FINANCIAL STABILITY REPORT – JUNE 2022

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FINANCIAL
STABILITY
REPORT


JUNE 2022


FINANCIAL STABILITY REPORT – JUNE 2022

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CONTENTS


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5.1
5.1.1
Revised Share Capital Requirement for Licensed Pension Fund Administrators

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5.1.2
Revised Regulation for the Administration of Retirement and Terminal Benefits

5.1.3


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LIST OF FIGURES
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LIST OF TABLES
TABLE 2:21 WOMEN AND WOMEN-OWNED BUSINESSES TRANSACTIONS ON THE NATIONAL
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TABLE 3:1 SELECTED FINANCIAL SOUNDNESS INDICATORS OF THE NIGERIAN BANKING INDUSTRY 73


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LIST OF BOXES
BOX 1: CBN COUNTER-MEASURES TO MITIGATE THE COVID-19 PANDEMIC.31


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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
CMNBs
Commercial, Merchant and Non-interest Banks
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
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
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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 Ratio
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
National 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
Nigeria 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
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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
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


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GOVERNOR’S STATEMENT
This edition of the Financial Stability Report highlights developments in the financial system
during the first half of 2022. The supply chain disruptions following the Russia-Ukraine
conflict, the spillovers from sanctions imposed on Russia, as well as the lingering headwinds
associated with the COVID-19 pandemic, resulted in a weakening of the global economy.
Consequently, global output for 2022 was projected at 3.20 per cent, 2.9 percentage points
lower than the 6.10 per cent recorded in 2021.
The GDP growth in advanced economies was projected to slow to 2.50 per cent in 2022,
compared with 5.20 per cent in 2021. For the USA, Japan and the Euro Area, growth was
estimated at 2.30, 1.70 and 2.60 per cent, respectively, compared with 5.70, 1.70 and 5.40
per cent recorded in 2021. Similarly, growth in Emerging Markets and Developing Economies
(EMDEs) was projected at 3.60 per cent in 2022, compared with the 6.80 per cent recorded
in 2021. Growth in sub-Saharan Africa (SSA) was projected at 3.80 per cent, lower than 4.60
per cent achieved in 2021.
Global inflationary pressures heightened during the review period, driven by the disruptions
to supply chains, resulting in tightening global financial conditions as most central banks
pursued aggressive monetary policy stance. Other ramifications include declining global
trade and growing risks to financial stability.

In Nigeria, the economy continued its recovery, albeit at a slower pace, as GDP grew by 3.32
per cent in the first half of 2022, compared with 4.02 per cent in the second half of 2021. The
growth was driven by the non-oil sector, specifically, the services and agriculture subsectors. The performance of these sub-sectors was due to the sustained and targeted
interventions by the fiscal and monetary authorities. Total credit to the private sector
continued to grow during the review period, with increased lending to the real sector and
households, in line with the Bank’s policies to encourage lending to key sectors of the
economy. The exchange rate remained stable owing to improved foreign exchange liquidity
in the system, particularly from non-oil sources.

The Bank continued the implementation of various regulatory and supervisory measures,
including the Global Standing Instruction (GSI) and Guidelines for Credit Guarantee
Companies, to moderate risks and promote the soundness and stability of the banking
system in the short to medium term. These measures reinforced the health and resilience of
the Nigerian banking system as it remained safe, sound and stable.
The Nigerian pension industry continued to improve its performance in the review period,
with growth in total enrolment in pension schemes and assets under management.
Furthermore, the recapitalisation exercise initiated to enhance the resilience of pension fund
administrators was successfully concluded. Similarly, the Nigerian insurance industry
continued to grow with the sustained implementation of ongoing policy programmes and
development of new initiatives intended to reposition the industry for enhanced
contribution to the economy. Insurance penetration was potentially deepened by the
licensing of seven micro-insurance companies by the National Insurance Commission
(NAICOM).
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The overall economic outlook for both the global and domestic economies in the short- to
medium-term remains uncertain. The effects of supply chain disruptions occasioned by the
Russian-Ukraine crisis, elevated global inflation, the lingering impact of the Covid-19
pandemic, as well as the broad shocks to foreign capital flows following rate hikes by most
advanced economies continue to dampen growth expectations. However, efforts to resolve
the Russia-Ukraine crisis has resulted in partial lift on grain exports with positive impact in
the short- to medium-term growth expectations. On the domestic front, the economy is
expected to sustain its growth trajectory, owing to the continued rise in oil prices, rebound in
manufacturing activities, and sustained policy support. However, persisting security
challenges and infrastructure deficit are major headwinds that could undermine the outlook
for growth. The Bank will continue to provide policy support to priority sectors to support
growth.
Godwin I. Emefiele, CON
Governor, Central Bank of Nigeria

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FOREWORD
The first half of 2022 witnessed a downward trend in global growth, with tight monetary policy
stance of most monetary authorities in response to the unprecedented rising inflationary
pressures, contributing to the general decline in output and constrained access to global
capital. The attendant tighter financial conditions posed considerable risk to financial stability
owing to their tendency to induce debt distress, especially in emerging markets and
developing economies.
The Nigerian economy sustained the positive performance in the last six quarters, driven
largely by the continuous growth in the non-oil sector. Nigeria’s economic growth is projected
to decline to 3.40 per cent, while inflation is expected to moderate to 16.10 per cent in 2022.
However, the Nigerian NGX All-Share Index increased by 21.31 per cent in the first half of
2022.
Sustained implementation of the appropriate mix of monetary and, micro and
macroprudential policies continued to yield positive results, as most financial soundness
indicators were within the prudential requirements. Furthermore, results of stress tests
showed the resilience of the banking system and its ability to cope with severe
macroeconomic shocks. Other sub-sectors, including pension, capital market and insurance
continued to contribute immensely to the resilience and stability of the financial system.
This edition of the FSR 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 the
pension and insurance sub-sectors respectively. The key risks and the outlook for financial
stability are presented in sections 7 and 8, respectively.
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 commitment of the Bank and other regulators in the financial
system to ensuring a sound financial system that supports inclusive growth and sustainable
economic development.

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


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EXECUTIVE SUMMARY
The Russia-Ukraine crisis and the resurgence of Covid-19 in China disrupted the global
supply chains, heightened commodity prices, and fuelled inflationary pressures.
Furthermore, rising inflation prompted the adoption of tight monetary policy stance by most
central banks which led to tightening financial conditions with attendant risk to financial
stability. Consequently, growth of the global economy earlier projected at 4.40 per cent for
2022 was revised to 3.20 per cent, lower than 6.10 per cent recorded in 2021.
Growth in Sub-Saharan Africa was estimated at 3.80 per cent in 2022, a moderated from
4.60 per cent achieved in 2021. In Nigeria, growth for the first half of 2022 declined to 3.32
per cent, from 4.02 per cent in the second half of 2021. This was due mainly to the lingering
effects of the Russia-Ukraine crisis, which disrupted supply chains and heightened prices of
raw materials and operational costs. Consequently, annual growth was projected to
moderate to 3.40 per cent in 2022, from 3.60 per cent in 2021.
Global prices continued its upward trend in the first half of 2022, reflecting supply-side
constraints and lingering effects of an accommodative monetary policy stance adopted to
ameliorate the impact of the Covid-19 pandemic. In line with global trends, Inflationary
pressures in Nigeria rose in the first half of 2022, owing largely to domestic security
challenges which continued to impact on crude oil production, agricultural output and food
supply as well as spill over effects of Russia-Ukraine crisis, which increased freight costs
and commodity prices. However, inflationary pressures are expected to moderate slightly
from 17.00 per cent in 2021 to 16.10 per cent in 2022.
Gross external reserves at end-June 2022 decreased by 2.66 per cent to US$39.16 billion,
from US$40.23 billion at end-December 2021. The low accretion to reserves was due mainly
to reduction in crude oil production and high debt-service obligations.
The Bank sustained its implementation of various supervisory measures including virtual
examinations, the Global Standing Instruction (GSI) policy, and also issued guidelines for
credit guarantee companies. This boosted public confidence in the banking industry and
enhanced safety and soundness of banks, as evidenced by the Financial Soundness
Indicators (FSIs), which were within prudential requirements.
The ratio of non-performing loans net of provisions to capital for commercial, merchant and
non-interest banks (CMNBs) increased marginally to 4.95 per cent at end-June 2022, from
4.85 per cent at end-December 2021. Similarly, the ratio of interest margin to gross income
decreased marginally to 47.93 per cent during the review period, from 48.59 per cent at endDecember 2021. Also, the ratio of non-interest expenses to gross income declined to 65.04
per cent at end-June 2022, from 65.14 per cent at end-December 2021. The ratio of
personnel expenses to non-interest expenses declined to 25.47 per cent at end-June 2022,
from 29.38 per cent at end-December 2021.
Results of the stress test showed that the banking industry could withstand a shock of “up to
100 per cent increase” in the industry NPLs, as the post-shock industry CAR would remain
above the regulatory requirement of 10 per cent. The sector concentration stress test showed
that the industry could withstand “up to 20.00 per cent shock” to oil and gas exposures as
post-shock CAR would decline marginally below the regulatory requirement. The results also
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showed resilience to obligor credit concentration risk as the CAR remained above the
regulatory threshold of 10.0 per cent.

The Bank sustained its interventions to households and businesses adversely impacted by
the Covid-19 pandemic through the implementation of the Healthcare Sector Intervention
Facility and Targeted Credit Facility, amongst others.
Similarly, the Bank continued its efforts to ensure that financial institutions comply with the
redesigned Credit Risk Management System (CRMS) thereby strengthening credit
administration as indicated by improved credit records. Thus the total number of credit
records on the database increased by 10.00 per cent relative to the preceding period.
Consumer confidence in the banking industry was enhanced with the resolution of 1,399
complaints entailing refunds to the complainants and closure of 1,321 customers’ complaints
against financial institutions during the review period. The total complaints resolved and
closed increased by 4.7 and 20.64 per cents, respectively.

In the first half of 2022, the Bank sustained its efforts in the implementation of eNaira, Africa’s
first Central Bank Digital Currency (CBDC), extended the charges-free regime for eNaira
transactions, and commenced the integration of the digital currency with Nigeria Inter-Bank
Settlement System (NIBSS) instant payment platform. At end-June 2022, the number of
eNaira wallet downloads, onboarded customers and activated wallets were 807,920;
244,340; and 182,790, respectively. These indicate increases of 32.45, 35.52, and 45.11 per
cents, respectively, above the levels at end-December 2021.

The capital market recorded bullish performance as evidenced by an increase in aggregate
market capitalisation by 21.31 per cent to N50.18 trillion, at end-June 2022, from N43.12
trillion, at end-December 2021. The pension industry also grew with total enrolment in
pension schemes, increasing by 1.25 per cent to 9.71 million, from 9.59 million in the
previous half year, largely driven by the increased adoption of the Contributory Pension
Scheme (CPS) by States and Local Governments as well as the steady uptake of the Micro
Pension Plan in the informal sector. The net pension Assets under Management (AuM) grew
by 6.30 per cent to N14.27 trillion, from N13.42 trillion at end-December 2021. Similarly, the
insurance industry recorded an increase in its total assets by 2.41 per cent to N2.28 trillion,
from N2.23 trillion at end-December 2021. The net premium income and gross claims rose
by 16.89 and 7.71 per cent to N260.34 billion and N174.78 billion at end-June 2022, from
N222.72 billion and N162.27 billion at end-December 2021, respectively.

The key risks to financial system stability during the review period include elevated inflation,
exchange rate pressures, spill-over effects of the Russia-Ukraine crisis, shortage of
petroleum products, cyber-risk from increased use of digital financial services, as well as
increased operating costs and operational risks. Consequently, the Bank and other financial
sector regulators implemented appropriate measures to mitigate these risks. Overall, the
outlook for financial stability remained optimistic, given the robust policy measures adopted
by the Bank and other financial sector regulators towards enhancing the resilience of the
financial system.
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ECONOMIC AND FINANCIAL DEVELOPMENTS
1.1 Global Developments
1.1.1 Output
Global output weakened considerably in the first half of 2022, owing mainly to the RussiaUkraine crisis, which disrupted demand and supply chains in many countries. This
development resulted in increased commodities prices including food, oil and natural gas.
Similarly, the economic downturn, in China, due largely to the resurgence of COVID-19
pandemic and the attendant lockdowns also exacerbated the global slowdown. In addition,
the tight monetary policy stance of most central banks in response to rising inflationary
pressures contributed significantly to the general decline in output growth. The attendant
tighter financial conditions pose considerable risk to financial stability due to its tendency to
induce debt distress, especially in emerging markets and developing economies.
Consequently, global output growth in 2022 is projected at 3.20 per cent, lower than the 6.10
per cent recorded in 2021.

