, the sum of ₦1.90 billion was disbursed for 3 projects, compared with
₦0.39 billion disbursed for 1 project in the first half of 2021. This represents a decrease of
387.18 per cent in the review period.
2.4.3.6 CBN-BOI Industrial Facility
In the second half of 2021, there was no disbursement, compared with ₦50.00 billion
released to BOI in the first half of 2021.
2.4.3.7 Presidential Fertilizer Initiative
There were no disbursements in 2021 under the Initiative. The sum of ₦2.75 billion was
repaid in the second half of 2021, compared with ₦2.50 billion repaid in the first half of 2021.

2.4.3.8 Solar Connection Facility
In the review period, no disbursement was made, compared with ₦7.0 billion disbursed in
the first half of 2021, for the procurement and installation of 100,000 home solar systems
across the country. There were no repayments as the facilities were under moratorium.

2.4.3.9 Intervention Facility for the National Gas Expansion Programme
In the review period, the sum of ₦24.00 billion was disbursed for 4 projects, compared with
₦15.20 billion disbursed for 2 projects in the first half of 2021. There was no repayment as
the facilities were under moratorium.

2.4.3.10
Shared Agent Network Expansion Facility
In the review period, no disbursement was made, compared with N0.50 billion disbursed for
1 project in the first half of 2021. The sum of ₦0.07 billion was repaid in the second half of
2021, compared with ₦0.41 billion in the first half of 2021.
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

2.5 Export Policy Support
2.5.1 Non-oil Export Stimulation Facility
The sum of ₦1.75 billion was released for 1 export-oriented project in the second half of
2021, while there was no disbursement in the first half of 2021. The sum of ₦3.88 billion was
repaid in the review period, compared with ₦0.77 billion repaid in the preceding period.
2.6 Energy Policy Support
2.6.1 Power and Airline Intervention Fund
In the review period, the sum of ₦0.99 billion was disbursed, compared with ₦0.89 billion in
the preceding period, representing an increase of 11.24 per cent. The sum of ₦6.56 billion
was repaid in the second half of 2021, compared with ₦33.21 billion in the first half of 2021.

2.6.2 Nigerian Electricity Market Stabilisation Facility
Under Phase 2 of the NEMSF, the sum of ₦96.72 billion were released in the review period,
compared with ₦120.29 billion released in the first half of 2021. No repayments were made
under the facility as all facilities were still under moratorium.
Under Phase 1 of the NEMSF, the sum of ₦12.51 billion was repaid in the second half of
2021, compared with ₦11.91 billion in the first half of 2021.
2.6.3 Nigeria Bulk Electricity Trading – Payment Assurance Facility
During the review period, the sum of ₦301.36 billion was disbursed to Nigeria Bulk Electricity
Trading Plc, through the BOI, compared with ₦105.76 billion in the first half of 2021,
representing an increase of 184.95 per cent.
2.6.4 National Mass Metering Programme
In the second half of 2021, the sum of ₦11.58 billion was disbursed, compared with ₦21.65
billion in the first half of 2021, reflecting a decrease of 46.51 per cent. All the facilities were
under moratorium.
2.7 Institutional Support and Financial Inclusion
2.7.1 National Collateral Registry
The performance indicators of the National Collateral Registry (NCR) trended upwards,
indicating increased lending against movable assets offered as collateral by individuals and
MSME borrowers in the review period.
A total of forty-nine financial institutions registered 52,085 financing statements valued
₦6.87 trillion and US$827.50 million in respect of 53,209 borrowers, compared with 33,423
financing statements valued ₦6.23 trillion and US$155.54 million in favour of 34,268
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

borrowers in the first half of 2021. In addition, a total of 67,382 searches were conducted in
the review period, compared with 43,386 searches in the first half of 2021, reflecting an
increase of 55.31 per cent.
TABLE 2:17 TRANSACTIONS ON THE NATIONAL COLLATERAL REGISTRY PORTAL FOR 2021
Debtor Type
Number of
Financing
Statements
Number of
Borrowers
Currency
Value of Financing Statements

H1
H2
H1
H2

H1
H2
Individual
31,524
50,278

32,122
51,097

NGN
70,235,795,201.73
6,713,232,221,397.13
USD
13,500,000.00

Large Business

NGN
6,126,806,008,682.95
129,533,272,929.53
USD
138,524,987.18
762,000,000.00
Medium
Business

1,043

NGN
29,842,192,547.08
21,187,780,337.42
USD
3,511,709.68
65,003,185.85
Micro
Business

NGN
1,774,343,154.02
1,134,041,724.67
USD

500,000.00
Small Business

NGN
7,995,845,891.89
10,788,404,681.55
Total

NGN
6,236,654,185,477.67
6,875,875,721,070.30
USD
155,536,696.86
827,503,185.85

Further analysis showed that a total of 22,775 or 43.73 per cent of the total financing
statements were in respect of 23,211 women and women-owned enterprises, representing
43.62 per cent of the total number of borrowers.
TABLE 2:18 TRANSACTIONS IN RESPECT OF WOMEN AND WOMEN-OWNED BUSINESSES ON
THE NATIONAL COLLATERAL REGISTRY PORTAL IN 2021
Debtor Type
Number of
Financing
Statements
Number of
Number of
Women-owned
Enterprises
Curre
ncy
Value of Financing Statements

H1
H2
H1
H2

H1
H2
Individual
16,078
22,431

16,273
22,795

NGN
14,506,692,287.98
30,727,830,281.76
Large Business

NGN
318,718,599.68
346,816,561.85
USD
3,800,000.00

Medium
Business

NGN
2,107,480,590.47
1,693,493,631.28
USD
124,064.68

Micro Business

NGN
558,057,027.21
55,003,992.22
Small Business

NGN
837,164,873.81
1,081,102,621.53
Total

NGN
18,328,113,379.15
33,904,247,088.64
USD
3,924,064.68
0.00
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

From inception to end-December 2021, a total of 138 financial institutions had registered
210,592 financing statements valued at ₦15,135.92 billion, US$2.41 billion, €0.11 billion, and
£27,352.00. An analysis of these figures showed that 87,312 representing 41.46 per cent of
the total financing statements valued N202,480,528,641.62 and US$4,623,704.68 were
registered in respect of women and women-owned enterprises by ninety-eight financial
institutions.
2.8 Financial Inclusion
A review of the Bank Verification Number (BVN) enrolment revealed that a total of 3,173,274
new BVNs were issued in the review period, compared with 2,932,844 issued in the first half
of 2021. This reflected new entrants into the banking system. Of this figure, 1,461,132
females were registered in the second half of 2021, compared with 1,344,117 females
registered in the first half of the year.

In the second half of 2021, the financial sector recorded an increase in the number of agent
locations where financial services could be accessed. As at 31st December 2021, SANEF
reported a total of 1,002,514 agents under its agent expansion scheme, of which 225,854
agents were onboarded during the review period, compared with 215,617 agents onboarded
in the preceding period. In terms of access point per capita, 946 agents were serving 100,000
adults in the second half of 2021, compared with 733 agents per 100,000 adults recorded in
the first half of 2021. Furthermore, the number of ATMs deployed and active PoS at end-
December, 2021 stood at 19,355 and 915,519, respectively, compared with 19,156 ATMs
deployed and 638,983 active PoS at end-June, 2021.

The total number of deposit accounts by regulated financial institutions increased to 198.82
million at end-December 2021, compared with 185.33 million at end-June 2021.
In addition, from the industry data, the total number of credit accounts marginally rose to
12.33 million (made up of 4.28 million in DMBs and 8.05 million accounts in MFBs) at endDecember 2021, from 11.60 million accounts (made up of 4.33 million in DMBs and 7.27
million accounts in MFBs) at end-June 2021.
Furthermore, the number of DMB branches increased marginally to 5,184 at end-December
2021, compared with 5,139 branches at end-June 2021. Consequently, the number of DMB
branches serving per 100,000 adults stood at 5. Similarly, at end-December 2021, the
number of Microfinance Bank branches increase to 2,070 at end-December 2021, from 2,055
branches at end-June 2021.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
Table 2:19 FINANCIAL INCLUSION STATISTICS


2.9 Summary and Outlook for Development Finance Interventions
Overall, the Bank’s development finance interventions continued to facilitate seamless flow
of credit to projects with the potential to catalyse and transform the productive base of the
economy. The core objectives are to stimulate investments to priority sectors, promote the
generation of sustainable jobs, support households’ income and consumption, boost non-oil
exports and sustain economic growth.