In the advanced economies, growth was projected to moderate to 2.50 per cent in 2022,
compared with 5.20 per cent in 2021. In the United States (US), growth was estimated at
2.30 per cent in 2022, compared with 5.70 per cent in 2021, attributed largely to tighter
monetary policy and lower-than-expected consumer spending. Similarly, in the Euro area,
output was expected to soften to 2.60 per cent in 2 022, from 5.40 per cent in 2021, reflecting
spill over from the Russia-Ukraine crisis and tight monetary conditions. In Japan, however,
growth was projected to remain flat at 1.70 per cent in 2022.

In Emerging Market and Developing Economies (EMDEs), growth was projected at 3.60 per
cent in 2022, compared with 6.80 per cent in 2021. This was largely a reflection of a slow
growth in China which was projected at 3.30 per cent in view of Covid-19 induced lockdowns,
compared with 8.10 per cent in 2021. Similarly, Middle East and North Africa (MENA) region
was expected to grow by 4.90 per cent during the review period, compared with 5.80 per
cent in 2021. Growth in Sub-Saharan Africa (SSA) was estimated at 3.80 per cent, compared
with 4.60 per cent recorded in 2021. In line with the global trend, growth in Nigeria was
projected to moderate to 3.40 per cent in 2022, from 3.60 per cent in 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

Middle East and Central Asia

Sub-Saharan Africa

*Nigeria

Source: IMF’s World Economic Outlook Update, July, 2022, *National Bureau of Statistics (NBS)
1.1.2 Inflation
Global inflation remained elevated during the first half of 2022, mainly reflecting disruptions
to supply value chains by the Russia-Ukraine crisis, resulting in the rising prices of food,
energy and other commodities. The development induced many central banks to switch to
tight monetary policy mode to tame inflation.
Inflation in Advanced Economies was expected to accelerate to 6.60 per cent in 2022,
compared with 3.10 per cent in 2021. The United States, Japan and the United Kingdom
were expected to record higher inflation rates of 7.70, 1.90 and 9.10 per cent in 2022,
respectively, compared with 4.30, 0.80 and 2.20 per cent in 2021.
Similarly, inflation in EMDEs was projected to increase to 9.50 per cent in 2022, compared
with 5.90 per cent in 2021. SSA was expected to experience inflation of 12.20 per cent in
2022, compared with 11.00 per cent in 2021. In Nigeria, however, inflation was expected to
moderate slightly to 16.10 per cent in 2022, from 17.00 per cent in 2021.


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Table 1:2 Global Inflation
Region/Country

Advanced Economies

United States

Euro Area

Japan

United Kingdom

Emerging Markets and Developing
Economies

Sub-Saharan Africa

Nigeria

Source: WEO Update, July 2022

1.1.3 Oil Prices
The prices of crude oil increased significantly in the review period, owing to the disruption in
the supply chain following the Russia-Ukraine crisis, and rising global demand owning to
sustained increase in economic activities. The OPEC Reference Basket (ORB) rose by 50.98
per cent to US$117.72 pb at end-June 2022, compared with US$77.97 pb at end-December
2021. The ICE Brent also increased by 52.08 per cent to US$119.78 pb at end-June 2022,
over US$78.76 pb at end-December 2021. In the same vein, the West Texas Intermediate
(WTI) rose by 120.38 per cent to US$114.84 pb at end-June 2022, compared with US$52.11
pb at end-December 2021. Similarly, the Bonny Light rose by 69.29 per cent to US$126.00
pb at end-June 2022, compared with US$74.43 pb at end-December 2021.

Table 1:3 Oil Prices (US$ per barrel)
CRUDE OIL TYPES\DATES
End-Dec.

End-Dec.

End-Dec.

End-Dec.

End-Jun.

OPEC
Reference
Basket
(ORB) (US$)

ICE Brent (US$)

West Texas Intermediate
(WTI) (US$)

Bonny Light (US$)

Source: OPEC and Reuters
1.1.4 Food Prices
The Food and Agriculture Organization (FAO) Food Price Index increased by 15.41 per cent
to 154.30 points at end-June 2022, compared with 133.70 points at end-December 2021.
The above development was due, mainly to the rise in the prices of meat, dairy, cereals,
vegetable oils, and sugar products.
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The Meat Price Index increased by 12.25 per cent to 124.60 points at end-June 2022,
compared with 111.00 points at end-December 2021; while the Dairy Price Index increased
by 16.43 per cent to 150.20 points at end-June 2022, over the level of 129.00 at endDecember 2021. Also, the Cereals Price Index increased by 18.36 per cent to 166.30 points
at end-June 2022, compared with 140.50 points at end-December 2021, while the Vegetable
Oil and Sugar Price Indices rose by 18.66 and 0.77 per cent, to 211.80 and 117.30 points at
end-June 2022, compared with 178.50 and 116.40 points at end-December 2021,
respectively. The upward trend in the various indices was attributed to supply constraint
induced by the Russia-Ukraine crisis and low inventory levels for most items.

Table 1:4 World Food Price Index

End-Dec. 2018
End-Dec. 2019
End-Dec. 2020
End-Dec. 2021
End-Jun.

Food Price Index

Meat

Dairy

Cereals

Vegetable Oils

Sugar

Source: Food and Agriculture Organisation (FAO).

1.1.5 International Stock Markets
International stock markets generally recorded a bearish performance during the review
period, reflecting a shift in investors’ preference from equity market to fixed income securities
in response to rising interest rates.
In North America, the United States S&P 500, the Canadian S&P/TSX Composite, and the
Mexican Bolsa indices decreased by 21.36, 11.72, and 10.94 per cent, to 3,752.71,
18,713.62 and 47,337.65, from 4,772.14, 21,198.03 and 53,150.36, respectively. Similarly,
in South America, the Brazilian Bovespa Stock and the Colombian COLCAP indices
decreased by 6.69 and 4.60 per cent to 97,805.61 and 1,346.03, respectively, while the
Argentine Merval index increased by 4.22 per cent to 87,023.10.
In the European stock markets, the UK FTSE 100, France CAC 40 and the Germany DAX
indices decreased by 3.22, 17.54, and 19.89 per cent, respectively, relative to their levels at
end-December 2021.
In Asia, the Japan NIKKEI 225, China Shanghai SEA, and India BSE Sensex decreased by
8.33, 6.62 and 8.99 per cent, respectively, compared with their levels at end-December 2021.
In Africa, the South African JSE All-Share Index, the Kenyan Nairobi NSE 20, Egyptian EGX
CASE 30, and Ghanaian GSE All Share Index declined by 10.01, 15.23, 22.79, and 8.86 per
cent, respectively, while the Nigerian NGX All-Share Index increased by 21.31 per cent.

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Table 1:5 Indices of Selected Stock Markets
Country
Index
End-Dec 2019
(1)
End-Dec 2020
(2)
End-Dec 2021
(3)
End-June
2022 (4)
% Change
(4) & (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 115,645.00

Argentina
Merval

Columbia
COLCAP

EUROPE
UK
FTSE 100

France
CAC 40

Germany
DAX

ASIA
Japan
NIKKEI 225

China
Shanghai SE A

India
BSE Sensex

Bloomberg:

1.1.6 Foreign Exchange Markets
Major currencies depreciated against the US dollar during the first half of 2022, owing to the
tight monetary policy stance of the US Federal Reserve (the Fed) during the period. In
Europe, the British pound sterling and the Euro depreciated by 10.81 and 7.95 per cent,
respectively while the Russian rubble appreciated by 27.32 per cent. The strong performance
of the Russian rubble was underpinned by various capital control measures imposed by the
government to mitigate the impact of sanctions imposed by the West.

In Asia, the Japanese yen, the Chinese renminbi, and the Indian rupee depreciated by 17.96,
5.35 and 6.28 per cent, respectively. In North America, the performance was mixed as the
Mexican peso recorded an appreciation of 1.13 per cent during the review period, while the
Canadian dollar depreciated by 1.57 per cent. In South America, the Brazilian real
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appreciated by 5.57 per cent, while the Argentine and the Colombian pesos depreciated by
21.88 and 2.01 per cent, respectively.
In Africa, the Nigerian naira, South African rand, Kenyan shilling, Egyptian pound and
Ghanaian cedi depreciated against the US dollar by 0.42, 1.94, 6.11, 19.59 and 31.27 per
cent, respectively.
The developments in the various foreign exchange markets heightened foreign exchange
risk of the banks, particularly in the EMDEs.

Table 1:6 Performance of Selected Currencies
Country/Region
Currency
EndDecember
2019 (1)
EndDecember
2020 (2)
EndDecember
2021 (3)
End-June
2022 (4)
% Change (-
App/+Dep)
(4) & (3)
AFRICA
Nigeria
Naira

South Africa
Rand

Kenya
Shilling

Egypt
Pound

Ghana
Cedi

NORTH AMERICA
Canada
Dollar

Mexico
Peso

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 review period. Most central banks
commenced monetary policy normalisation in response to inflationary pressure that
accompanied the prolonged period of monetary policy accommodation.

In the advanced economies, the Bank of England, the Fed, Bank of Canada, Bank of Korea,
the Reserve Bank of New Zealand and the Reserve Bank of Australia increased policy rates,
from 0.25, 0.25, 0.25, 1.00, 0.75 and 0.10 per cent, to 1.25, 1.75, 1.50, 2.00, 2.00 and 0.85
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per cent, respectively. The Bank of Japan and the European Central Bank, however,
maintained policy rates at -0.10 and 0.00 per cent, respectively.
In Asia, the Bank of Indonesia maintained its policy rate at 3.50 per cent, while Bank Negara
Malaysia increased its rate to 2.00 per cent, from the level of 1.75 per cent at the end of the
previous period. In the BRICS, the Central Bank of Brazil, Reserve Bank of India, and South
African Reserve Bank increased policy rates to 13.50, 4.90 and 4.25 per cent, relative to
9.25, 4.00 and 3.75 per cent, respectively, while Bank of Russia and the Peoples’ Bank of
China reduced rates to 6.50 and 3.70 per cent, from 7.50 and 3.80 per cent, respectively.

All the emerging market economies reported upon during the period signalled a tight
monetary policy stance. The Bank of Mexico, Central Bank of Chile and the Bank of the
Republic (Colombia), increased their policy rates to 7.75, 9.00 and 7.50 per cent, relative to
4.00, 4.00 and 3.00 per cent, respectively. Similarly in Africa, the Central Bank of Egypt,
Bank of Ghana, and Central Bank of Nigeria increased policy rates to 11.25, 19.00 and 13.00
per cent, compared with 8.25, 14.50 and 11.50 per cent, respectively.
{{
Table 1:7 Policy Rates of Selected Countries
Country/Region
Jun-21
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21 Dec-21
Jun-22
Developed Economies
Japan

Europe

UK

US

Canada

South Korea

New Zealand

Australia

Asia
Indonesia

Malaysia

BRICS
Brazil

Russia

India

China

South Africa

FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Other Emerging Economies & South America
Mexico

Chile

Colombia

Africa


Egypt

Ghana

Nigeria

Source: www.cbrates.com, www.tradingeconomics.com, relevant central bank websites.

1.2 Domestic Macroeconomic Developments
1.2.1 Output Growth
The Nigerian economy continued its recovery in the first half of 2022, albeit at a slower pace
relative to the level in the preceding half year. Output grew by 3.32 per cent in the first half
of 2022, compared with 4.01 per cent in the second half of 2021.The moderation in growth
was due to the negative impact of the Russia-Ukraine crisis and the lingering security
challenges, particularly in the major food producing areas. These developments resulted in
major economic and financial shocks which induced inflationary and exchange rate
pressures.

Figure 1.1 Gross Domestic Product (Growth %)

Source: National Bureau of Statistics
The non-oil sector remained the major driver of growth, owing to the improved performance
of the services sectors. The non-oil sector contributed 4.97 percentage points to output in
the first half of 2022. However, the oil sector, however, contracted, contributing negative 1.64
percentage points to the growth in GDP.


H2 2018
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
H1 2022
PER CENT
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 1:8 Sectoral Contributions to real GDP
Source: National Bureau of Statistics

In terms of relative sectoral contribution to real GDP growth, the Services sector maintained
its steady improvement, contributing 3.87 percentage points, compared with 3.50 percentage
points in the preceding half year, while the contribution of the agriculture sector dropped
marginally to 0.50 percentage point from 0.68 percentage point in the preceding half of 2021.
The improvement in the Services sector was due to the growth in ICT, while the slow growth
in agriculture sector was owing to a decline in crop production arising from the lingering
security challenges in the food producing areas. The contribution of the industry sector,
however, was negative (-0.05 percentage point).
1.2.2 Inflation
Inflationary pressures heightened in the first half of 2022, driven, largely by the continued
increase in both core and food components. Headline inflation (year-on-year) rose to 18.60
per cent in June 2022, compared with 15.63 per cent in the second half of 2021. The 12month-moving-average headline inflation, however, moderated slightly to 16.54 per cent at
end-June 2022, compared with 16.95 per cent at end-December 2021.
Food inflation (year-on-year) increased to 20.60 per cent, compared with 17.37 per cent in
the second half of 2021, largely driven by the lingering insecurity, particularly in the food
producing areas and supply chain disruptions induced by the Russia-Ukraine crisis. Core
inflation also rose to 15.75 per cent, compared with 13.87 per cent in the second half of
2021. The rise was due, mainly, to increased electricity tariffs, high price of Automotive Gas
Oil (AGO) and scarcity of Premium Motor Spirit (PMS).