Indicator
END-JUNE 2021
END-DECEMBER 2021
New BVN Registration
2,932,844
3,126,025
New BVN Registration
(Female)
1,344,117
2,800,010
Total Agents
776,660
1,002,514
Nos Of Onboarded (New) Agents
215,617
225,854
Nos Of Agents Per 100,000 Adults

ACTIVE Atms DEPLOYED
116,510
115,541
Active PoS Deployed
2,245,478
3,265,924
Nos Of Deposit Accounts (Million)
185.33
198.82
Nos Of Credit Accounts (Million)
11.60
12.33
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

REGULATORY AND SUPERVISORY ACTIVITIES
3.1 Financial Soundness Indicators
3.1.1 Asset-Based Indicators
3.1.1.1 Non-Performing Loans to Gross Loans
The quality of banks’ assets continued to improve due to the Bank’s sustained regulatory
measures as well as recoveries and loan write-offs by banks in the period under review.
Consequently, the ratio of non-performing loans (NPLs) to gross loans decreased to 4.94
per cent at end-December 2021, from 5.70 per cent at end-June 2021. The recoveries were
majorly from General Commerce (N12.85 billion), Real Estate (N16.07 billion) and Power &
Energy (N88.00 billion) transactions.


FIGURE 3.1 BANKING INDUSTRY NPLS TO GROSS LOANS

3.1.1.2 Core Liquid Assets to Total Assets and Short-term Liabilities
The ratio of core liquid assets to total assets decreased by 0.44 percentage point to 20.54
per cent at end-December 2021, from 20.98 per cent at end-June 2021. Similarly, the ratio
of core liquid assets to short-term liabilities declined by 0.83 percentage point to 29.95 per
cent at end-December 2021, compared with 30.78 per cent at end-June 2021. The decline
was due to increased lending to the real sector and households, in keeping with the Bank’s
policies to encourage lending to key sectors of the economy.


End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
Banking Sector NPLs to Gross Loans
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 3.2 BANKING INDUSTRY LIQUIDITY INDICATORS

3.1.1.3 Banking System Real Estate Loan Indicators
The banks’ exposure to real estate (residential and commercial) declined marginally in the
review period. The ratio of residential real estate loans to total gross loans decreased by
0.02 percentage point to 0.22 per cent at end-December 2021, from 0.24 per cent at endJune 2021. Equally, the ratio of commercial real estate loans to total gross loans declined by
0.13 percentage point to 2.67 per cent at end-December 2021, compared with 2.80 per cent
at end-June 2021.

FIGURE 3.3 BANKING INDUSTRY REAL ESTATE INDICATORS


3.1.2 Capital-Based Indicators
The banking industry’s solvency, measured by regulatory capital to risk-weighted assets,
declined to 14.55 per cent at end-December 2021, from 16.46 per cent at end-June 2021,
owing largely to growth in risk assets and loan loss provisions occasioned by the impact of

End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
Liquid assets (core) to total assets*
Liquid assets (core) to short-term liabilities*

End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
Residential real estate loans to total gross loans
Commercial real estate loans to total gross loans
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

the COVID-19 pandemic. Similarly, the regulatory tier-1 capital to risk-weighted assets
decreased to 12.46 per cent at end-December 2021, from 13.07 per cent at end-June 2021.
The ratio was, however, above the minimum regulatory threshold.

FIGURE 3.4 BANKING INDUSTRY CAPITAL ADEQUACY INDICATORS


The asset quality of the banking industry improved as the ratio of non-performing loans net
of provisions to capital, declined to 28.41 per cent at end-December 2021, from 30.42 per
cent at end-June 2021.

FIGURE 3.5 NON-PERFORMING LOANS NET OF PROVISION TO CAPITAL RATIO


End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
Regulatory capital to risk-weighted assets*
Regulatory Tier 1 capital to risk-weighted assets*

End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
P
e
r
c
e
n
t
a
g
e
s
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
3.1.3 Income and Expense Based Indicators
The ratio of interest margin to gross income decreased by 10.12 percentage points to 48.59
per cent during the review period, from 58.71 per cent at end-June 2021. Similarly, the ratio
of non-interest expenses to gross income declined by 7.43 percentage points to 65.14 per
cent at end-December 2021, from 72.57 per cent in the preceding half. The ratio of personnel
expenses to non-interest expenses rose to 29.38 per cent at end-December 2021, from
28.09 per cent at end-June 2021.

TABLE 3:1 SELECTED FINANCIAL SOUNDNESS INDICATORS OF THE NIGERIAN BANKING
INDUSTRY
Indicators

End-Jun
End-Dec
End-Jun
End-Dec
1. Assets Based Indicators
Nonperforming loans to total gross loans *

Liquid assets (core) to total assets*

Liquid assets (core) to short-term
liabilities*

Residential real estate loans to total gross
loans

Commercial real estate loans to total gross
loans

2. Capital Based Indicators
Regulatory capital to risk-weighted assets*

Regulatory Tier 1 capital to risk-weighted
assets*

Nonperforming loans net of provisions to
capital *

Return on assets*

3. Income and Expense Based Indicators
Interest margin to gross income*

Noninterest expenses to gross income*

Personnel expenses to noninterest
expenses


*FSIs are computed based on IMF-FSI Manual.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

3.2 The Banking Industry Stress Tests
The Bank continued to conduct top-down solvency and liquidity stress testing to identify and
analyse banking industry vulnerabilities and risks with a view to assessing the soundness
and stability of the financial system.
3.2.1 Solvency Stress Test
3.2.1.1 Baseline Position
The baseline CAR, LR and NPL ratio in the period under review were 14.53, 41.33 and 4.80
per cent, respectively. Also, Return on Assets and Return on Equity stood at 2.31 and
27.47per cent, respectively, at end-December 2021.

TABLE 3:2 BANKING INDUSTRY BASELINE SELECTED KEY INDICATORS

CAR
LR
NPLs
ROA
ROE
Jun 2021 (%)

Dec 2021 (%)

Percentage Points Change -0.93


FIGURE.3.6 BANKING INDUSTRY CAR (PER CENT)


3.2.1.2 Credit Risk
The stress test revealed that the banking industry could withstand a shock of “up to 50 per
cent increase” in the industry NPLs, as the CAR would remain above the regulatory
requirement of 10 per cent.


Jun ' 18
Dec '18
Jun' 19
Dec' 19
Jun' 20
Dec' 20
Jun' 21
Dec-21
Per cent
Banking Industry CAR
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 3:3 CREDIT DEFAULT SHOCKS


The banking industry also showed resilience to credit concentration risk as the CAR would
remain above the 10.0 per cent regulatory threshold under stress test scenarios 1, 2 and 3.

TABLE 3:4 CREDIT CONCENTRATION RISK


2 Performing Loans
Single Factor Shocks
June 2021
December 2021
Baseline CAR
15.46
14.53
10% NPLs increase
15.06
14.17
15% NPLs increase
14.87
13.99
20% NPLs increase
14.67
13.81
30% NPLs increase
14.27
12.72
50% NPLs increase
13.45
10.85
100% NPLs increase
11.35
6.86

Jun 2021
December

Baseline CAR
15.46
14.53
Single Factor Credit Concentration Shocks
Scenario 1
Five largest corporate credit facilities shifted from pass-through2to substandard (10% provision)
14.89

14.04
Scenario 2
Five largest corporate credit facilities shifted from sub-standard to
doubtful (50% provision)
14.03
13.31
Scenario 3
Five largest corporate credit facilities shifted from doubtful to lost (100%
provision)
12.56
12.05
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as


FIGURE 3.7 CREDIT CONCENTRATION RISK


3.2.1.3 Sectoral Credit Concentration Risk
A breakdown of banking industry total credit by sector at end-December 2021 showed that
the Oil & Gas sector accounted for 23.23; Manufacturing, 16.51; Government, 9.52; General,
9.80; General Commerce, 7.28; Finance and Insurance, 5.72; and Others, 27.94 per cent.

FIGURE 3.8 SECTORAL CONCENTRATION OF CREDIT


The results of the stress test showed that the banking industry could withstand “up to 50.00
per cent shock” to oil and gas exposures as the post-shock CAR stood at 10.14 per cent.


Baseline
Scenario 1: Five largest
corporate credit facilities
shifted from Sub-standard to
Doubtful (10% provision)
Scenario 2: Five largest
corporate credit facilities
shifted from Doubtful to Lost
(50% provision)
Scenario 3: Five largest
corporate credit facilities
shifted from Doubtful to Lost
(100% provision)

Oil and Gas
Manufacturing
Government
General
Gen Comm
Finance and Insurance
Others
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as


TABLE3:5 STRESS TEST ON OIL AND GAS EXPOSURES

Industry CAR (%)
Baseline CAR
14.53
20% Default on total exposure to Oil and Gas
13.86
50% Default on total exposure to Oil and Gas
10.14

3.2.1.4 Interest Rate Risk
The stress test on the net position of interest-sensitive instruments showed that the industry
could maintain a stable solvency position to interest rate shock of “up to 1000 basis points
downward shift in yield curve” as the post-shock CAR of 10.51 per cent remained above the
regulatory threshold of 10 per cent.

FIGURE 3.9 IMPACT OF INTEREST RATE SHOCKS ON CAR


3.2.2 Liquidity Stress Test3
The stress test result revealed that after a one-day run scenario, the LR for the industry could
decline from the 41.37 per cent baseline position to 32.07 per cent. Similarly, under the 5day and 30-day scenarios, the LR for the industry could decline to 14.48 and 9.75 per cent,
which could result in liquidity shortfalls of N3.61 trillion and N 4.42 trillion, respectively.

3 Liquidity stress tests were conducted at end-Dec 2021 using the Implied Cash Flow Analysis and Maturity Mismatch/Rollover Risk
approaches to assess the resilience of individual banks and the banking industry to liquidity and funding shocks.
14.53
14.05
10.51
Baseline CAR
500 bps downward shift in yield
curve
1000 bps downward shift in yield
curve
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as


FIGURE 3.10 INDUSTRY LIQUIDITY RATIOS AT PERIODS 1-5 AND CUMULATIVE 30-DAY SHOCKS


TABLE 3:6 LIQUIDITY STRESS TEST RESULTS
Scenario
Banks with
Liquidity Ratios (LR) < 30%
December 2021
June 2021

December

Industry LR
(%)
Shortfall to 30% LR
threshold
(N’ billion)
Test 1.1: Implied Cash Flow Test

Day 1

32.07
Nil
Day 2

28.00
548.81
Day 3

23.76
1,619.74
Day 4

19.27
2,639.66
Day 5

14.48
3,605.08
Implied Cash Flow Test
(30 Days)

9.75
4,422.16


3.2.3 3.2.3 Maturity Mismatch
The industry’s baseline assets and liabilities maturity profile at end-December 2021 showed
an excess of N639.71 trillion in assets over liabilities. Further analysis revealed that only the
short-end of the market (≤90 day bucket) was adequately funded. However, six and eight
banks were not adequately funded in the ≤30-day and 31–90-day buckets, respectively.

Pre-Shock
After Day 1
After Day 2
After Day 3
After Day 4
After Day 5
After cum 30
days
Jun-20
Dec-20
Jun-21
Dec-21
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

TABLE 3:7 MATURITY PROFILE OF ASSETS AND LIABILITIES AT END-DECEMBER 2021
Bucket
Liabilities
Assets
Mismatch
Cumulative
Mismatch
N Billion
≤30 days

31-90 days

91-180 days

181-365 days

1-3 years

>3 years

Total
43,179.50
43,819.21


TABLE 3:8 TEST RESULTS FOR SYSTEM-WIDE MATURITY MISMATCH

Test 2A
Descriptive Maturity
Mismatch.
(No consideration of
rollover)
Test 2B
Static Rollover risk Analysis.
(No possibility to close
liquidity gaps in other
buckets)
Test 2C
Dynamic Rollover risk test.
(Free assets used to close
liquidity gaps in other
buckets)

N ‘billion
No of
banks with
mismatch
N ’billion
No of banks
with
mismatch
N ‘billion
No of banks
with
mismatch
≤30 days
16,865.81

10,714.27

(342.44)

31-90 days
6,399.52

171.07

(31.08)

91-180days
3,599.22

(1,647.86)

(288.18)

181-365days
1,165.18

(4,120.53)

(844.35)

1-3 Years
1,903.48

(3,600.01)

(1,408.74)

Above 3 years (948.41)

(5,884.85)

(4,785.90)

Total
28,984.80

(4,367.91)

(7,700.69)


The test results under 2A revealed that the banking industry was adequately funded, while
under Test 2B and 2C the industry had mismatches of N4.37 trillion and N7.70 trillion,
respectively (Table 3.8). These indicated a decrease of N0.83 trillion under the Test 2B and
an increase of N 0.03 trillion under Test 2C, respectively, relative to end-June 2021 tests
results.

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

3.2.4 3.2.4 Contagion Risk Analysis
The contagion risk analysis depicted an increase in interconnectedness through inter-bank
placements and takings. However, the total exposure decreased by 35.92 per cent to
₦352.86 billion at end-December 2021, from ₦550.64 billion at end-June 2021.
Further analysis revealed that 6 banks accounted for ₦293.56 billion or 83.19 per cent of
total placements, while another 6 banks accounted for ₦4,299.58 billion or 84.90 per cent of
total takings. The analysis revealed that the exposures were within the safety corridor of the
inter-bank market operations and therefore did not pose any significant threat to financial
system stability as all placements were secured.


FIGURE 3.11 NETWORK ANALYSIS BASED ON INTERBANK EXPOSURES


BOX 2: LIQUIDITY STRESS TEST ASSUMPTIONS
Implied Cash Flow Analysis
The Implied Cash Flow Analysis (ICFA) assessed the ability of the banking
system to withstand unanticipated substantial withdrawals of deposits, shortterm wholesale and long-term funding over 5 days and cumulative 30 days,
with specific assumptions on fire sale of assets.
Node colour representation
Blue = Placement only
Deep Blue = Net Placement
Red = Takings only
Purple = Net Takings
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
The test assumed gradual average outflows of 3.8, 5.0 and 1.5 per cent of
total deposits, short-term funding and long-term funding respectively, over a
5-day period and a cumulative average outflow of 22.0, 11.0 and 1.5 per cent
of total deposits, short-term funding and long-term funding respectively, on a
30-day balance. It also assumed that the assets in Table 3.10 would remain
unencumbered after a fire sale.


The Maturity Mismatch/Rollover Risk
This assessed funding maturity mismatch and rollover risk for assets and
liabilities in the 1-30 and 31-90 day buckets, with assumptions of availability
of funding from the CBN and intra-group as described below:

i. Test 2a: Descriptive Maturity Mismatch assumed that the baseline
mismatch remained, but 5 per cent of total deposits would be made available
by the CBN and the intra-group;

ii. Test 2b: Static Rollover Risk assumed that 80.0 and 72.0 per cent of the
funding in the 1-30 and 31-90 day buckets would be rolled over, with no
possibility to close the funding gap from other buckets. However, 5 per cent
of the total deposits would still be available from the CBN and the intragroup; and

iii. Test 2c: Dynamic Rollover Risk made the same assumption as in 2b
above, but with the option of closing the liquidity gap from other buckets.

TABLE 3:9 PERCENTAGE OF ASSETS UNENCUMBERED AFTER FIRE SALES
Item
No
Assets
%
Unencumbered
1.
Cash and cash equivalents

2.
Current account with CBN

3.
Government bonds, treasury bills and other
assets with 0% risk-weighting
66.5
4.
Certificates of deposit held
66.5
5.
Other short-term investments

6.
Collateralized placements and money at call

7.
CRR

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

3.3 Supervision of Banks
The Bank’s supervisory and surveillance activities on the banking sector, aimed at fostering
a safe, stable and sound financial system was sustained in the review period. The activities
included review of banks’ periodic returns, routine monitoring and special investigations. The
Bank relied on the provisions of the CBN Act 2007, Banks and Other Financial Institutions
Act (BOFIA) 2020 and other extant regulations in performing these functions.
3.3.1 Examination
The CBN and NDIC joint Risk Based Examination of all banks was conducted virtually to
accommodate the restrictions around the COVID-19 pandemic. The risk-based examination
of banks with Composite Risk Rating of “High” and “Above Average” at end-September 2021
was conducted between October and November 2021; while the examination of banks with
Composite Risk Rating of “Moderate” and “Low” for the period ended June 30, 2021 was
conducted between July and August 2021.
A total of 7 examinations were carried out on four Non-interest Financial Institutions (NIFIs)
in the review period. The examinations included two routine RBS and 2 Risk Asset
Assessments carried out on the full-fledged NIFIs, two routine examinations of Non-Interest
windows, and a special examination of the Ijarah service product requested by the Financial
Regulation Advisory Council of Experts for Non-Interest Financial Institutions (FRACE). The
most significant issue arising from the examinations was the adverse impact of the COVID19 pandemic on the quality of risk assets.
The Bank also conducted risk-based supervision (RBS) examination of AMCON in October
2021. Following the various examinations, the banks were required to remediate identified
lapses.
3.3.2 Foreign Exchange Examination
The foreign exchange activities of the 26 Authorised Dealers were examined through off-site
reviews and spot checks to address observed lapses, customers’ complaints and other
emerging issues/challenges in the foreign exchange market.
At the conclusion of the examinations, the Authorised Dealers were required to address
observed inadequacies in line with the Foreign Exchange (Monitoring and Miscellaneous
Provisions) Act 1995.
3.3.3 Non-Interest Banks
A non-interest bank (NIB) with regional authorisation, which was licenced in the first half of
2021, commenced operations in the second half. This brings the total number of financial
institutions authorised to offer non-interest financial products to 8, comprising 3 banks, 3
MFBs and 2 non-interest windows.
The total assets of non-Interest banks (NIBs) stood at N434.22 billion at end-December
2021, representing 0.73 per cent of total banking industry assets, while their total deposits

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

and total credits, at N172.09 billion and N177.60 billion, represented 0.45 per cent and 0.80
per cent of the industry totals, respectively.
3.3.4 Supervision of Domestic Systemically Important Banks
Following the six-monthly assessment of banks in accordance with the Framework for the
Regulation and Supervision of Domestic Systemically Important Banks (D-SIBs), 5
commercial banks maintained their designation as D-SIBs at end-December 2021. These
banks’ activities continued to be under enhanced supervision in view of the significant impact
the distress of any of the institutions could have on the overall financial system.