Sector
H1 2021
H2 2021
H1 2022
Agriculture
0.41
0.68
0.50
Of which: Crop Production
0.38
0.68
0.45
Industry
-0.02
-0.17
-1.05
Of which: Oil
-0.66
-0.69
-1.64
Manufacturing
0.32
0.29
0.42
Services
2.31
3.50
3.87
Of which: ICT
0.95
1.02
1.49
GDP Growth
2.70
4.01
3.32
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Figure 1.2 Inflationary Trend (Year-on-Year)

Source: National Bureau of Statistics
1.2.3 Fiscal Operations of the Federal Government
Provisional data on Federal Government Retained Revenue, at N2,134.47 billion in the first
half of 2022, fell short of the budget benchmark by 60.30 per cent, reflecting the subsisting
revenue challenges. Provisional aggregate expenditure, at N8,368.06 billion in the first half
of 2022, was below the prorated budget by 2.30 per cent, owing to the shortfall in capital
expenditure. Consequently, the fiscal operations of the Federal Government resulted in an
overall deficit of N6,233.60 billion, indicative of an expansionary policy stance.

Figure 1.3 Federal Government Fiscal Operations (N Billion)

Source: OAGF & CBN Staff Estimate

The gap between total revenue and expenditure was bridged by borrowing from domestic
and external sources. The consolidated public debt stock at end-March 2022 stood at
N41,604.06 billion, comprising 60.06 per cent and 39.94 per cent of domestic and external
debt, respectively. The total public debt stock indicated an increase of 5.18 per cent over the
level at end-December 2021. The debt stock represented 27.34 per cent of GDP, which was
below the Medium-Term Debt Strategy (MTDS) threshold of 40.0 per cent.


2021 H1
2021 H2
2022 H1
Headline (Y-on-Y)
Core (Y-on-Y)
Food (Y-on-Y)

2020 First Half
2020 Second Half
2021 First Half
2021 Second Half
2022 First Half
Retained Revenue
Aggregate expenditure
Overall Balance
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

The total domestic debt of N24,986.87 billion at end-March 2022, reflected an increase of
N286.67 billion or 1.16 per cent, compared with N23,700.80 billion at end-December 2021.
The increase was driven, largely, by Nigerian Treasury Bills, FGN Savings Bond and FGN
Bonds issues. The FGN portion constituted 80.62 per cent, while states and FCT held 19.38
per cent.
At end-March 2022, the FGN domestic debt stood at N20,144.03 billion (54.80 per cent of
total FGN debt), while the FGN external debt was N16,617.19 billion (45.20 per cent) (Fig
1.4). FGN Bond issues maintained its dominance, accounting for 70.70 per cent of the total
domestic debt, followed by Treasury Bills (21.88 per cent), Promissory Notes (3.79 per cent),
FGN Sukuk (3.03 per cent), and others1 (0.60 per cent).
Nigeria’s consolidated external debt comprised multilateral, commercial and bilateral loans,
which accounted for 47.43, 39.83 and 11.25 per cent, respectively, while ‘other’2 loans
constituted 1.50 per cent.
Figure 1.4 FGN External and Domestic Debt Composition (N Billion)

Source: Debt Management Office


1 This includes Treasury bonds (0.38 per cent), Green bonds (0.13 per cent) and FGN Savings bonds (0.09 per
cent).
2 Promissory Notes.

2021 Q1
2021 Q2
2021 Q3
2021 Q4
2022 Q1
External Debt
Domestic Debt
Total Debt
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 1.5 Federal Government Domestic Debt Stock

Source: Debt Management Office
1.2.4 External Reserves

At end-June 2022, gross external reserves decreased by 2.66 per cent to US$39.16
billion, from US$40.23 billion at end-December 2021. A breakdown of the reserves
indicated that the CBN, FGN and Federation holdings were 96.84, 3.07 and 0.09 per
cent, respectively. The currency composition showed that 76.59 per cent of the reserves
was held in US dollars, 12.88 per cent in SDRs, 9.32 per cent in Renminbi and 1.21 per
cent in other currencies.

Total inflow to the external reserves was US$16.40 billion in the first half of 2022,
compared with US$26.01 billion in the second half of 2021, reflecting a decrease of 36.95
per cent. The higher inflow in the preceding half was attributed largely to non-recurring
inflows of US$3.34 billion (SDR allocation) and US$4.0 billion (proceeds of the FGN
Euro bond issuance).

Total outflow decreased by 24.16 per cent to US$16.89 billion, compared with US$22.27
billion in the second half of 2021, owing largely to a decrease in the Bank’s intervention
at the foreign exchange market.


FGN Bonds
Treasury Bills
Promissory Notes
FGN Sukuk
Others
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 1.6 External Reserves Position (US$ Millions)


Table 1:9 Foreign Exchange Flows through the CBN (US$ billion)


1.2.5 Risks to the External Reserves
The level of external reserves remained a key factor in the stability of the financial system.
Downside risks to the external reserves include:
• Low inflows from crude oil & gas revenue. The non-receipt of inflows from crude oil
and gas sales despite the rise in oil prices has continued to impact negatively on
accretion to the reserves. This was attributed to reduction in crude oil production,
among others.
• Rising foreign loan repayment obligations. The increase in the foreign debt profile is
an indication that foreign debt service payments are likely to increase, and would
negatively affect the level of reserves.
• Global inflationary pressures. Global inflation is expected to remain elevated a
situation that was previously anticipated, necessitating the hike in interest rates by the

Gross Foreign Reserves
Period
Inflow
US$ billion
Outflow
US$ billion
Net flow
US$ billion
H1 – 2021
14.06
17.65
(3.59)
H2 – 2021
26.01
22.27
3.74
H1 – 2022
16.40
16.89 (0.49)
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Fed and other major central banks. This scenario poses a threat to reserves accretion
as foreign investors move assets from emerging economies to advanced economies
for expected higher returns.
• Lead-up to the 2023 general elections. There is the expectation of increased foreign
exchange demand pressure resulting from uncertainties surrounding the conduct of
the 2023 general elections.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

DEVELOPMENTS IN THE FINANCIAL SYSTEM
2.1 Monetary and Credit Developments
Broad money supply (M3) grew by 10.00 per cent to N48,890.24 billion at end-June 2022.
The development reflected an increase in domestic claims (17.88 per cent), arising from
31.61 and 12.44 per cent growth in net claims on the central government and claims on
‘other’ sectors, respectively. The increase in claims on ‘other’ sectors reflected improved
credit delivery to the real economy.

The growth in total monetary liabilities was due, mainly, to the rise in transferable deposits
(16.61 per cent) and other deposits (8.19 per cent). The growth in transferable deposit was
due, largely, to the increase in transferable deposits of commercial and merchant banks,
while the increase in other deposits was hinged on the 13.40 per cent rise in foreign currency
deposits. Narrow money supply (M1) rose by 12.69 per cent to N20,347.59 billion at endJune 2022, compared with N18,055.86 billion at end-December 2021. The growth in M1 was
due to rise in demand for cash as inflationary pressures persisted in the economy.

Table 2:1 Growth Rates of Monetary Aggregates
% Change (Over preceding December)
Dec 20
Jun 21
Dec 21
Jun 22
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)

Source: Statistics Department, Central Bank of Nigeria
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.1.1 Market Structure of the Banking Industry
During the review period, six banks accounted for 68.79 and 66.69 per cent of total deposits
and assets, compared with 63.88 and 63.79 per cent in the second half of 2021, respectively,
reflecting an increase in concentration. This was consistent with the Herfindahl Hirschman
Indices (HHI) of 954.53 and 933.89, for deposits and assets, respectively, compared with
847.43 for deposits and 854.24 for assets at end-December 2021. The shares of individual
banks ranged from 0.07 to 15.56 per cent in deposits and 0.33 to 17.04 per cent in assets.
Figure 2.1 Concentration Ratios of the Banking Industry Assets and Deposits

Source: Research Department, Central Bank of Nigeria

2.1.2 Consumer Credit
Consumer credit outstanding, which accounted for 7.22 per cent of total credit to the private
sector, declined by 6.78 per cent to ₦1,933.18 billion at end-June 2022, compared with
N2,073.76 billion at end-December 2021. The decrease was due, largely, to the reduction in
personal loans, owing to the rise in lending rates.
Figure 2.2 Consumer Credit

Dec-20
Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
HHI
Concentration Ratio
CR(Deposits)
CR( Assets)
CR( Largest-Deposits)
CR (Largest-Assets)
HHI (Deposits) (rhs)
HHI (Assets) (rhs)

Jun-20
Dec_20
Jun_21
Dec_21
Jun_22
₦'Billion
Ratio (%)
Ratio of consumer credit to claims on private sector (lhs)
Consumer credit (rhs)
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.1.3 Sectoral Distribution of Credit
Total credit to various sectors of the economy grew by 10.12 per cent to N26,846.40 billion
at end-June 2022, owing, largely, to a 12.41 per cent increase in credit to N14,624.15 billion
in the Services Sector. Also, credit to Agriculture and Industry increased by 11.84 and 6.87
per cent to ₦1,630.38 billion and ₦10,591.87 billion, respectively.
Services and Industry remained the dominant sectors, accounting for 54.47 and 39.45 per
cent of the total credit, respectively, compared with 53.36 and 40.66 per cent at endDecember 2021. The share of Agricultural Sector increased by 0.09 percentage point to 6.07
per cent, compared with 5.98 per cent, at end-December 2021.
The improved flow of credit to the real sector reflected the Bank’s sustained effort in
supporting productivity and, real output growth and employment generation in the economy.
Table 2:2 Sectoral Allocation of Credit
ITEM
Jun-21
Dec-21
Jun-22
Percentage Share in Total
%
Change
Between
(=N='m)
(=N='m)
(=N='m)
Jun-

Dec-

Jun-22
(2) &(3)
(1) &(3)


SECTORAL
CREDIT
ALLOCATION


[a] Agriculture

[b] Industry

of which Construction

1,096.19


[c] Services

11,466.57


of which Trade/General
Commerce

1,376.32


TOTAL

PRIVATE
SECTOR
CREDIT

21,895.31


Source: Central Bank of Nigeria

2.2 Other Financial Institutions
The total number of Other Financial Institutions (OFIs) increased by 15 to 6,697 at end-June
2022, compared with 6,682 at end-December 2021. The increase was due to the licensing
of six Finance Companies (FCs) and nine Microfinance Banks (MFBs) in the review period.
The 6,697 OFIs comprised Seven Development Finance Institutions (DFIs), 875 MFBs, 106
FCs, 34 Primary Mortgage Banks (PMBs) and 5,675 Bureaux-de-change (BDCs) (Table
2.31).


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:3 Composition of Other Financial Institutions
S/N
Type
Number of Institutions
at end-December, 2021
Number of Institutions
at end-June, 2022

Microfinance Banks

Bureaux De Change
5,675
5,675

Finance Companies

Development
Finance
Institutions

Primary Mortgage Banks

Total
6,682
6,697

The total assets of OFIs, excluding BDCs, increased by 8.10 per cent to N5,646.65 billion at
end-June 2022, from the level of N5,223.66 billion recorded at end-December 2021. This
was due largely to increase in investments, cash and bank balances, net loans and advances
and placements. Investments increased by 21.24 per cent to N1,231.45 billion, at end-June
2022, from N1,015.71 billion at end-December 2021, while cash and bank balances
increased by 16.04 per cent to N263.82 billion, from N227.37 billion.
Similarly, net loans and advances and placements increased by 3.19 per cent and 5.58 per
cent to N3,023.61 billion and N708.54 billion at end-June 2022, from N2,930.06 billion and
N671.07 billion, respectively, at the end of the preceding period.
Aggregate shareholders’ funds grew by 6.91 per cent to N733.92 billion at end-June 2022,
compared with N686.47 billion at end-December 2021, owing to compliance with the new
minimum capital requirement for MFBs and the accretion to reserves.