At end-December 2021, the D-SIBs accounted for 57.73 per cent (N34.20 trillion) of the
industry’s total assets of N59.24 trillion. The D-SIBs also accounted for 60.02 per cent
(N23.06 trillion) of total industry deposits of N38.42 trillion and 56.05 per cent (N13.78 trillion)
of the aggregate industry credit of N24.58 trillion. The D-SIBs were compliant with prudential
requirements during the review period.

3.3.4.1 Recovery and Resolution Plans
The CBN continued to require banks to submit their Recovery and Resolution Plans (RRPs)
annually. The purpose of the RRPs is to serve as a “playbook” for both the management of
banks and the CBN in times of financial stress.
The outcome of the Bank’s review of the RRPs was communicated to the D-SIBs with the
directive to address observed lapses.

3.3.5 Asset Management Corporation of Nigeria
From inception to end-December 2021, the Corporation achieved total recoveries of N953.42
billion made up of cash recoveries of N532.81 billion and asset & shares forfeiture of N420.61
billion. Cash recoveries in the period under review, amounted to N23.60 billion resulting in
total recovery of N92.80 billion at end-December 2021.
The carrying value of AMCON’s liabilities decreased to N5.52 trillion at end-December 2021,
from N5.67 trillion at end-June 2021 dowing to the reduction in the outstanding balance of
the AMCON Note to N3.86 trillion at end-December 2021, from N3.97 trillion in the preceding
period. The reduction arose from AMCON’s repayment of N108.28 billion on the Note at endDecember 2021. The carrying value of the Loan (Debenture) however remained at N500
billion.
The combined value of the AMCON notes and Loan represented 78.95 per cent of the total
liabilities. The Note is due to mature on December 27, 2023, while the N500 billion Loan is
due for redemption on December 30, 2022.

Meanwhile, the 3rd amendment of the AMCON Act 2010, which seeks to, among other things,
extend the tenor of the Banking Sector Resolution Cost Fund, was enacted effective
November 12, 2021. Consequently, the Banking Sector Resolution Cost Fund would, at the
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

minimum, remain in operation for another five (5) years covering 2021 to 2025, to continue
supporting AMCON’s funding requirements. Following the passage of the Amendment Act,
the sum of N307.97 billion was contributed by the CBN and participating banks for year 2021.
This amount formed part of AMCON’s funding in settling its obligations in December 2021.
3.3.6 Cross Border Supervision of Nigerian Banks
3.3.6.1 Foreign Subsidiaries of Nigerian Banks
The number of offshore subsidiaries of Nigerian banks at end-December 2021 was fifty-nine.
The number of representative offices was 5 while the number of affiliates, international
branches and agent banking remained 1, 3 and 1, respectively, bringing the total number of
offshore entities to sixty-nine.
The RBS examination of 7 off-shore subsidiaries of Nigerian banks was conducted during
the review period. The first virtual RBS examination of 8 offshore banking subsidiaries of a
banking group was conducted as part of the consolidated supervision of all its components.

3.3.7 Credit Risk Management System
The CBN Credit Risk Management System (CRMS) database remained a veritable source
of credit information and additional risk management tool in the banking industry.
At end-December 2021, the total number of credit facilities on the CRMS database stood at
29,213,129, comprising 28,338,562 individual and 874,567 non-individual borrowers and,
representing an increase of 35.15 per cent. The total number of facilities with outstanding
balances stood at 4,898,075, comprising 4,779,565 individuals and 118,510 non-individuals
at end-December 2021, a decrease of 6.83 per cent from 5,233,014 at end-June 2021.
The strict enforcement of the CBN Regulatory Guidelines on CRMS has led to enhanced
compliance by banks as signified by improved credit records.


FINANCIAL STABILITY REPORT – DECEMBER 2021

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TABLE 3:10 CREDIT RISK MANAGEMENT SYSTEM
Borrowers from the Banking Industry (Commercial, Merchant and Non-Interest Banks)
Description


June 2021

December 2021

Absolute Change:
Increase/
(decrease)

%
Change

* Total No. of Credit/facilities
reported on the CRMS:

Individuals

Non-Individuals

* Total No. of Outstanding Credit
facilities on the CRMS:

Individuals

Non-Individuals

* The figures include borrowers with multiple loans and/or credit lines
3.3.8 Credit Bureaux
The Bank published the maiden edition of the Credit Market Statistical Update in line with
Section 8 (1) (f) of the Credit Reporting Act 2017. The publication contains activities in the
credit reporting subsector and the National Collateral Registry. In addition, it provided an
overview of the credit market in Nigeria, highlighting trends over the previous years (2014 –
2020) in the: subscriber base; credit supply & categorisation; industry credit data; usage of
the National Collateral Registry; among others.

Routine offsite and onsite supervisory activities of the 3 bureaux continued during the review
period with offsite reviews of returns and the yearly onsite examination. The routine
examinations indicated that the operations of the 3 bureaux remained in compliance with the
applicable laws and regulations whilst growth in the credit statistics was recorded as at end
of the year.


FINANCIAL STABILITY REPORT – DECEMBER 2021

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TABLE 3:11 CREDIT BUREAUX STATISTICS

CRC Credit Bureau
CreditRegistry
First Central Credit Bureau

End-June

End-December

End-June

End-December

End-June

EndDecember

Number of
Credit
Record

Number of
subscribers
1,535
1,603

1,242
1,306
Value
of
Credit
Facilities
(N’Trillion)
N32.99
N35.984
₦31.124
N37.043
N28.274
N29.729
Number of
Data
Subjects


3.4 Supervision of Other Financial Institutions
The Bank conducted on-site examination of 264 MFBs in the second half of 2021. The
exercise covered target and RBS examination of 145 and 119 MFBs, respectively. The
target examination showed that 136 were active, 3 inactive, 2 undergoing restructuring, while
4 had closed shop. Analysis of the active MFBs, showed that 4 were “Sound”, 26 “Unsound”
and 106 “Insolvent”.
The average liquidity ratio of the institutions was 37.12 per cent, which was above the
required benchmark of 20 per cent for MFBs, while average PAR of 37.12 per cent was
above the regulatory limit of 5 per cent. Further analysis showed that 17 and 71 MFBs met
the required CAR and LR benchmarks, respectively, while the PAR of two MFBs were within
the regulatory limit.
The RBS examination of 119 MFBs covered their corporate governance practices and risk
management control functions deploy to mitigate the identified risks. An analysis of the
composite risk rating of 2, thirty-four and eighty-three MFBs were categ0rised “Moderate”,
“Above Average” and “High”, respectively.
Commented [up1]: Need to add a verb after the word ‘cent”.
I suggest that the verb ‘was’ should be added.
Commented [up2]: Delete the comma.
FINANCIAL STABILITY REPORT – DECEMBER 2021

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The prudential analysis showed that the CAR and LR of ninety-eight and 113 MFBs were
above the benchmarks of 10 per cent and 20 per cent, respectively, while ten MFBs operated
within the 5 per cent regulatory PAR limit. Further analysis showed that average CAR, LR
and PAR were 16.36, 44.63 and 15.31 per cent, respectively. The examination reports further
revealed infractions of extant regulations and erring institutions were appropriately
sanctioned.
3.5 Other Developments in the Financial System
3.5.1 AML/CFT
3.5.1.1 Nigeria’s Mutual Evaluation Exercise
The Mutual Evaluation Exercise on Nigeria was conducted by the Inter-Governmental Action
Group Against Money Laundering in West Africa (GIABA) and the Mutual Evaluation Report
(MER) was released in October 2021. Nigeria was rated Moderate Effectiveness on
Immediate Outcome (IO3) for Supervision and Immediate Outcome (IO6) for Financial
Intelligence. The Nigerian Financial Intelligence Unit (NFIU) as the national coordinating
agency for Anti-Money Laundering/Combating the Financing of Terrorism and Financing the
Proliferation of Weapons of mass destruction (AML/CFT/PF) is working in collaboration with
relevant agencies to address the deficiencies identified in the MER.
3.5.1.2 AML/CFT Examination
On-site Cross-border examination was conducted on 3 foreign subsidiaries of Nigerian banks
to assess their compliance with home and host countries’ AML/CFT laws and regulations.
The examination results showed no significant issues of regulatory concerns.
The examination of thirty banks (24 Commercial and 6 Merchant banks) was conducted to
assess their compliance with extant AML/CFT laws and regulations. This was to ensure that
banks implement appropriate processes, systems and procedures to identify and mitigate
Money Laundering and Terrorism Financing (ML/TF) risks. The increased usage of banks’
delivery channels: Internet banking, USSD, PoS, among others has increased potential
ML/TF risks in the banking industry.
The risk control functions – Corporate Governance/Board & Senior Management, Risk
Management, AML Policies and Procedures, Internal/External Audit, Monitoring & Reporting
of Suspicious transactions, Compliance function, and Training were rated as Acceptable in
mitigating the identified ML/TF risks.
3.5.2 Corporate Governance Scorecard
In the review period, the CBN monitored banks to ensure strict adherence to the provisions
of the Code of Corporate Governance Guidelines for Banks and Other Financial Institutions.
Banks were required to provide quarterly returns to the CBN on their compliance with the
Code of Corporate Governance and the Whistleblowing Guidelines which were appraised
and regulatory measures taken on observed infractions.
FINANCIAL STABILITY REPORT – DECEMBER 2021

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3.5.3 Launch of the eNaira
Following the issuance of the governing framework for the administration of the eNaira in
Nigeria, the Bank launched eNaira, a digital form of the Fiat currency (Naira), on October 25,
2021. The eNaira is a legal tender and forms part of the currency-in-circulation. It is created
to complement cash as a less costly, more efficient, generally acceptable, safe and trusted
means of payment and store of value. The introduction and use of the eNaira would
potentially boost electronic payments in Nigeria and attract investments into the Fintech
space.
3.5.4 Risk- Based Cybersecurity Assessment
The CBN and the NDIC conducted a Supervisory Review and Evaluation (SRE) of the annual
cybersecurity self-assessment of financial institutions. The outcome of the SRE helped the
financial institutions identify and address their inherent cyber risks and determine
cybersecurity maturity level for improvement.
3.5.5 Nigeria Sustainable Banking Principles
The Bank continued to monitor the implementation of the Nigeria Sustainable Banking
Principles (NSBP) at individual bank and industry levels to provide appropriate intervention.
Assessment of implementation progress of the NSBP at end-December 2021 showed that
out of the total 121,598 transactions approved, 96.54 per cent (117,393) were screened for
environmental and social risk, and 94.02 per cent screened for human rights risk.
The banking industry financed projects for environmentally beneficial purposes worth N82.50
billion in 2021. The industry was also committed to efficient use of energy with 36.12 per cent
or 1,872 out of 5,183 bank branches powered by solar energy, an alternative source of
energy, in 2021.
At end-December 2021, the total number of women in the banking industry was 34,352
representing 36.90 per cent of the total employees in the entire industry. Similarly, women
had a total of 662 or 32.00 per cent of top management positions, and 91 or 29.55 per cent
of board positions in the industry.
TABLE 3:12 NSBP STATISTICS AT END-DECEMBER 2021
S/N Item
Banking
Industry
Female
Representation
Percentage
of
Female
Representation%
1 Total Employees

93,104
34,352

36.90

Staff
in
Management
Position

662 32.00
3 Board Members

29.55
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The banking industry has made considerable progress in its response to the needs of the
planet, human rights and support to the disadvantaged groups since the adoption of the
NSBP. Banks have also continued to develop capacity of staff and board members on
sustainability and collaborate in developing the right governance structure to implement the
NSBP.

3.5.6 IFRS Implementation
IFRS 9 (Financial Instruments) was issued in July 2014 to replace IAS 39 (Financial
Instruments: Recognition and Measurement) and became mandatorily effective in Nigeria on
1st January 2018. Given its wider focus and requirements, the new standard gave rise to
huge under impairments in the books of banks upon adoption on 1st January 20184. The
CBN’s impact assessment evaluated the aggregate industry wide under impairment at ₦300
billion as at 1st January 2018.
The Bank determined that the ₦300 billion Day-One impact would adversely impact banks’
capital, threaten their safety and the stability of the industry, necessitating implementation of
a transitional arrangement of amortization over a period of four years in five instalments. The
transitional arrangement commenced on 1st January 2018 with banks required to make the
first set of amortizations on that date, the second on 31st December 2018, and subsequently
at financial year ends of 31st December 2019, 2020, and 2021. The transitional arrangement
ended on December 31, 2021, with the Day-One impact fully amortized.
3.5.7 Impact of Covid-19 Pandemic
The CBN/NDIC continued to monitor and assess the impact of the COVID-19 pandemic in
the industry. The assessment of facilities impacted by the COVID-19 pandemic, not granted
CBN forbearance, showed a downward trend as many banks no longer reported new cases
of significant impact on credit performance. This could be attributed to the CBN interventions
and improved macroeconomic conditions.
Similarly, analysis of the facilities under the CBN approved forbearance shows
improvement as some of the facilities exited the waiver within the initial forbearance
expiry date of March 2021. All the regulatory forbearance measures are expected to
expire by June 30, 2022, as the world recovers from the economic impact of the
pandemic. Overall, 14.7 per cent of the total industry loans and advances remained under
forbearance at end-December 2021.

4 IFRS 9 is a more forward-looking approach than the replaced IAS 39 as it requires banks to always
recognize impairment for expected credit loss (ECL), taking into account past events, current
conditions and forecast information; and to update the amount of ECLs recognized at each reporting
date to reflect changes in credit risk valuation.

FINANCIAL STABILITY REPORT – DECEMBER 2021

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3.5.8 Implementation of Basel III
The implementation of Basel III commenced in November 2021 with the release of 6
Guidelines and Reporting Templates covering the following:
i.
Regulatory Capital
ii.
Leverage Ratio (LeR)
iii.
Liquidity Coverage Ratio (LCR)
iv.
Liquidity Monitoring Tools (LMT)
v.
Large Exposures (LEX); and
vi.
Liquidity Risk Management and Internal Liquidity Adequacy Assessment Process
(ILAAP) for implementation.
The submission of returns in line with Basel III requirements was expected to run
concurrently with that of Basel II for six months ending May 2022.
3.5.9 Supervision and Outlook for the First Half of 2022
Despite the persistence of the COVID-19 pandemic, the industry recorded improvement in
most of the financial soundness indicators at end-December 2021, compared with the levels
at end-June 2021. This was reflected in fewer banks failing to meet the minimum liquidity
ratio and breaching non-performing loans limit than was the case in the previous periods.
Furthermore, the NPL at end-December 2021 dropped below the regulatory maximum of 5
per cent for the first time in over 5 years.
The threats to the banking industry include the likelihood of a resurgence in the number of
reported cases of COVID-19 infections and high number of facilities under regulatory
forbearance transmuting to non-performing loans and attendant loan-losses. Other pressure
points include the security challenges across the country and uncertainties in the price of
crude oil.
The CBN would continue to monitor the industry very closely to ensure that vulnerabilities
are identified early and addressed with appropriate supervisory actions. The proactive
supervisory approach including stress testing and the Early Warning System will be
sustained in complementing the risk-based supervision of the banking industry.

3.6 Complaints Management and Resolution
The total number of complaints received against financial institutions in the review period
was 2,483, an increase of 510 complaints or 25.85 per cent from the total of 1,973 complaints
received in the first half of the year. Of the total complaints received, 2,334 (94.0 per cent)
were against banks, 143 (5.76 per cent) against OFIs, while six (0.24 per cent) were
miscellaneous complaints.

Complaints on fraudulent transactions were the highest category with a total of 681 (27.43
per cent), followed by failed transactions of 597 (24.04 per cent) and account management
with 547 (22.03 per cent) complaints. Other categories of complaints received include excess
charges, 134 (5.40 per cent); failed transfers, 133 (5.36 per cent); erroneous transfers, 129
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

(5.20 per cent); dispense errors, 125 (5.03 per cent); loan related issues, 73 (2.94 per cent);
tenured investments, 9 (0.36 per cent); unauthorised charges, 1 (0.04 per cent); and others,
54 (2.17 per cent).

During the second half of 2021, 1,336 complaints were resolved with refunds to the
complainants, indicating an increase of 20 (1.52 per cent) over the first half of the year,
while1,095 complaints were closed indicating an increase of 237 (27.62 per cent) over the
first half of the year. The resolved cases included outstanding complaints from the first half
of the year.

Total claims in respect of the complaints stood at N15.88 billion and US$50.89 million while
total refunds amounted to N6.04 billion and US$0.94 million, compared with N8.42billion and
US$0.05 million in the first half of 2021, respectively.
FIGURE 3.12 CATEGORY OF COMPLAINTS
FIGURE 3.13 NUMBER AND PERCENTAGE OF COMPLAINTS BY CATEGORY: JULY TO DECEMBER


ELECTRONIC/CARDS
FRAUD
ACCOUNT MGT
EXCESS CHARGES
OTHERS
-100

January to June 2021
July to December 2021
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

FIGURE 3.14 DISTRIBUTION OF COMPLAINTS RESOLVED AND CLOSED

3.7 Market Conduct & Development
Consumer protection compliance examination was conducted in September 2021 on twenty
banks covering the period January 2021 to June 2021. Areas examined included compliance
with payment of interest on savings deposits, sales of FX to retail customers, upload of
complaints to the Consumer Complaints Management System, disclosures on credit
repayment defaults, cooling-off period, insurance options and USSD fees. The examination
revealed a generally satisfactory compliance level.

A total of 24 penalties were imposed on financial institutions for various infractions during the
period under review, compared with 14 imposed in the preceding period.

JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
NO. OF CASES RESOLVED
NO. OF CASES CLOSED
TOTAL
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

DEVELOPMENTS IN THE PAYMENTS SYSTEM
The Bank continued to implement policies and initiatives to improve the safety and efficiency
of the Nigerian Payments System.
4.1 Mobile Money and Bank Verification Number Operations
The Bank issued Revised Regulatory Framework and Guidelines for Mobile Money Services
in Nigeria in July 2021. Highlights of the Framework include introduction of savings wallets,
transaction limits, processes for resolution of failed Mobile Money Operators (MMO),
permissible activities and annual reporting requirements.
At end-December 2021, the Bank Verification Number (BVN) count stood at 51.93 million,
reflecting an increase of 6.53 per cent over 48.75 million at end-June 2021. The number of
accounts linked with BVNs was 117.55 million out of 134.01 million active customer accounts
while the number of watch-listed BVNs associated with fraud and deceased persons stood
at 5,347 and 9,300, respectively at end-December 2021.

TABLE 4:1 BVN STATISTICS

End-December 2021
End-June 2021
%
BVNs enrolled
51,928,568
48,745,518
6.53
Accounts linked with BVN
117,551,302
109,600,471
7.25
Active Accounts
134,007,725
124,753,126
7.42
Watchlisted BVNs (Fraudulent)
5,347.00
4,261.00
20.31
Watchlisted BVNs (Deceased)
9,300.00
8,168.00
12.17

4.2 Nigeria Electronic Fraud Forum
During the second half of 2021, the Steering Committee of the Nigeria Electronic Fraud
Forum created three working groups, eFraud Information Management, Law Enforcement,
and Knowledge Sharing Working Groups, to further drive its activities.
4.3 Licensing of Payments System Participants
In the review period, 37 companies were issued with Approvals-in-Principle, comprising 35
in the Payment Solution Services (PSS) and 2 in the Switching & Processing categories. In
addition, 21 companies were issued with commercial licences, consisting of 17 in the PSS
and 4 in the Switching & Processing categories.
Also, the Bank issued Approval-In-Principle to two Payment Service Banks.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
TABLE 4:2 PAYMENTS SYSTEM PARTICIPANTS
Licence Type
June 2021
Dec 2021
Accredited Cheque Printers

Card Schemes

Mobile Money Operator Licence Category

Switching/Processing Licence Category

Payment Solution Services Licence Category
Payment Terminal Services Provider (PTSP) Authorisation

Payment Solution Service Provider (PSSP) Authorisation

Super-Agent Authorisation

Total

4.3.1 Examination of Payments System Participants
As part of the Bank’s efforts to promote a safe, reliable, and efficient payments system, it
conducted onsite examination and spot check assessment of payments system participants
in the review period. The Supervisory Framework for Payment Service Banks (PSBs) was
also released in July 2021 to streamline the activities of PSBs and to ensure sound risk
management practices, transparency in their operations as well as adequate customer
protection.

4.3.1.1 Onsite Examination and Assessment
The maiden examination of 2 Payments Service Banks, using the Supervisory Framework
for Payment Service Banks was conducted during the review period. The objective of the
examination was to provide regulatory guidance to strengthen their operations.
Similarly, spot-check assessment of 16 banks and payments service providers was
conducted to ascertain the institutions’ compliance with the relevant framework, guidelines
and policies guiding PoS implementation and usage within the banking industry.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

4.3.1.2 AML/CFT Assessment of Payment Service Providers
With the designation of Payment Service Providers (PSPs) as Other Financial Institutions
(OFIs) in BOFIA 2020 (as amended), they are required to amongst others, comply with the
requirements of CBN AML/CFT regulations, policies and guidelines. Consequently, the
assessment of 22 PSPs was conducted in the review period.

The assessment covered 8 Payment Solutions Service Providers (PSSPs), eleven Mobile
Money Operators (MMOs) and 3 Payment Switches. Most of the institutions had a
combination of licences. However, the focus was on institutions that onboard merchants,
agents and customers through creation of e-wallets that could be channels for ML/TF.
4.3.1.3 BVN Assessment
The Bank continued its effort to ensure effectiveness of the Know Your Customer (KYC)
principles and to promote a safe, reliable and efficient payments system. Consequently, the
Bank conducted assessment of 28 banks and NIBSS to ascertain their compliance with the
Regulatory Framework for BVN Operations and Watch-List for the Nigerian Banking Industry
in the review period.

The assessment revealed some infractions which attracted appropriate sanctions and the
affected banks were required to remediate the observed lapses.


4.4 Cheque Standards and Cheque Printers Accreditation Scheme
During the review period, the Bank monitored compliance with the new cheque standards
implemented in April 2021. The issues observed were associated largely with rejection of
non-compliant cheques.
The Bank accredited three additional cheque personalizers, bringing the total number to 7
while the number of accredited cheque printers remained 8.
4.5 Other Initiatives
The Guidelines for Licensing and Regulation of Payments Service Holding Companies in
Nigeria was issued in August 2021. The Guidelines require companies desirous of offering
switching and processing services, and mobile money services to set up a payment service
holding company, to clearly delineate activities of the subsidiaries.
In addition, the Revised Regulatory Framework for Bank Verification Number (BVN)
Operations and Watch-list for the Nigerian Banking Industry was released in October 2021.
The highlights of the Framework were as follows:
• inclusion of MMO and payment service providers as participants in the revised
Framework, following their designation as Other Financial Institutions in the BOFIA
2020 (as amended).
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

• categorisation of access to the BVN database into Tier 1 (direct Access) and Tier 2
(indirect Access).
• introduction of a sanctions regime, and
• introduction of the “Deceased” category under the watch-list, amongst others.


4.6 Payment System Statistics and Trend
4.6.1 Large Value Payment
The Real Time Gross Settlement (RTGS) system operations remained stable during the
review period, contributing to the stability of the financial system. The volume of inter-bank
fund transfers through the RTGS system increased by 3.05 per cent to 145,914, at endDecember 2021, from 141,592 at end-June 2021. Conversely, the value of inter-bank fund
transfers decreased to N32,329.86 billion at end-December 2021, from N35,695.95 billion at
end-June 2021, a decline of 9.43 per cent.

4.6.2 Retail Payments
4.6.2.1 Cheque clearing
The value of cheques cleared increased to N1,623.60 billion at end-December 2021, from
N1,596.82 billion at end-June 2021, reflecting an increase of 1.68 per cent. Conversely, the
volume of cheques cleared, decreased from 2,253,064 at end-June 2021 to 2,201,288 at
end-December 2021, reflecting a decrease of 2.30 per cent. The decrease in volume of
cheques cleared reflected the growing customers’ preference for electronic transactions.
4.6.2.2 Electronic Transactions
The volume and value of electronic transactions increased by 31.10 per cent and 16.60 per
cent to 7,581,064,406 and N506,765.66 billion, respectively, during the review period. The
surge in the usage of electronic payments for banking transactions was due to the
convenience of the channels and increased public confidence in the banking system.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as


TABLE 4:3 ELECTRONIC TRANSACTIONS


Payment Channel
Number of Connected
Terminals
Volume of Transactions
% Change
Volume
Increase/
(decrease)
Value N’ Billion
% Change
Value
Increase/
(decrease)
Jun
Dec
Jan-Jun 2021

Jul-Dec 2021
Jan-Jun 2021

Jul-Dec 2021

ATMs

POS

Mobile Money
N/A

Online
Transfers
(Internet/Web)
N/A-

Mobile App
N/A

USSD
N/A-

Direct Debit
N/A

ACH/NEFT
N/A-

Total


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

PENSIONS
The focus of the pension industry during the 2021 Financial Year centered on enhancing the
resolution of the challenges of outstanding pension liabilities of the Federal Government
under the Contributory Pension Scheme (CPS). The industry also focused on the expansion
of the coverage of the CPS to the informal sector and the sub-national governments and the
diversification of Pension Fund Investment with a view to mitigating associated risks. Other
focus areas included the drive to improve the quality of customer service delivery,
enhancement of operational capacity of the regulator/operators’ workforce and the reinvigoration of the public enlightenment and education initiatives of the National Pension
Commission (PenCom) to address the knowledge gap about the CPS.

The Nigerian Pension Industry expanded in the review period as total membership of pension
schemes increased by 1.59% to 9.59 million at end-December 2021, from 9.44 million at
end-June 2021. The growth is expected to continue as many States and Local Governments
adopt the CPS, as well as the steady uptake of the Micro Pension Plan by workers in the
informal sector.

The net Pension Assets under Management (AuM) grew by N766.83 billion (6.06%) to
N13.42 trillion at end-December 2021, from N12.66 trillion at end-June 2021. Investment in
FGN securities accounted for the largest share of Pension fund assets. Investments were
also made in other assets classes, such as States Government Securities, Ordinary Shares,
Corporate Debt Securities, Local Money Market Instruments, Supranational Bonds, Mutual
Funds, Infrastructure Funds and Private Equity Funds.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
TABLE 5:1 PENSION ASSETS


5.1 Other Developments in the Nigerian Pension Industry

5.1.1 Payment of Outstanding Pension Liabilities
The PenCom defrayed some aspects of outstanding pension liabilities of the Federal
Government under the CPS. The sum of N40.55 billion being the outstanding accrued rights
of 6,282 retirees and 2,329 deceased employees was paid. Similarly, the sum of N66.83
billion was remitted into the Retirement Savings Accounts (RSAs) of 85,743 retirees and
693,229 active employees, being the 2.5% shortfall in the rate of employer pension
contributions at end-December 2021.