́Due to other banks’ and borrowings increased by 218.64 per cent and 16.81 per cent to
N157.94 billion and N2,125.76 billion, at end-June 2022, compared with N49.57 billion and
N1,819.87 billion, respectively, at end-December 2021. Similarly, deposit liabilities increased
by 7.21 per cent to N1,186.56 billion at end-June 2022, from N1,106.79 billion, at endDecember 2021, while long-term liabilities decreased by 25.27 per cent to N521.94 billion
from N698.45 billion.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Figure 2.3 Consolidated Balance Sheet of OFIs


2.2.1 Development Finance Institutions
The total assets of the development finance sub-sector grew by 9.16 per cent to N3,334.06
billion at end-June 2022, from the level of N3,054.33 billion at end-December 2021. The
increase was due largely to investments and placements which grew by 23.37 per cent and
8.79 per cent to N1,121.46 billion and N466.51 billion at end-June 2022, from N909.04 billion
and N428.81 billion, respectively, at end-December 2021. Net loans and advances increased
by 0.83 per cent to N1,598.62 billion at end-June 2022, compared with N1,585.39 billion at
end-December 2021.
The growth in assets was driven mainly by the 19.24 per cent increase in borrowings to
N1,886.72 billion at end-June 2022, from N1,582.32 billion at end-December 2021.The
aggregate shareholders’ funds increased by 4.07 per cent to N471.67 billion at end-June
2022, from N453.24 billion at end-December 2021, due to accretion of N18.43 billion to
reserves. Deposit liabilities also increased by 8.45 per cent to N558.36 billion at end-June
2022, from N514.85 billion at end-December 2021; while other liabilities decreased by 15.40
per cent to N371.03 billion from N438.60 billion.
DFI:
58.47%
PMB:
9.68%
FC: 6.94%
MFB:
24.91%
Total Assets of OFIs at End-Dec. 2021
DFI
PMB
FC
MFB
DFI:
59.04%
PMB:
9.32%
FC: 6.68%
MFB: 24.95%
Total Assets of OFIs at End- Jun. 2022
DFI
PMB
FC
MFB


N'Billions
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

The breakdown of the total assets by institutions, indicated that the Bank of Industry (BOI),
Development Bank of Nigeria (DBN), Federal Mortgage Bank of Nigeria (FMBN), Nigerian
Export-Import Bank (NEXIM) accounted for 59.83, 14.91, 14.46 and 6.49 per cent,
respectively. Furthermore, Nigeria Mortgage Refinance Company (NMRC), Bank of
Agriculture (BOA) and The Infrastructure Bank (TIB), accounted for 2.58, 1.66 and 0.07 per
cent, respectively. The BOI, DBN, FMBN, NEXIM, BOA and NMRC accounted for 48.75,
20.06, 19.31, 8.53, 1.80 and 1.55 per cent of total net loans and advances, respectively.
Figure 2.4 Consolidated Balance Sheet of DFIs


Figure 2.5 Total Assets and Liabilities of DFIs

Cash &
Bank
Balances
0.03%
Placement
s
14.04%
Investment
29.76%
Net Loans &
Advances
51.91%
Other
Assets
2.22%
Fixed
Assets
2.04%
Assets of DFIs at End- Dec. 2021
Total Assets of N3,054.33 billion
Cash & Bank
Balances
0.66%
Placements
13.99%
Investment
33.64%
Net Loans &
Advances
47.95%
Other Assets
1.82%
Fixed Assets
1.95%
Assets of DFIs at End- Jun. 2022
Total Assets of N3,334.06 billion


N'billion
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

2.2.2 Primary Mortgage Banks
The total assets of the sub-sector increased by 4.14 per cent to N526.53 billion, at end-June
2022, compared with N505.61 billion, at end-December 2021, owing largely to increases in
net loans and advances, as well as balances with banks. Net loans and advances and
balances with banks increased by 4.32 per cent and 31.77 per cent to N287.97 billion and
N23.64 billion at end-June 2022, compared with N276.03 billion and N17.94 billion,
respectively, at end-December 2021. Placements with banks increased by 4.63 per cent to
N77.35 billion at end-June 2022, from the level of N73.93 billion at end-December 2021,
while short-term investments declined by 36.26 per cent to N4.39 billion from N6.88 billion.
The shareholders’ funds increased by 26.75 per cent to N41.23 billion at end-June 2022,
from N32.53 billion at end-December 2021, owing to accretion to reserves. Long-term loans
and other liabilities also increased to N86.30 billion and N203.71 billion at end-June 2022,
from N77.06 billion and N194.26 billion at end-December 2021, indicating increases of
11.99 and 4.87 per cent, respectively.
Cash &
Bank
Balanc...
Placement
s...
Investment
29.76%
Net Loans &
Advances
51.91%
Other
Assets
2.22%
Fixed
Assets
2.04%
Assets of DFIs at End- Dec. 2021
Total Liabilities of N3,054.33 billion
Paid-up
Capital
7.16%
Reserves
6.99%
Deposits
16.75%
Borrowings
56.58%
Due to
Banks
0.09%
Other
Liabilities
11.13%
Long-term
Liabilities
1.30%
Liabilities of DFIs at End- Jun. 2022
Total Liabilities of N3,054.33 billion
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 2.6 Consolidated Balance Sheet of PMBs (N'BN)

Figure 2.7 Composition of Assets and Liabilities of Primary Mortgage Banks

Cash &
ShortTerm ...
Investmen
t...
Net
Loans &
Advanc...
Other
Assets
10.57%
Fixed
Assets
3.90%
Assets of PMBs at End- Dec. 2021
Total Assets of N526.53
billion
Cash &
ShortTerm ...
Investme
nt...
Net Loans
&
Advance...
Other
Assets
10.56%
Fixed
Assets
3.78%
Assets of PMBs at End- Jun. 2022
Total Assets of N526.53 billion
-100
-50

Assets and Liabilities
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:4 Financial Highlights OF PMBs

End-December

(N’ billion)
End-June 2022
(N’ billion)
Change
(N’ billion)
% Change
Total Assets

Net Loans and Advances

Investments

Other Assets

Cash and Short-Term Funds

Reserves

Deposit liabilities

Other liabilities

Long-term Liabilities

Shareholders’ funds


Investible funds available to the PMB sub-sector at end-June 2022 amounted to N31.41
billion. The funds were sourced mainly from increases in long-term loans and other liabilities
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
Total Liabilties of N526.53 billion
Paid-up
Capital,
21.04%
Reserves,
-13.21%
Deposits,
33.09%
Due to
Banks,
4.01%
Long-term
Liabilities,
16.39%
Other
Liabilities,
38.69%
Liabilities of PMBs at End- Jun. 2022
Total Liabilities of N526.53 billion
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
by N9.24 billion and N9.46 billion, respectively and were mainly utilised to increase loans
and advances, as well as cash and short-term funds.
The capital adequacy ratio of the PMBs increased to 12.09 per cent at end-June 2022,
compared with 9.95 per cent at end-December 2021 and was above the regulatory minimum
of 10.00 per cent. The increase in the CAR was due to additional capital injection, which
impacted positively on shareholders’ funds. Also, the Liquidity Ratio increased to 49.34 per
cent at end-June 2022, compared with 43.65 per cent at end-December 2021 and surpassed
the prudential minimum of 20.00 per cent. Similarly, asset quality improved as nonperforming loans (NPL) ratio reduced by 21.63 percentage points to 27.28 per cent at endJune 2022, compared with 48.91 per cent at end-December 2021. The NPL ratio, however,
remained above the regulatory maximum of 10.00 per cent.

2.2.3 Finance Companies
During the review period, six new FCs were granted licences, bringing the total to 106 at
end-June 2022, compared with 100 at end-December 2021. Similarly, the total assets of FCs
increased by 4.10 per cent to N377.47 billion at end-June 2022, from N362.62 billion at endDecember 2021. The development was attributed largely to the six newly licenced FCs and
increases in net loans and advances and other assets.
At end-June 2022, net loans and advances increased by 8.88 per cent to N181.80 billion and
other assets by 13.84 per cent to N66.20 billion; compared with N166.98 billion and N58.15
billion, respectively, at end-December 2021. Furthermore, fixed assets increased by 7.89 per
cent to N49.79 billion at end-June 2022, from N46.15 billion at end-December 2021.
Investments, however, decreased by 35.43 per cent to N12.76 billion at end-June 2022, from
the level of N19.76 billion recorded at end-December 2021.

Total borrowings and other liabilities increased by 0.63 and 8.42 per cent to N239.04 billion
and N89.31 billion at end-June 2022, compared with N237.55 billion and N82.38 billion at
end-December 2021, respectively. Similarly, shareholders’ funds increased by 15.54 per
cent to N47.18 billion at end-June 2022, compared with N40.84 billion at end-December
2021, resulting from additional capital injection and accretion to reserves.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:5 Financial Position of FCs


End-December 2021
(N’ billion)
End-June 2022

(N’ billion)
% Change

Total Assets
362.62
377.47
4.10
Cash in Vault
2.37
2.23
(5.94)
Balances with Banks
27.32
27.67
1.28
Net Loans and Advances
166.98
181.80
8.88
Investments
19.76
12.76
(35.43)
Placements
41.89
37.02
(11.62)
Fixed Assets
46.15
49.79
7.89
Borrowings
237.55
239.04
0.63
Other Liabilities
82.38
89.31
8.42
Shareholder’s Funds
40.84
47.18
15.54
Paid up capital
25.65
29.40
14.62
Reserves
15.19
17.78
17.09

Figure 2.8 Consolidated Balance Sheet of FCs

(N'Billion)
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 2.9 Composition of Assets and Liabilities of FCs


Investible funds at end-June 2022 amounted to N26.86 billion, compared with N42.17 billion
at end-December 2021. The decline was mainly due to reduction in other liabilities and
borrowings. The funds were sourced mainly from increases in paid-up capital and other
liabilities by N3.75 billion and N6.93 billion, as well as decreases in placements and
investments by N4.87 billion and N7.00 billion, respectively. The funds were utilised mainly
to increase loans and advances, and other assets.
The CAR for the subsector was 11.24 per cent at end-June 2022, compared with 11.12 per
cent at end-December 2021, while NPL ratio declined to 19.17 per cent from 19.91 per cent
over the same period, reflecting an improvement in asset quality and loan repayment.

Cash & Bank
Balances
8.19%
Placements
11.55%
Investment
5.45%
Net Loans &
Advances
46.05%
Other
Assets
16.04%
Fixed
Assets
12.73%
Assets of FCs at End- Dec. 2021
Total Assets of N377.47 billion
Cash & Bank
Balances,
7.92%
Placements,
9.81%
Investments,
3.38%
Net Loans &
Advances,
48.16%
Other
Assets,
17.54%
Fixed
Assets,
13.19%
Assets of FCs at End- Jun. 2022
Total Assets of N377.47 billion
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
Total Liabilities of N377.47 billion
Paid-up
Capital,
7.79%
Reserves,
4.71%
Borrowing
s 63.33%
Long-term
Liabilities,
0.51%
Other
Liabilities,
23.66%
Liabilities of FCs at End- Jun. 2022
Total Liabilities of N377.47 billion
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.2.4 Microfinance Banks
During the review period, nine Unit MFBs were licensed, bringing the total to 875 (9 National,
134 State and 732 Unit MFBs), compared with 866 (9 National, 134 State and 723 Unit
MFBs) at end-December 2021.


The total assets of the subsector increased by 8.26 per cent to N1,408.58 billion, at endJune 2022, from N1,301.11 billion, at end-December 2021. The increase was due to the
newly licensed MFBs and growth in net loans and advances, cash and bank balances, and
fixed assets. Similarly, net loans and advances increased by 5.94 per cent to N955.23 billion,
at end-June 2022, compared with N901.66 billion, at end-December 2021, while fixed assets
increased by 141.93 per cent to N35.45 billion, at end-June 2022, from N14.65 billion, at
end-December 2021. Cash increased by 96.09 per cent to N32.74 billion, at end-June 2022,
compared with N16.70 billion, at end-December 2021.
Shareholders’ funds increased by 8.74 per cent to N173.83 billion at end-June 2022,
compared with N159.86 billion at end-December 2021, owing largely to capital injection and
retained earnings. Similarly, takings from other banks increased by 707.52 per cent to
N133.93 billion at end-June 2022, from N16.58 billion at end-December 2021, while deposits
increased by 10.26 per cent to N453.99 billion, from N411.74 billion. However, long-term
loans declined by 12.95 per cent to N390.36 billion at end-June 2022, from N448.43 billion
at end-December 2021.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:6 Highlights of Financial Position of MFBs


End-December 2021
(N’ Billion)
End-June 2022
(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

Takings from Other Banks 16.58
133.93
117.34
707.52
Long
Term
Loans/Onlending

Other Liabilities

Figure 2.10 Balance Sheet of MFBs

1,000
1,100
N"Billion
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as


Figure 2.11 Composition of Assets and Liabilities of MFBs


Investible funds at end-June 2022 amounted to N190.32 billion, compared with N183.67
billion at end-December 2021. The funds were sourced mainly from additional paid-up capital
(N25.53 billion), deposits (N42.25 billion) and takings from other banks (N117.34 billion). The
funds were utilised mainly to increase net loans and advances by N53.57 billion, fixed assets
(N20.80 billion), investments (N11.47 billion) and cash and bank balances (N10.84 billion)
as well as reduction in long-term loans (N58.08 billion).
Cash & Bank
Balances
13.31%
Placements
9.72%
Investment
2.15%
Net Loans &
Advances
69.29%
Other
Assets
4.40%
Fixed
Assets
1.13%
Assets of MFBs at End- Dec. 2021
Total Assets of N1,408.58 billion
Cash & Bank
Balances
13.06%
Placements
9.06%
Investment
2.79%
Net Loans &
Advances
67.82%
Other
Assets
4.74%
Fixed
Assets
2.52%
Assets of MFBs at End- Jun. 2022
Total Assets of N1,408.58 billion
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
Total Liabilities of N1,408.58 billion
Paid-up
Capital,
8.47%
Reserves,
3.87%
Deposits,
32.23%
Takings from
Other Banks,
9.51%
Long-term
Liabilities,
27.71%
Other
Liabilities,
18.21%
Liabilities of MFBs at End- Jun. 2022
Total Liabilities of N1,408.58 billion
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

The capital adequacy and liquidity ratios of the subsector improved to 15.51 and 75.71 per
cent at end-June 2022, compared with 15.42 and 78.01 per cent, respectively, at endDecember 2021. The ratios were above the minimum regulatory requirements of 10.00 and
20.00 per cent, respectively. Portfolio-At-Risk (PAR) rose to 8.68 per cent in the first half of
2022, from 5.94 per cent at end-December 2021.