5.1.2 Investment of Pension Funds
At end-December 2021, N8.77 trillion representing 65.35 per cent of the total pension AuM,
was invested in Federal Government Securities, of which N118.31 billion was invested in the
FGN Sukuk Bond. Furthermore, pension funds investment in FGN Green Bond stood at
N59.32 billion while N14.30 billion was invested in Agency Bonds issued by the Nigeria
Mortgage Refinance Company.
ASSET CLASSES
EXISTING
SCHEMES
CPFAs
FUND I
FUND II
FUND III
FUND IV
FUND V
FUND VI
ACTIVE
FUND VI
RETIREE
TOTAL PENSION
FUND ASSETS
₦ 'Million
₦ 'Million
₦ 'Million ₦ 'Million
₦ 'Million
₦ 'Million
₦ 'Million
₦ 'Million
₦ 'Million
₦ 'Million
DOMESTIC ORDINARY SHARES

FOREIGN ORDINARY SHARES

TOTAL FGN SECURITIES

FGN BONDS HTM

TREASURY BILLS

AGENCY BONDS

SUKUK

GREEN

STATE GOVT. SECURITIES

CORPORATE DEBT SECURITIES

CORPORATE BONDS

CORPORATE INFRASTRUCTURE

CORPORATE GREEN BONDS

SUPRA-NATIONAL BONDS

LOCAL MONEY MARKET SECURITIES

BANK PLACEMENTS

COMMERCIAL PAPERS

FOREIGN MONEY MARKET SECURITIES

MUTUAL FUNDS

OPEN/CLOSE-END FUNDS

REITS

REAL ESTATE PROPERTIES

PRIVATE EQUITY FUNDS

INFRASTRUCTURE FUNDS

CASH & OTHER ASSETS


700.41
74.78
59,694.67
NET ASSET VALUE AS @ 31
DECEMBER 2021

UNAUDITED REPORT ON PENSION FUNDS INDUSTRY PORTFOLIO FOR THE PERIOD ENDED 31 DECEMBER 2021
APPROVED EXISTING SCHEMES, CLOSED PENSION FUND ADMINISTRATORS AND RSA FUNDS (INCLUDING UNREMITTED CONTRIBUTIONS @CBN & LEGACY FUNDS)
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

5.1.3 Process Automation and Other ICT Initiatives
5.1.3.1 Enhanced Contributory Registration System
The PenCom developed the Enhanced Contributory Registration System (ECRS) to
enhance the records of registered contributors by capturing their biometrics and linking RSAs
to their respective National Identification Numbers.

5.1.3.2 Implementation of the RSA Transfer System
The PenCom deployed the RSA Transfer System (RTS) to coordinate all the processes
relating to the transfer of RSAs from one PFA to another in line with Section 13 of the Pension
Reform Act (PRA) 2014. The RTS is an electronic platform through which RSA transfers are
initiated, processed, monitored and global net transfer positions for all affected PFAs are
determined on an online and real-time basis.

5.1.3.3 Electronic Enrolment System
The PenCom deployed Online Enrolment Application on September 1, 2021. Since the
deployment, a total of 357 Ministries, Departments and Agencies (MDAs) had uploaded the
data of 10,584 retirees, while 6,937 retirees had successfully registered on the application.
Similarly, 6,266 retirees had been verified and enrolled by various PFAs at end-December
2021.
PenCom automated the Pre-retirement Verification and Enrolment for prospective
retirees of treasury-funded Ministries, Departments and Agencies (MDAs), by
deploying an online Enrolment Application on its website, from 1 September 2021.
The Application, which has capabilities to register, verify and enrol prospective
retirees, effectively eliminates the need for a physical enrolment exercise. It also
eliminates the convergence of a mass gathering, while enhancing comfort for the
prospective retirees who are now enabled to participate in the exercise seamlessly
through the Application. All retirees and prospective retirees for the year 2021 were
required to register on the application and complete the verification and enrolment
processes, to enable the computation of their accrued pension rights for their previous
active service up to June 2004 when the Contributory Pension Scheme (CPS)
commenced. Since deployment, a total of 357 Ministries, Departments and Agencies
(MDAs) had uploaded the data of 10,584 retirees, while 6,937 retirees had successfully
registered on the application. Similarly, 6,266 retirees had been verified and enrolled by
various PFAs as at 31 December 2021. This will ensure the speedy processing of their
retirement benefits.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

INSURANCE
The Nigerian insurance market remained resilient in the second half of 2021 despite
the effects of the COVID-19 pandemic, which impacted ongoing efforts to deepen
insurance penetration. The various regulatory reforms implemented within the
review period, including the recapitalisation exercise, have started to impact many
facets of the industry especially market size.
6.1 Assets
The total assets of the industry have continued to increase, rising by 9.33 per cent to N2.23
trillion, at end-December 2021, from N2.03 trillion, at end-June 2021. Similarly, net premium
income and total gross claims rose significantly by 101.86 and 92.99 per cent to N441.37
billion and N336.79 billion at end-December 2021, from N218.65 billion and N174.51 billion
at end-June 2021, respectively. The developments were due largely to the market
development initiatives and increased public awareness on insurance services.

TABLE 6:1 KEY INDICATORS
Period
End-June 2021
End-December 2021
%Change
Gross Premium Income
307,395,894,325.00
616,040,928,000.40
100.41
Net Premium Income
218,651,930,689.00
441,371,942,881.40
101.86
Total (Gross) Claims
174,514,908,745.00
336,789,189,287.00
92.99
Total Assets
2,039,809,809,965.00
2,230,165,942,794.00
9.33

The Gross Premium Income rose significantly by 100.41 per cent to N616.04 billion
at end-December 2021, from N307.40 billion at end-June 2021, demonstrating the
industry’s strong capacity to withstand the adverse effect of the COVID-19
pandemic.

6.2 Selected Insurance Financial Soundness Indicators
6.2.1 Capital Adequacy Ratio
The industry remained solvent in the review period as the CAR, measured by capital to total
assets, was above the regulatory threshold of 40 per cent. However, it declined by 12.84
percentage points to 42.90 per cent at end-December 2021 from 55.74 per cent at end-June
2021, driven largely by the recognition of the IFRS 9 impairment charges.
6.2.2 Liquidity Ratio
The ratio of liquid assets to current liabilities decreased by 6.05 percentage points to 115.00
per cent at end-December 2021, from 121.05 per cent at end-June 2021. This was however
adequate to accommodate significant claims.
FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as
6.2.3 Combined Ratio
The combined ratio for the industry rose marginally by 0.06 percentage point to 73.34 per
cent at end-December 2021, from 73.27 per cent at end-June 2021. This was due to the
increase in expenses by 3.15 percentage points to 31.68 per cent at end-December 2021,
from 28.53 per cent at end-June 2021. The increase in expenses outweighed the decrease
in claims, which declined from 44.74 per cent at end-June 2021 to 44.65 per cent at endDecember 2021.
6.2.4 Premium Debtors
Premium debtors, measured as a percentage of gross premium, significantly declined by
24.27 percentage points to 5.06 per cent at end-December 2021, from 29.33 per cent at endJune 2021. The significant decline was due largely to the strict enforcement of the “nopremium-no-cover” policy.

6.2.5 Retention Ratio
The retention ratio measured as insurance premium retained to total premium generated,
rose by 10.67 percentage points to 72.14 per cent at end-December 2021, from 61.47 per
cent at end-June 2021. This reflected a rise in the industry’s capacity to undertake big
insurance policies.

TABLE 6:2 INSURANCE INDUSTRY DASHBOARD
KEY INDICATORS
Jun-21
Dec-21
CAR (Capital/Total Asset)
55.74
42.90
Liquidity Ratio (liquid assets/current liabilities)
115.00
121.05
Claims Ratio %
44.74
41.65
Expense Ratio %
28.53
31.68
Combined Ratio %
73.27
73.34
investment to Total Assets Ratio %
70.86
70.19
Change in Gross Written Premium (in %)
20.18
23.82
Change in Net Written Premium (in %)
19.10
29.82
Change in Capital & Surplus (in %)
5.45
14.47
Premium Debtors as a % of Equity
4.56
2.34
Premium Debtors as a % of Total Assets
2.13
1.30
Premium Debtors as a % of Gross Premium
29.33
5.06
Retention Ratio (in %)
61.47
72.14
Return on Assets (in %)
1.46
1.09


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

6.3 Policy Development and Initiatives
During the review period, the Nigerian Insurance Commission (NAICOM) continued with
the implementation of ongoing policy programmes and development of new initiatives
intended to reposition the Nigerian insurance industry for enhanced contribution to the
economy. The initiatives included the following:
i.
The introduction of NAICOM Portal on 1st September 2021 which allows insurance
agents, brokers, and underwriters to provide regulatory returns online and for the
public to validate purchased insurance policies.
ii.
Issuance of revised guidelines on Market Conduct and Business Practice for
Insurance Institutions in Nigeria in October 2021; and the revised Guidelines and
roadmap on the implementation of International Financial Reporting Standard
(IFRS) 17 in December 2021.
iii.
Introduction of microinsurance products with the grant of approval to 4
conventional insurance companies to offer such products to drive financial
inclusion.
iv.
Conduct of pilot onsite Risk Based examination on 5 insurance companies in the
review period, focused on corporate governance, risk management and internal
controls, solvency and liquidity of insurance institutions.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

RISKS TO THE FINANCIAL SYSTEM
7.1 Credit Risk


Risk Rating (Medium Risk, Stable)
Credit risk during the review period continued to be effectively managed through sustained
implementation of regulatory and supervisory measures. The non-performing loans ratio
reduced to 4.94 per cent in December 2021, from 5.70 per cent in June 2021.
The risk is expected to remain moderate and stable in 2022 even as banks manage the
transition to a full interest rate regime on loans earlier granted forbearances in the wake of
the Covid-19 pandemic.

7.2 Liquidity Risk
Risk Rating (Low Risk, Stable)

The industry maintained a stable and sound liquidity position for the period from July to
December 2021. The industry liquidity ratio which remained above the regulatory threshold
of 30 per cent, increased to 41.33 per cent at end-December 2021, compared with 41.30 per
cent at end-June 2021. Industry liquidity risk is expected to remain low and stable in 2022.

7.3 Market Risk
Risk Rating (Medium Risk, Stable)

The weighted average of OBB and interbank call rates fell to 11.49 per cent and 12.48 per
cent at end-December 2021, from 12.76 per cent and 12.53 per cent, respectively, at endJune 2021, reflecting higher banking system liquidity. Similarly, the average savings rate fell
to 1.25 per cent from 1.81 per cent during the same period. The average maximum lending
rate declined to 27.58 per cent at end-December 2021, from 29.05 per cent at end-June
2021.
The Covid-19 restrictions effect on the foreign exchange market is gradually abating, with
the official exchange rate remaining relatively stable at N412.99/US$ at end-December 2021,
compared with N409.16/US$ at end-June 2021, a depreciation of 0.81 per cent. The
marginal depreciation was due to increased demand at the I&E window.
The NGX-ASI improved by 12.69 per cent between end-June 2021 and end-December 2021
to 42,716.44 points, showing renewed interest in the market by way of new public offerings.
Market risk is expected to remain stable in 2022 with the interplay of expected stability in
foreign exchange market, increasing oil prices and improved economic activities owing to
relaxed Covid-19 pandemic restrictions.

FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

7.4 Operational Risk
Risk Rating (Medium Risk, Increasing)

During the second half of 2021, operational risks in banks were driven mainly by the lingering
impact of the restrictive COVID-19 protocols on operations, security challenges, the
attendant risks from telecommuting, rising cybersecurity and insider threats.
Banks lost N613.40 million through fraud and forgeries at end December 2021, compared
with N307.83 million at end June 2021, indicating an increase of 99.27 per cent in the
corresponding period.
However, the number of reported cases of fraud and forgeries through conversion of
customers’ deposits, unauthorised fund transfers, ATM withdrawals and suppression of
cheques declined by 10.66 per cent to 14,141 at end December 2021, from 15,829 at end
June 2021.
Low compliance with the Pension Reforms Act 2014 by sub-national governments
constitutes a risk to comprehensive coverage of the Contributory Pension Scheme.
Operational risk is expected to remain moderate and stable in 2022 as the various initiatives
geared towards making the business environment more favourable take effect.

7.5 Cybersecurity Risk
Risk Rating (High Risk, Trending up)


The Covid-19 lockdown accelerated an unprecedented digital transformation, which has
been exploited by cyber-criminals, leading to an increase in the number of cybersecurity
incidents. Threats witnessed in the period included: social engineering, especially for the
vulnerable segment of the users of digital financial services; unauthorised access to
information; ransomware attacks; online ponzi schemes and mobile App fraud.
In response to the heightened cybersecurity risk, the Bank in conjunction with the Committee
of Chief Information Security Officers of the Nigeria Financial Industry and CyberSafe
Foundation launched the “NoGoFallMaga” campaign in July 2021. The campaign raised
public awareness on the various tactics used by cyber-criminals and ways of avoiding them.
The risk from cybersecurity is expected to remain high and to increase in intensity as digital
financial service adoption increases. However, the Nigerian financial system is well
positioned to remain resilient to cyber-attacks and other threats.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

7.6 Macroeconomic Risk
Risk Rating (High Risk, Stable)

Inflation constitutes a risk to the financial system, with significant impact on the pension
industry and other sectors. Despite efforts to diversify pension fund investments into other
asset classes, the average returns on pension fund investments remained below the inflation
rate, leading to negative real returns.
Headline and food inflation fell to 15.63 per cent and 17.37 per cent, at end-December 2021,
respectively, from 17.75 per cent and 21.83 per cent, respectively at end-June 2021. Given
the sustained efforts at curbing security challenges coupled with CBN interventions in the
real sector, food production is expected to improve in 2022 with moderating impact on
inflation rates.
Other macroeconomic risks include the increasing debt service to revenue ratio, exacerbated
by the decline in crude oil revenue owing to under-recovery cost and drop in oil production.
Although high, macroeconomic risks are expected to remain stable in the coming year. The
headwinds include monetary policy normalisation in advanced economies, lingering supply
chain disruptions, capital flow reversals and the high cost of financing the 2023 general
elections. However, these would be mitigated by sustained implementation of the monetary
and fiscal interventions and other policy supports.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

OUTLOOK
The domestic economy is expected to sustain an upward trajectory, driven by improvements
in supply chains, manufacturing and agricultural output, continued recovery of oil prices, and
increased diaspora remittances. In addition, inflationary pressures are expected to ease in
the short-to-medium term in response to the positive impact of the various monetary and
fiscal interventions in the real sector.
However, monetary policy normalisation in advanced economies, rising energy prices,
lingering security challenges in the food-producing regions, delays in the full implementation
of the Petroleum Industry Act, and persistent power supply shortages might subdue the
growth prospects. Thus, monetary and fiscal stimuli will be sustained to support recovery
until the downside risks to growth dissipate substantially.
The banking industry remained resilient in the review period, and the trend is expected to
continue with the industry FSIs buoyed as economic activities improve in 2022. The key risks
faced by the industry remain credit and credit concentration risks and emerging cybersecurity
risks with the increased digitization of financial services. Nevertheless, regulatory and
supervisory activities will continue to be proactive in identifying and managing potential
vulnerabilities and risks to the banking industry.
Activities in the capital market are expected to sustain a positive trend in 2022 with the
implementation of the Nigeria Capital Market Master plan. The optimistic outlook is reinforced
by the expected increase in the number of listings as a result of the activities of the Securities
Issuers Forum (SIF), and the upgraded capital market infrastructure from the demutualisation
of the NGX. Similarly, activities in the commodity segment of the market are expected to
increase substantially in 2022 owing to the increased number of commodity exchanges
which would further improve price discovery and diversification of the economy. However, a
high inflationary environment could lead to low yield on investments.
The insurance industry faces challenges arising from the prescriptive laws, bureaucracy,
difficulties in accessing funds, and socio-cultural issues. Nonetheless, NAICOM’s on- going
recapitalization, process automation, and market development initiatives would facilitate the
continued growth of the industry. Equally, implementation of a risk-based supervisory
regime, introduction of a macroprudential framework, and deployment of group-wide
supervision would improve the efficiency of regulatory activities, and further enhance the
enabling environment for the industry to thrive.
Developments in both the global and domestic environment will continue to shape financial
system stability in Nigeria. The CBN and other financial system regulators will sustain the
deployment of proactive measures for early identification and management of systemic risks
to ensure financial system stability. Overall, macroprudential risks to the financial system are
expected to moderate in 2022 with prospects for improved financial system stability in the
near-term.


FINANCIAL STABILITY REPORT – DECEMBER 2021

Classified as

ACKNOWLEDGEMENTS
LIST OF MAJOR CONTRIBUTORS
1. V.O. Ururuka (PhD.)
Financial Policy and Regulation Department
2. N.M. Ilukwe
Ditto
3. J. A. Mohammed
Ditto
4.
A. Sylvanus-Dannana
Ditto
5. A.K. Usman
Ditto
6.
A Ochoche
Development Finance Department
7.
V.U Oboh
Monetary Policy Department
8.
C.P. Nwosu
Research Department
9.
N.A. Akwashiki
Banking Supervision Department
10.
A. Salihu
Statistics Department
11.
I. P. Akibolaji
Risk Management Department
12.
F.E. Oduniyi
Financial Markets Department
13.
V. A. Martins
Other Financial Institutions Supervision Department
14.
L.A. Sawa
Reserve Management Department
15. M.K. Usman
Consumer Protection Department
16.
H. Abdullahi
Banking Services Department
17.
A. A. Isa-Olatinwo
Payments System Management Department
18.
H. H. Suleiman
Securities and Exchange Commission
19.
M. Mammada
Nigerian Insurance Commission
20.
P. Aghahowa
National Pension Commission

The Report is produced and supervised by the Financial Policy and Regulation Department

Chibuzo A. Efobi
Director, Financial Policy and Regulation Department