2.2.4.1 Maturity Structure of Loans and Advances and Deposit Liabilities
Credits with maturity period of more than a year accounted for 58.90 per cent of the total
loans and advances at end-June 2022, reflecting an increase of 37.79 percentage points,
from the level of 21.11 per cent recorded at end-December 2021. Loans and advances with
maturity periods of less than one year accounted for 41.10 per cent, compared with 78.89
per cent at end-December 2021.

The deposit structure remained largely short-term, as those of less than one-year maturity
accounted for 81.33 per cent, a decrease of 5.03 percentage points, from the level of 86.36
per cent recorded at end-December 2021. Conversely, deposits of over one-year maturity
accounted for 18.67 per cent, reflecting an increase of 5.03 percentage points, from the level
of 13.64 per cent at end-December 2021.

Table 2:7 Maturity Structure of Loans and Advances and Deposit Liabilities
Dec-21
Jun-22
Tenor/Period
Loans and
Advances
Deposits
Tenor/Period
Loans and
Advances
Deposits

%
%

%
%
0-30 Days
21.69
40.38
0-30 Days
10.32
31.90
31-60 Days
7.59
7.58
31-60 Days
3.81
10.08
61-90 Days
7.86
11.99
61-90 Days
4.48
11.35
91-180 Days
22.48
15.03
91-180 Days
12.25
16.56
181-360 Days
19.27
11.38
181-360 Days
10.24
11.45
Short-Term
78.89
86.36
Short-Term
41.10
81.33
Above 360 Days
21.11
13.64
Above 360 Days
58.90
18.67
Total

Total

2.2.5 Capacity Building Programme
As part of capacity building efforts, 308 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 8,100
at end-June 2022, from 7,792 at end-December 2021.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3 Financial Markets
The Bank adopted a contractionary monetary policy stance, in response to the lingering
inflationary and exchange rate pressures. Thus, the Monetary Policy Committee (MPC)
increased the Monetary Policy Rate (MPR) from 11.50 per cent to 13.00 per cent while
sustaining an asymmetric corridor of +100/-700 basis points for Standing Lending Facility
(SLF) and Standing Deposit Facility (SDF). The Cash Reserve Ratio (CRR) and Liquidity
Ratio (LR) were also maintained at 27.50 and 30.00 per cent, respectively.

2.3.1 Money Market
The major activities that impacted the money market included fiscal flows, conduct of open
market and discount window operations and government securities auctions, foreign
exchange interventions and cash reserve ratio operations. The open-buy-back (OBB) and
unsecured interbank call weighted daily average opened at 5.50 and 13.00 per cent on
January 4 and 11, 2022, respectively, compared with 11.69 per cent and 9.82 per cent on
July 1 and 7, 2021, respectively. The rates peaked at 15.29 and 16.00 per cent for OBB and
unsecured interbank call on January 17 and 21, 2022, respectively. The rates, thereafter,
moderated to 13.63 per cent on June 30, 2022, for OBB, and 14.00 per cent on June 29,
2022 for unsecured interbank calls.
The monthly average OBB and inter-bank call rates closed at 10.89 and 11.10 per cent at
end-June 2022, compared with 12.59 and 13.42 per cent, respectively, at end-December
2021. This reflected improved liquidity conditions occasioned by the maturing CBN and NTB
bills. The OBB weighted daily average rates ranged between 0.57 and 15.29 per cent,
compared with a range 3.52 and 21.34 per cent in the second half of 2021. Similarly, the
inter-bank call rates ranged between 4.50 and 16.00 per cent, compared with 4.00 and 25.00
per cent in the second half of 2021.

Figure 2.12 Money Market Rates for First Half of 2022


JAN
FEB
MAR
APR
MAY
JUN
Inter-Bank Call (%)

Open-Buy-Back (OBB) (%)

MPR (%)

Call NIBOR (%)

30-day NIBOR

Per Cent
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3.1.1 Developments in Interest Rates
Lending transactions increased by 9.56 per cent to N25,586.61 billion in the review period,
compared with N23,354.01 billion in the second half of 2021. The average maximum lending
rate rose marginally by 0.96 percentage point to 28.47 per cent from, 27.51 per cent in the
second half of 2021. Similarly, the prime lending rate increased by 0.24 percentage point to
11.91 per cent from, 11.67 per cent in the second half of 2021. The maximum lending rate
remained above the inflation rate of 18.60 per cent at end-June 2022, while the prime lending
rate was negative in real terms.
The weighted average term-deposit rate dipped by 0.39 percentage point to 3.80 per cent,
leading to a wider spread between the deposit and lending rates. The spread between the
average term deposit and maximum lending rates widened to 26.78 percentage points in the
first half of 2022 from, 25.66 percentage points in the second half of 2021.
Figure 2.13 Interest Rates Spread

2.3.1.2 Nigerian Treasury Bills
Nigerian Treasury Bills (NTBs) of 91-, 182- and 364-day tenors, totaling N2,415.58 billion,
were issued and allotted in the first half of 2022. This indicated a decrease of N54.28 billion
or 2.20 per cent, compared with the N2,469.86 billion issued in the preceding period.
Similarly, total subscription was N4,663.18 billion during the first half of 2022, indicating a
decrease of N453.55 billion or 8.86 per cent, compared with N5,116.73 billion recorded in
the preceding period. Average marginal rates ranged between 1.7400– 2.5000 per cent for
the 91-day, 3.0000 – 3.8900 per cent for the 182-day and 4.000 – 6.4900 per cent for the
364-day tenors, respectively.


Per cent
Interest rate spread - Max Lending Minus Weighted Av. Savings/Term Rate
Interest rate spread - Max Lending Minus Weighted Av. Deposit rate(Demand, Saving, Time/Term)
Savings/Term Rate
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 2.14 Primary Market: Nigerian Treasury Bills Allotment (%)


Figure 2.15 Primary Market: Nigerian Treasury Bills Transactions (N'Billion)


In the review period, commercial banks took up N1,782.22 billion or 73.78 per cent,
compared with N1,696.13 billion or 68.67 per cent in the preceding period. Merchant banks
accounted for N68.87 billion or 2.85 per cent, as against N89.10 billion or 3.61 per cent, in
the preceding period, while mandate and internal funds customers of the CBN took up
N564.50 billion or 23.37 per cent, compared with N551.38 billion or 22.32 per cent in the
second half of 2021.
The NTBs outstanding at end-June 2022 stood at N4,504.80 billion. The holding structure
indicated that parastatals accounted for N1,212.03 billion (26.91 per cent), commercial banks
N2,275.12 billion (50.50 per cent), CBN mandate and internal fund customers accounted for

DMBs
MBs
Mandate & Internal Customers
CBN Branches
CBN Take-up

Jul-21
Jul-21
Aug-21
Aug-21
Aug-21
Aug-21
Sep-21
Sep-21
Sep-21
Sep-21
Sep-21
Oct-21
Oct-21
Oct-21
Oct-21
Nov-21
Nov-21
Nov-21
Nov-21
Dec-21
Dec-21
Dec-21
Dec-21
Dec-21
Jan-22
Jan-22
Jan-22
Jan-22
Feb-22
Feb-22
Feb-22
Feb-22
Mar-22
Mar-22
Mar-22
Mar-22
Mar-22
Apr-22
Apr-22
Apr-22
Apr-22
May-22
May-22
May-22
May-22
Jun-22
Issues
Subscription
Repayment
Ave. Rates %
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
N988.26 billion (21.94 per cent), while merchant banks accounted for N29.38 billion (0.65
per cent). In the preceding period, the NTBs outstanding amounted to N2,991.87 billion,
comprising parastatals N1,566.31 billion (52.35 per cent), commercial banks holdings of
N728.95 billion (24.36 per cent), CBN mandate and internal fund customers N682.58 billion
(22.81 per cent) and merchant banks N14.03 billion (0.47 per cent).
Figure 2.16 NTBs Outstanding at End-June 2022 (Per cent and in N'BN)


2.3.1.3 Foreign Exchange Market: US Dollar Sales and Purchases
The total foreign exchange sales by the Bank in the first half of 2022 amounted to
US$9,229.27 million, compared with US$10,543.52 million in the second half of 2021,
reflecting a decrease of 12.47 per cent. A breakdown indicated that retail spot sales
amounted to US$622.92 million; invisible trade sales, US$856.81 million; I&E window,
US$2,075.45 million; SMEs, US$834.74 million; and Retail forwards sales, US$4,839.35
million. Furthermore, the Bank purchased US$1,325.43 million, resulting in net sales of
US$7,903.83 million.
Forwards contracts, totaling US$7,008.27 million matured, while US$3,846.64 million was
outstanding at end-June 2022.


Table 2:8 Interventions at the Interbank Foreign Exchange Market
FX Transactions
End-Dec 21
End-June 22

Sales
Purchases
Sales
Purchases

($ million)
($ million)
($ million)
($ million)

Parastatals
Commercial banks
CBN
Merchant banks
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
SMIS Spot
615.07
622.92

Invisible Trade
1,041.00

856.81

SME
793.13
834.74

I&E
3,316.91
2,075.45

SMIS Forwards
4,777.42
4,839.35

IOCs
807.65

1,325.43
Total


2.3.1.4 Exchange Rate Movement at the Investors’ & Exporters’ Window
The rate at the I&E window opened at N417.00/US$ on January 4, 2022 and closed at
N414.00/US$ at end-June, 2022, reflecting 0.72 per cent appreciation.

Figure 2.17 Investors’ & Exporters’ Rate


Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
(N/US$)
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3.1.5 Over-the-Counter Foreign Exchange Futures
The notional amount of over-the-counter foreign exchange (OTC FX) futures executed,
matured and outstanding during the review period stood at US$1,437.90 million,
US$3,001.44 million, and US$3,768.37 million, respectively, at end-June 2022, compared
with US$3,577.39 million, US$2,496.85 million and US$5,331.89 million at end-December
2021.

2.3.1.6 Naira/Yuan Bilateral Currency Swap Agreement
A total of CNY1,263.51 million was sold at end-June 2022, compared with CNY 2,093.51
million sold in the second half of 2021. A total of CNY7,043.57 million was sold from inception
to end-June 2022.
2.3.2 Capital Market
The Nigerian capital market was bullish as evidenced by the positive performance in the
equities, debt and Exchange Traded Fund (ETF) segments. Consequently, aggregate
Market Capitalisation increased by 21.31 per cent to close at N50.18 trillion, at end-June
2022, from N43.12 trillion at end-December 2021. The equities and debt segments increased
by 25.29 and 25.31 per cent to N27.94 trillion and N22.23 trillion respectively, and the ETF
component appreciated by 2.05 per cent to close at N7.45 billion.
Table 2:9 NGX ASI, Equity and Debt Market Capitalisation

EndDecember

End-June

EndDecember

End-June

% Change
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
In the first half of 2022, 16 new issues valued ₦534.50 billion were approved and listed,
comprising six equity issues (₦124.10 billion) and 10 corporate bonds (₦410.40 billion),
compared with 9 issues which comprised two equity issues valued (₦7.44 billion) and 7
corporate bonds (₦291.65 billion) in the second half of 2021 (table 2.10). The six equity issues
included one Initial Public Offering (IPO), three rights issues and two public offers. There were
no supranational bonds issued in the review period. However, there were 17 FGN bonds issued
at end-June 2022, compared with 15 FGN bonds issued in the preceding period reflecting a
reduction of 13.33 per cent
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:10 New Issues
Type
Number of Issues
Value of Issues (N’Bn)

Dec-21
Jun-22 Change
%
Dec-21
Jun-22 Change
%
IPO
-

-
111.8
-
Public Offer/Offer for Sale
-


Private Placement


Rights


Total Equities


Corporate Bonds


Sub-national Bonds
-
-

-
-

FGN Bonds


Eurobond (415.58/$)

-
519.475

Total Debt

8.33 1,483.66 2,485.58
67.53
Total (Equities & Debt)

23.08 1,491.10 2,609.78
75.02
Source: SEC, DMO

2.3.2.1 Equities Market
2.3.2.1.1 Nigerian Exchange Limited
The Nigerian Exchange Limited (NGX) All Share Index (ASI) and equities market
capitalisation experienced a bullish trend in the first half of 2022. The NGX ASI rose to
51,817.59 points at end-June 2022, from 42,716.44 points at end-December 2021, attaining
a level of 53,098.46 points on May 13, 2022, reflecting a 14-year high since 2008. The
impressive performance reflected improved earnings, dividends reinvestment and the roll out
of two exchange traded derivatives, the NGX 30 Index Futures and NGX Pension Index
Futures. The NGX equities market capitalisation closed at N27.94 trillion, indicating an
increase of 25.00 per cent compared with N22.3 trillion at end-December 2021.
Generally, sectoral performance was impressive during the review period as 14 out of 17
indices closed the half year on a positive note.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as


Table 2:11 Nigerian Exchange Limited Indices
Index
Dec-20
Jun-21
H1 YTD
Dec-21
Jun-22

Change
%
NGX 30

NGX AFR Div. Yield

NGX ASeM

NGX Banking

NGX CG

NGX Consumer Goods

NGX Growth

NGX Industrial

NGX Insurance

NGX Lotus Islamic

NGX Main-Board

NGX MERI GROWTH

NGX MERI VALUE

NGX Oil/Gas

NGX Pension

NGX Premium

NGX-AFR Bank Value

Source: NGX Reports
Foreign Portfolio Investment (FPI) inflows totalled N120.51 billion, while divestments
(outflows) stood at N122.97 billion, reflecting a net outflow of N2.46 billion in the first half of
2022. In comparison, inflows in the second half of 2021 amounted to N99.64 billion, while
divestments stood at N112.90 billion, reflecting a net outflow of N13.26 billion.

Foreign Portfolio flows accounted for 14.65 per cent of total equity transactions in the review
period, compared with 24.58 per cent in the preceding period. Domestic transactions
accounted for the balance of 85.35 per cent in the equity market, compared with 75.42 per
cent in the preceding period. The net capital outflow experienced during the period reflected
the impact of interest rate hikes in advanced economies. Despite the FPI net outflows, the
market was resilient owing to increased participation of domestic investors following low
interest rates in the money market and government securities, as well as impressive
performance by listed companies and expected dividend payout.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:12 Domestic and Foreign Portfolio Participation in Equities Trading
Period
H1 2021
H2 2021
H1 2022
% Change
Total Equities Transactions N'Billion

Foreign Portfolio Transactions N'Billion 221.96
212.54
243.48
14.56
Foreign %

Domestic Transactions N'Billion

Domestic %

Foreign Inflow N'Billion

Foreign Outflow N'Billion

NSE ASI

Market Capitalization


2.3.2.1.2 National Association of Securities Dealers
The National Association of Securities Dealers (NASD) Unlisted Securities Index appreciated
by 2.74 per cent, to 763.24 points at end-June 2022, from 742.85 points at end-December
2021. Similarly, the market capitalisation increased by 59.72 per cent to N1,004.74 billion at
end-June 2022, from N629.03 billion at end-December 2021. Further analysis showed that
3,225 shares worth N21.30 billion were traded in the first half of 2022, compared with 12,483
shares valued N23.69 billion traded in the second half of 2021, reflecting a decrease of
599.75 and 10.09 per cent, respectively, compared with the level in the preceding period.
Table 2:13 National Association of Securities Dealers Transactions

Total
H1 2021
H2 2021
H1 2022
Change
%
Unlisted Index (Points)

Market Cap (N’Bn)

Volume(N'000)

Value (N'000)

Source: NASD Reports
2.3.2.2 Commodities Market
Commodities exchanges are critical for enabling investment diversification, risk
management, price discovery and transactional efficiency. The Exchanges provide facilities,
regulations, and standards for orderly, efficient and transparent trading of designated
commodities. At end-June 2022, five commodity exchanges were in operation, trading mostly
in agricultural produce.
2.3.2.2.1 AFEX Commodities Exchange
The overall value and volume of commodity transactions at the AFEX Commodities
Exchange increased by 97.42 per cent to N88,681.26 billion at end-June 2022, from
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
N44,920.15 billion at end-December 2021. The value of cashews traded increased
significantly by 256.98 per cent, while sorghum and sesame also increased by 586.53 and
649.39 per cent, respectively. The values of maize and cocoa traded increased by 72.02 and
47.70 per cent, respectively.

Table 2:14 Transactions on AFEX (N’M)
Product
Cashew
Ginger
Maize
Paddy
Rice
Soybeans
Cocoa
Sesame
Sorghum
Grand Total
H1


H2


H1


Change


Table 2:15 Volume and Value of Transactions on AFEX (N’M)
2021H1
2021H2
2022H1
Total Volume
(kg)
417,686,542
184,960,516
311,276,230
Value(N’M)
77,656.37
44,920.15
88,681.26

2.3.2.2.2 Gezawa Commodity Market and Exchange
Gezawa Commodity Market and Exchange Limited (GCMX) traded a total of 244,930 metric
tonnes of maize and soybeans valued ₦55.09 million in the review period.
Table 2:16 Gezawa Commodity Market and Exchange (GCMX) Transactions
PRODUCT
MAIZE
SOYBEANS
GRAND
TOTAL
(N’M)
TOTAL
VOLUME
(KG)
2021H2

2022H1


2.3.2.2.3 Prime Commodity Exchange
Prime Commodity Exchange Limited (PCX) in the review period reported no trading
activities.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3.2.2.4 Nigeria Commodity Exchange
There was no trading on the Nigeria Commodity Exchange (NCX) during the review period.
However, the Bank’s efforts in repositioning the NCX to a world-class commodity exchange
was sustained.

2.3.2.2.5 Lagos Commodities and Futures Exchange
Trading activities on the Lagos Commodities and Futures Exchange (LCFE) commenced in
the first half of 2021. However, there were no trades recorded in the second half of 2021 and
first half of 2022. At end-June 2021, a total of 556 metric tonnes valued ₦98.26 million was
traded in 36 deals.
Table 2:17 Lagos Commodities and Futures Exchange (LCFE) Transactions (N’M)
Product
Maize
Paddy Rice
Soybean
Grand Total
Total Volume
(Kg)
H1 2021
41.46
49.02

7.77

98.26
556,000
H2 2021

H1 2022


2.3.2.3 Bonds
Total bonds outstanding at end-June 2022 stood at N16.72 trillion, reflecting an increase of
1.13 per cent, compared with N20.99 trillion recorded at end-December 2021. This
comprised FGN Bonds (N15.19 trillion or 90.87 per cent), FGN Saving Bonds (N20.87 billion
or 0.13 per cent), FGN Sukuk (N612.56 billion or 3.66 per cent), FGN Green Bonds (N25.69
billion or 0.15 per cent), FRN Treasury Bonds (N75.99 billion or 0.46 per cent), FGN
Promissory Notes (N475.87 billion or 2.85 per cent), Sub-National Bonds (N65.96 billion or
0.39 per cent), and Corporate Bonds (N248.89 billion or 1.49 per cent).

2.3.2.4 FGN Bonds
FGN Bonds new issues and re-openings of N1,125.00 billion were offered during the review
period, indicating an increase of 32.35 per cent above N850.00 billion auctioned in the
second half of 2021. The public subscription and sales decreased to N2,852.56 billion and
N1,805.45 billion in the first half of 2022, compared with N1,630.92 billion and N1,192.01
billion in the second half of 2021, respectively.
Although the yield curve for the review period was normal, however, there was a downward
shift compared with the preceding period, which reflected improved investors’ sentiments.

Figure 2.18 Yield Curve
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Source: FMDQ-OTC Plc

2.3.2.4.1 FGN Savings Bonds
A total of ₦7.46 billion was allotted during the review period, indicating an increase of ₦3.92
billion or 111.00 per cent, compared with ₦3.53 billion at end-December 2021. The increase
was attributed to a higher subscription from targeted investors. The range of coupon rates
increased to 7.2200 to 9.4700 per cent and 8.2200 to 10.4700 per cent for the 2- and 3-year
tenors, respectively, compared with 7.3220 to 8.8640 per cent and 7.8990 to 9.8640 per cent
for the 2- and 3-year tenors respectively, in the preceding period. Consequently, total value
of FGN Savings Bonds outstanding at end-June 2022 was ₦20.87 billion.

2.3.2.4.2 Green Bonds
There was no issue of Green Bonds and six (6) transactions during the review period
compared with no transactions in the preceding period. The value of the transactions was
N1.69 billion. Total Green bonds outstanding at end-June 2022 was N25.69 billion.

2.3.2.4.3 FGN Sukuk Bond
There was no issue of FGN Sukuk Bond during the review period, compared with N250 billion
issued in the preceding period. Consequently, the total outstanding stood at N362.56 billion
at end-June 2022. Also, Sukuk transactions on the FMDQ exchange were valued at N76.81
billion, in contrast to N115.37 billion traded in the preceding half year.


Yield %
Time to Maturity
30/06/2021
30/06/2022
31/12/2021
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3.2.4.4 Sub-National Bonds
During the review period, one sub-national bond worth N27.19 billion was issued, six state
bonds amounting to N8.40 billion matured, while N113.34 billion was redeemed by five
states. The total outstanding balance stood at N65.96 billion at end-June 2022, compared
with N160.51 billion at end-December 2021.
In the preceding period, three sub-national bonds amounting to N3.08 billion matured, while
nine states redeemed bonds amounting to N40.15 billion.
During the review period, total value of transactions in Sub-national bonds on the FMDQ
exchange amounted to N0.6 billion from N0.29 billion in the preceding half year, representing
an increase of 107 per cent. However, the total number of deals decreased by 29 per cent
to 5 from 7.

2.3.2.4.5 Corporate Bonds
Corporate bonds worth N811.45 billion were outstanding at end-June 2022, compared with
N767.84 billion at end-December 2021. Corporate Bonds worth N185.80 billion listed, while
N1.00 billion matured and N658.69 billion were redeemed in the review period.
In addition, total value of transactions in corporate bonds on the FMDQ exchange amounted
to N258 billion up from N27.04 billion in the preceding half year, indicating an increase of
852.85 per cent. Also, the total number of deals increased by 146.00 per cent to 96 from 12.

2.3.2.4.6 Bonds - Secondary Market
The S&P FMDQ Sovereign Bond Index appreciated by 9.00 per cent to 621.69 points at endJune 2022, from 570.38 points at the end of the preceding period. The total debt market
capitalisation on the FMDQ Securities Limited (FMDQ) was ₦28.07 trillion at end-June 2022,
an increase of 7.10 per cent, compared with ₦26.21 trillion in the second half of 2021.

Table 2:18 S&P/FMDQ Sovereign Bond Index
S&P/FMDQ Nigeria
Sovereign Bond Index
Index
Points
%
Change
Debt Market
Capitalisation ₦’Trn)
% Change
2021 H1
532.98

24.18

2021 H2

2022 H1

Source: FMDQ
During the review period, two new participants were admitted on the Exchange. The value of
securities admitted was N175.05 billion and the value of securities settled was N16.16 billion,
which were mainly corporate bonds and commercial paper.

FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.3.2.5 Mutual Funds

The Net Asset Value (NAV) of the Collective Investment Schemes (CIS) rose by 15.45 per
cent to N1.50 trillion at end-June 2022, compared to N1.30 trillion at end-December 2021,
reflecting increased investment in the review period.
Table 2:19 CIS Funds

CIS Net Asset Value (N’Trn)
Percentage change
over preceding half
year
(%)
H2 2020
1.49

H1 2021
1.25
-15.99
H2 2021
1.30
4.08
H1 2022
1.50
15.45


2.3.2.6 Other Key Developments in the Capital Market
During the review period:

i.
The Securities and Exchange Commission (SEC)
• mandated
the
application
of
Rule 95
on all
Privately Managed
Discretionary/Non-discretionary portfolios to ensure the protection of investor
funds;
• provided guidance on Rule 465, which amended the contents of Trust Deeds
regarding the maximum allowable total expenses of a Collective Investment
Schemes (CIS) from 5.00 per cent to 3.50 per cent of Net Asset Value; and
• commenced the implementation of 100 per cent custody requirement in the
CIS to protect investors. Consequently, all clients’ assets are to be held under
independent custodial agreements in custodial banks.
ii.
The NGX introduced two exchange traded derivatives, the NGX 30 Index Futures and
NGX Pension Index Futures during the review period.


2.4 Real Sector Interventions
The Bank’s interventions continued to facilitate the flow of credit to projects with potential to
catalyse and transform the productive base of the economy. The interventions are designed
to stimulate private sector investment to priority sectors, promote the generation of
sustainable jobs, support households’ income and consumption, boost non-oil exports and
sustain economic growth.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.4.1 Agricultural Policy Support
2.4.1.1 Agricultural Credit Guarantee Scheme
In the first half of 2022, a total of 13,194 loans, valued ₦3.22 billion, were guaranteed under
the Scheme, compared with 21,872 loans, valued ₦3.62 billion in the preceding period. This
indicated decreases of 39.7 and 11.2 per cent in number and value of loans guaranteed,
respectively. A total of 11,773 loans, valued ₦2.14 billion, were repaid at end-June 2022,
compared with 13,349 loans, valued ₦2.01 billion, repaid at end-December 2021, reflecting
a decrease of 11.81 per cent in number and an increase of 6.47 per cent in value of repaid
loans.
2.4.1.2 Commercial Agriculture Credit Scheme
The sum of ₦28.30 billion was disbursed in the first half of 2022, reflecting an increase of
113.26 per cent, compared with ₦13.27 billion in the second half of 2021. A total of ₦32.86
billion was repaid in the review period, indicating a decrease of 31.51 per cent, compared
with ₦48.14 billion in the second half of 2021.
2.4.1.3 Anchor Borrowers’ Programme
The sum of ₦35.52 billion was disbursed in the first half of 2022 to 28,876 smallholder
farmers for production of major agricultural commodities, compared with ₦246.67 billion
disbursed to 679,776 farmers in the preceding period. A total of 128,579 hectares of land
were cultivated, compared with 1,123,684 hectares in the second half of 2021, reflecting a
decrease of 88.56 per cent. The sum of ₦42.99 billion was repaid in the review period,
compared with ₦196.48 billion in the preceding period, reflecting a decrease of 78.12 per
cent.
2.4.1.4 Accelerated Agriculture Development Scheme
The sum of ₦1.50 billion was disbursed in the first half of 2022, compared with ₦0.04 billion
in the second half of 2021. Repayments under the Scheme amounted to ₦4.37 billion in the
review period, compared with ₦5.31 billion in the preceding period.

2.4.1.5 Paddy Aggregation Scheme
The sum of ₦6.20 billion was released in the review period, while no disbursement was made
in the second half of 2021. There was no repayment as it was not due in the period under
review, while the sum of ₦4.66 billion was repaid in the second half of 2021.
2.4.1.6 National Food Security Programme
There were no disbursements in the review and preceding periods under the Programme.
However, repayments of ₦2.03 billion were made in the first half of 2022, compared with
₦2.30 billion in the second half of 2021, indicating a decrease of 11.74 per cent.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.4.2 Small and Medium Enterprises & Industrial Policy Support
2.4.2.1 Micro, Small and Medium Enterprises Development Fund
During the review period, there was no disbursement, compared with ₦0.69 billion disbursed
in the second half of 2021. A total of ₦2.52 billion was repaid in the review period, compared
with ₦2.81 billion in the second half of 2021, reflecting a decrease of 10.32 per cent.
2.4.2.2 Agribusiness/Small and Medium Enterprises Investment Scheme
In the review period, the sum of ₦1.60 billion was disbursed for 2,720 projects, compared
with ₦22.92 billion disbursed for 8,538 projects in the second half of 2021. This indicated
decreases of 93.02 and 68.14 per cent in value and number of projects, respectively.
Repayments in the review period amounted to ₦7.65 billion, compared with ₦1.16 billion in
the second half of 2021, indicating an increase of 559.48 per cent.
2.4.2.3 Creative Industry Financing Initiative
There was no disbursement in the first half of 2022, compared with ₦0.26 billion disbursed
for 31 projects in the second half of 2021. The sum of ₦0.28 billion was repaid in the period
under review, compared with ₦0.25 billion repaid in the second half of 2021, reflecting an
increase of 11.98 per cent.
2.4.2.4 Targeted Credit Facility
During the review period, the sum of ₦24.37 billion was disbursed to 50,302 beneficiaries,
compared with ₦69.90 billion disbursed to 136,532 beneficiaries in the second half of 2021,
reflecting decreases of 65.14 and 63.16 per cent in value and number of beneficiaries,
respectively. There was no repayment in the review period.
2.4.2.5 Nigeria Youth Investment Fund
During the period under review, there was no disbursement, compared with ₦0.88 billion
disbursed in the second half of 2021. The sum of ₦0.28 billion was repaid in the period under
review, compared with ₦2.61 billion in the preceding period.
2.4.2.6 Tertiary Institutions Entrepreneurship Scheme
The sum of ₦0.26 billion was disbursed to 53 beneficiaries, compared with N0.03 billion
disbursed to 6 beneficiaries in the preceding period, indicating an increase of 806.42 per
cent. There was no repayment as all the facilities were still under moratorium.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.4.3 Real Sector Policy Support
2.4.3.1 Real Sector Support Facility
The Real Sector Support Facility (RSSF) had been discontinued since 2018. However, the
sum of ₦21.65 billion was repaid from outstanding disbursements, compared with ₦6.62
billion in the preceding period.

2.4.3.2 RSSF - Differentiated Cash Reserve Requirement
The sum of ₦210.29 billion was disbursed to 34 projects in the first half of 2022, compared
with ₦476.30 billion disbursed to 39 projects in the second half of 2021, reflecting decreases
of 55.85 and 12.82 per cent in terms of total amount disbursed and number of projects
financed, respectively. The sum of ₦18.49 billion was repaid in the review period, compared
with ₦0.08 billion in the preceding period.
2.4.3.3 COVID-19 Intervention for the Manufacturing Sector
In the review period, the sum of ₦413.81 billion was disbursed for 50 projects, compared
with no disbursement in the second half of 2021. The sum of ₦12.01 billion was repaid, while
no repayment was made in the preceding period as the facilities were then under moratorium.
2.4.3.4 Healthcare Sector Intervention Facility
The sum of ₦17.21 billion was disbursed for 11 projects in the first half of 2022, compared
with ₦11.05 billion in the second half of 2021, representing 55.75 per cent increase. The sum
of ₦6.12 billion was repaid, while no repayment was made in the preceding period, as most
facilities were then under moratorium.
2.4.3.5 Healthcare Sector Research and Development Intervention (Grant) Scheme
The sum of ₦0.02 billion was released in the first half of 2022, compared with ₦0.03 billion
in the second half of 2021, reflecting a decrease of 46.36 per cent.
2.4.3.6 Textile Sector Intervention Facility
There was no disbursement in the review period, as against the sum of ₦0.90 billion was
disbursed to two projects in the second half of 2021. The sum of ₦8.62 billion was repaid in
the review period, compared with ₦3.27 billion in the second half of 2021.
2.4.3.7 CBN-BOI Industrial Facility
In the first half of 2022, ₦50.00 billion was released under this intervention to BOI, compared
with zero disbursement in the second half of 2021.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2.4.3.8 Presidential Fertilizer Initiative
There were no disbursements in both the review and preceding periods. However, the sum
of ₦3.00 billion was repaid in the first half of 2022, compared with ₦2.75 billion in the second
half of 2021.

2.4.3.9 Intervention Facility for the National Gas Expansion Programme
In the review period, the sum of ₦26.00 billion was disbursed for four projects, compared
with ₦24.00 billion for four projects in the second half of 2021. There was no repayment, as
the facilities were under moratorium.

2.4.3.10
Shared Agent Network Expansion Facility
There was no disbursement under the Facility in both the review and preceding periods. The
sum of ₦0.37 billion was repaid in the first half of 2022, compared with ₦0.14 billion in the
second half of 2021.

2.5 Export Policy Support
2.5.1 Non-oil Export Stimulation Facility
There was no disbursement in the period under review, compared with ₦1.75 billion in the
second half of 2021. The sum of ₦2.00 billion was repaid, compared with ₦3.88 billion in the
preceding period.
2.5.2 Export Facilitation Initiative
The sum of ₦36.00 billion was disbursed for five projects in the review period, while there
was no disbursement in the second half of 2021. There was no repayment as the facilities
were under moratorium.

2.6 Energy Policy Support
2.6.1 Power and Airline Intervention Fund
The review period recorded no disbursement, as against ₦0.99 billion in the preceding
period. However, the sum of ₦15.91 billion was repaid, compared with ₦6.56 billion in the
second half of 2021.

2.6.2 Nigerian Electricity Market Stabilisation Facility
The sum of ₦34.36 billion was disbursed in the review period, under Phase 2 of the Nigerian
Electricity Market Stabilisation Facility (NEMSF), compared with ₦96.71 billion in the second
half of 2021. No repayment was made as the facilities were under moratorium.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Meanwhile, the sum of ₦10.91 billion, was repaid in the first half of 2022, under Phase 1 of
the NEMSF, compared with ₦14.53 billion in the second half of 2021.
2.6.3 Nigeria Bulk Electricity Trading – Payment Assurance Facility
During the review period, ₦26.93 billion was disbursed, compared with ₦301.35 billion to
Nigeria Bulk Electricity Trading Plc (NBET Plc), through BOI in the second half of 2021,
reflecting a decrease of 91.06 per cent. The sum of ₦322.87 billion was repaid in the first
half of 2022, while there was no repayment in the preceding period.
2.6.4 National Mass Metering Programme
In the first half of 2022, the sum of ₦199.90 million was disbursed, compared with ₦11.79
billion in the second half of 2021, reflecting a decrease of 98.31 per cent. There was no
repayment as 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 downwards,
indicating decreased lending against movable assets offered as collateral by individuals and
MSME borrowers in the review period.
A total of 44 financial institutions registered 37,444 financing statements valued ₦221.20
billion and US$19.80 million in respect of 38,744 borrowers, compared with 52,085 financing
statements valued ₦6.87 trillion and US$827.50 million in favour of 53,291 borrowers
recorded in the second half of 2021. In addition, a total of 63,992 searches were conducted
in the review period, compared with 67,215 in the second half of 2021, reflecting a decrease
of 4.79 per cent.
Table 2:20 transactions on the National Collateral Registry Portal
Debtor
Type
Number of
Financing
Statements
Number of
Borrowers
Currency
Value of Financing Statements
(‘ billion)

H2

H1

H2

H1

H2 2021
H1 2022
Individual

NGN
6,712.69
114.62
Large
Business

NGN
130.13
25.70
USD
0.76
0.004
EUR
0.00
0.00011
Medium
Business

1,669
1,047
1,884
NGN
21.63
61.99
USD
0.07
0.02
Micro
Business

NGN
1.11
1.51
USD
0.0005
0.00
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Small
Business

1,354

1,475
NGN
10.90
17.39
Total

NGN
6,876.46
221.20
USD
0.83
0.03
EUR
0.00
0.00011
Further analysis showed that a total of 17,986 or 48.03 per cent of the total financing
statements were in respect of 18,360 women and women-owned enterprises, representing
47.39 per cent of the total number of borrowers.

Table 2:21 Women and Women-owned Businesses transactions on the National Collateral Registry
Portal

From inception to end-June 2022, a total of 139 financial institutions had registered 248,036
financing statements valued ₦15,358.44 billion, US$2.43 billion, €0.11 billion, and
£27,352.00. An analysis of these figures showed that 105,296, representing 42.45 per cent
of the total financing statements valued ₦267.37 billion and US$4.62 million were registered
in respect of women and women-owned enterprises by 98 financial institutions.
2.8 Financial Inclusion
The Bank sustained its efforts towards economic recovery post Covid-19 era, by embarking
on initiatives towards building a more inclusive, equitable and resilient economy. In the
review period, some bank branches remained closed to customers as a result of the Covid19 containment measures. However, most bank branches and other financial service access
points continued to provide in-person services to customers. Similarly, the delivery of
Debtor Type
Number of
Financing
Statements
Number of
women and
Women-owned
Enterprises
Currency
Value of Financing Statements
(‘ billions)

H2

H1

H2

H1

H2-2021
H1-2022
Individual

NGN
30.85
59.33
Large
Business

NGN
0.37
0.22
Medium
Business

NGN
1.74
3.50
Micro
Business

NGN
0.06
0.05
Small
Business

NGN
1.10
1.46
Total

NGN
34.12
64.56
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
services through alternative channels, such as ATMs, PoS, Agent locations and mobile
applications, was maintained.
Using the Bank Verification Number (BVN) count as an estimate of the number of new
entrants into the banking system, it was revealed that a total of 3,577,980 new BVNs were
issued in the review period, compared with 3,173,274 in the first half of 2021. Out of this
figure, 1,370,875 females were registered in the second half of 2022, compared with
1,461,132 females in the preceding period.
In the first half of 2022, the financial sector recorded an increase in the number of agent
locations where financial services could be accessed. At end-June 2022, SANEF reported a
total of 1,249,845 agents under its agent expansion scheme, compared with 1,002,514
agents onboarded at end-December 2021. In terms of access points per capita, 1,179 agents
served 100,000 adults in the first half of 2022, compared with 946 agents per 100,000 adults
in the second half of 2021. Furthermore, the number of active PoS and ATMs stood at 19,355
and 915,519, respectively, at end-June 2022, 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 CMBs and 8.05 million accounts in MFBs) at endDecember 2021, from 11.60 million accounts (made up of 4.33 million in CMBs and 7.27
million accounts in MFBs) at end-June 2021.
A total of 247,331 new agents were onboarded during the review period, compared with
225,854 in the preceding period. A total of 1,249,845 agents were registered under the
SANEF agent expansion scheme. In terms of access point per capita, 1,179 agents were
serving 100,000 adults in the first half of 2022, compared with 946 agents per 100,000 adults
recorded in the second half of 2021. Furthermore, the number of active PoS at end-March
2022 stood at 737,502. During the period under review, the number of deposit and credit
accounts increased to 229.87 million and 15.72 million, from 198.82 million and 12.33 million
at end-December 2021, respectively.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Table 2:22 Financial Inclusion Statistics
INDICATOR
END-DECEMBER 2021
END-JUNE 2022
New BVN Registration
3,173,274
3,577,980
New BVN Registration
(Female)
1,461,132
1,370,875
Total Agents
1,002,514
1,249,845

Nos Of Onboarded (New)
Agents
225,854
247,331

Nos
Of
Agents
Per
100,000 Adults

1,179

Active PoS Deployed
645,500
871,591

Nos Of Deposit Accounts
(Million)
198.82
229.87

Nos Of Credit Accounts
(Million)
12.33
15.72


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

REGULATORY AND SUPERVISORY ACTIVITIES
3.1 Financial Soundness Indicators
3.1.1 Asset-Based Indicators
3.1.1.1 Non-Performing Loans Ratio
The quality of banks’ assets, measured by the ratio of non-performing loans (NPLs) to gross
loans, was 4.95 per cent at end-June 2022, compared with 4.93 per cent at end-December
2021.
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 0.46 percentage point to 20.08
per cent at end-June 2022, from 20.54 per cent at end-December 2021. Similarly, the ratio
of core liquid assets to short-term liabilities declined by 0.34 percentage point to 29.61 per
cent at end-June 2022, compared with 29.95 per cent at end-December 2021. The decline
was due to increased lending to the real sector and households, in line with the Bank’s
policies to encourage lending to key sectors of the economy.
Figure 3.2 Banking Industry Liquidity Indicators (%)


End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
End Jun. 2022

End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
End Jun. 2022
Liquid assets (core) to total assets*
Liquid assets (core) to short-term liabilities*
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
3.1.1.3 Exposure of Banking System to Real Estate Subsector
The banks’ exposure to the real estate sub-sector (residential and commercial) declined
marginally in the review period. The ratio of residential real estate loans to total gross loans
decreased by 0.01 percentage point to 0.21 per cent at end-June 2022, from 0.22 per cent
at end-December 2021. Similarly, the ratio of commercial real estate loans to total gross
loans declined by 0.17 percentage point to 2.50 per cent at end-June 2022, compared with
2.67 per cent at end-December 2021.

Figure 3.3 Banking Industry Real Estate Indicators (%)

3.1.2 Capital-Based Indicators
The banking industry’s solvency, measured by qualifying capital to risk-weighted assets,
declined to 14.11 per cent at end-June 2022, compared with 14.55 per cent at end-December
2021, owing largely to growth in risk assets and loan loss provisions. Similarly, the regulatory
tier-1 capital to risk-weighted assets decreased to 12.19 per cent at end-June 2022, from
12.46 per cent at end-December 2021.


End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
End Jun. 2022
Residential real estate loans to total gross loans
Commercial real estate loans to total gross loans
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 3.4 Banking Industry Capital Adequacy Indicators (%)

The capacity of the banks’ capital to withstand losses declined as the ratio of non-performing
loans net of provisions to capital increased to 5.18 per cent at end-June 2022, from 1.22 per
cent at end-December 2021. This was due mainly to some NPLs being written-off against
provisions, hence, reducing the quantum of provisions which resulted in a higher indicator at
end-June 2022.
Figure 3.5 non-performing loans net of provision to capital Ratio

3.1.3 Income and Expense Based Indicators
The ratio of interest margin to gross income decreased marginally by 0.66 percentage point
to 47.93 per cent during the review period, compared with 48.59 per cent at end-June 2022.
Similarly, the ratio of non-interest expenses to gross income declined by 0.10 percentage
point to 65.04 per cent at end-June 2022, relative to 65.14 per cent at end-December 2021.

End Jun. 2020
End Dec. 2020
End Jun. 2021
End Dec. 2021
End Jun. 2022
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
End Jun. 2022
P
e
r
c
e
n
t
a
g
e
s
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
The ratio of personnel expenses to non-interest expenses declined to 25.47 per cent at endJune 2022, from 29.38 per cent at end-December 2021.
Table 3:1 Selected Financial Soundness Indicators of the Nigerian Banking Industry

End Jun
End Dec
End Jun
End Dec
End June
Assets Based Indicators
Non-performing 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

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*

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.

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 were 14.11, 42.63 and 4.95 per cent, respectively.
Also, Return on Assets (ROA) and Return on Equity (ROE) stood at 1.40 and 17.30 per cent,
respectively, at end-June 2022.

Table 3:2 Banking Industry Baseline Selected Key Indicators

CAR
LR
NPLs
ROA
ROE
Dec 2021 (%)

Jun 2022 (%)

Percentage
Points
Change


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure.3.6 Banking Industry CAR (per cent)


3.2.1.2 Credit Risk
Analysis of general credit risk revealed that shocks of 15, 20, 30 and 50 per cent increases
in NPLs would result in the banking industry CAR declining to 13.80, 13.64, 13.49 and 13.17
per cent, respectively, from the baseline of 14.11 per cent. Similarly, a shock of 100 per cent
increase in NPLs would lead to a decrease of banking industry CAR to 10.88 per cent.
The stress test revealed that the banking industry could withstand a shock of “up to 100 per
cent increase” in the industry NPLs, as the industry CAR would remain above the regulatory
requirement of 10 per cent.
Table 3:3 Credit Default Shocks


Similarly, analysis of obligor credit concentration shocks of five largest corporate credit
facilities shifting from performing loans to sub-standard and sub-standard to doubtful would
result in banking industry CAR declining to 13.63 and 12.88 per cent, respectively, from 14.11
per cent. In addition, a shock of five largest corporate credit facilities shifting from doubtful to
lost would result in banking industry CAR declining to 11.52 per cent. The result of the tests
showed resilience to obligor credit concentration risk as the CAR would remain above the
10.00 per cent regulatory threshold under stress test scenarios 1, 2 and 3.


Dec '18
Jun' 19
Dec' 19
Jun' 20
Dec' 20
Jun' 21
Dec-21
Jun-22
Per cent
Single Factor Shocks
December 2021
June 2022
Baseline CAR (%)
14.53
14.11
10% NPLs increase
14.19
13.80
15% NPLs increase
14.03
13.64
20% NPLs increase
13.86
13.49
30% NPLs increase
13.53
13.17
50% NPLs increase
12.86
12.53
100% NPLs increase
11.13
10.88
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Table 3:4 Credit Concentration Risk

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-June 2022 showed that the Oil
& Gas sector accounted for 22.04; Manufacturing 16.71; General 10.67; Government 8.83;
General Commerce 7.37; Agriculture 6.17 and Others 28.21 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)
CAR (%)

December

June 2022
Baseline CAR (%)
14.53
14.11
Single Factor Credit Concentration Shocks
Scenario 1
Five largest corporate credit facilities shifted from performing loans to
sub-standard (10% provision)
14.04
13.63
Scenario 2
Five largest corporate credit facilities shifted from sub-standard to
doubtful (50% provision)
13.31
12.88
Scenario 3
Five largest corporate credit facilities shifted from doubtful to lost (100%
provision)
12.05
11.62
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 3.8 Sectoral Concentration of Credit


The results of sectoral credit concentration risks showed that 20.00 per cent default on total
exposure to Oil & Gas could result in CAR decreasing to 13.44 per cent, while a 50.00 per
cent default on total exposure to Oil & Gas could lead to the industry CAR declining to 9.73
per cent. Thus, the sector concentration stress test showed that the banking industry could
withstand “up to 20.00 per cent shock” to Oil and Gas exposures.

Table3:5 Stress Test on Oil and Gas Exposures

Industry CAR (%)
Baseline CAR
14.11
20% Default on total exposure to Oil and Gas
13.44
50% Default on total exposure to Oil and Gas
9.73

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 12.12 per cent remained above the
regulatory threshold of 10.00 per cent.


Oil and Gas
Manufacturing
Government
General
Gen Comm
Agriculture
Others
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Figure 3.9 Impact of Interest Rate Shocks on CAR


3.2.2 Liquidity Stress Test3
The stress test results revealed that after a one-day run scenario, the LR of the industry
could decline from the 42.69 per cent baseline position to 32.73 per cent. However, under
the 5-day and 30-day scenarios, the LR for the industry could decline to 14.71 and 9.58 per
cent, which could result in liquidity shortfalls of N3.87 trillion and N4.84 trillion, respectively.

Figure 3.10 Industry Liquidity Ratios at Periods 1-5 and cumulative 30-day Shocks


3 Liquidity stress tests were conducted at end-June 2022 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.
14.11
13.11
12.12
Baseline CAR
500 bps downward shift in yield
curve
1000 bps downward shift in yield
curve

Pre-Shock
After Day 1
After Day 2
After Day 3
After Day 4
After Day 5
After cum 30
days
Per cent
Dec-20
Jun-21
Dec-21
Jun-22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Table 3:6 Liquidity Stress Test Results
Scenario
Banks with
Liquidity Ratios (LR) < 30%
December 2021
December

June 2022
Industry LR
(%)
Shortfall to 30% LR
threshold
(N’ billion)
Test 1.1: Implied Cash Flow Test
Test 1.1: Implied Cash
Flow Test
Day 1

32.73
Nil
Day 2

28.58
431.96
Day 3

24.28
1,623.78
Day 4

19.69
2,760.48
Day 5

14.71
3,865.63
Implied Cash Flow Test
(30 Days)

9.58
4,836.98


3.2.3 Maturity Mismatch
The industry’s baseline assets and liabilities maturity profile at end-June 2022 showed an
excess of N1,427.74 trillion in assets over liabilities. Further analysis revealed that the shortend of the market (≤90 day bucket) was adequately funded.
Table 3:7 Maturity Profile of Assets and Liabilities at End-June 2022
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
47,020.48
48,448.23
(1,427.74)


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Table 3:8 Test Results for System-wide Maturity Mismatch at End-June 2022

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
18,704.88

11,915.10

(36.96)

31-90 days
6,380.16

(287.84)

(175.46)

91-180days
2,966.75

(2,636.89)

(495.59)

181-365days
2,355.37

(3,281.88)

(484.58)

1-3 Years
1,957.03

(3,989.71)

(1,248.85)

Above 3 years
(2,071.54)

(7,358.27)

(5,392.04)

Total
30,292.64
(5,639.50)
(7,833.49)

The test results under 2A revealed that the banking industry was adequately funded except
for the “above 3 years” bucket, while under Tests 2B and 2C the industry had mismatches
of N5.64 trillion and N7.83 trillion, respectively. These indicated increases of N1.27 trillion
and N0.13 trillion under the Test 2B and Test 2C, respectively, relative to end-December
2021 test result.
3.2.4 Contagion Risk Analysis
The contagion risk analysis depicted an increase in interconnectedness through inter-bank
placements and takings. The total exposure increased by 49.04 per cent to ₦597.49 billion
at end-June 2022, from ₦352.86 billion at end-December 2021. Further analysis revealed
that six banks accounted for ₦387.30 billion or 64.82 per cent of total placements, while
another six banks accounted for ₦432.14 billion or 72.33 per cent of total takings. 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.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
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.
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:

Node colour representation
Blue = Placement only
Deep Blue = Net Placement
Red = Takings only
Purple = Net Takings
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
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

3.3 Supervision of Banks
The Bank maintained its supervisory and surveillance activities in the banking sector towards
promoting a safe, stable and sound financial system. These activities included offsite
appraisal of banks’ requests and periodic returns, regular onsite assessments and issuance
of guidance notes to banks.
3.3.1 Examination
The joint CBN and NDIC Risk Asset Examination (RAE) of 31 banks (commercial, merchant
and non-interest) was carried out in the review period to evaluate the quality of the banks’
assets and ensure the adequacy of loan loss provisioning. The banks were generally
compliant with extant regulations. However, some infractions were observed and regulatory
actions taken.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
The CBN also monitored the banks’ implementation of the recommendations from the
previous risk-based supervision reports during the period. The findings showed that banks
had largely implemented the recommendations.
3.3.2 Foreign Exchange Examination
A routine examination of 29 Authorised Dealers (ADs), consisting of 25 commercial and four
merchant banks, was carried out on banks’ foreign exchange activities to assess compliance
with extant regulations, identify and address anomalies, customer complaints, and other
emerging issues.
In addition, spot checks on customers’ applications under the RT200 scheme and utilisation
of Invisibles were conducted. In line with extant regulations, appropriate regulatory actions
were taken where infractions were observed.

3.3.3 Non-Interest Banks
During the review period, a non-interest microfinance bank (MFB) was licensed, bringing the
total number of Non-interest Financial Institutions (NIFIs) in operation to nine, comprising
three banks, two non-interest windows and four MFBs.

A compendium of the Resolutions of the Financial Regulation Advisory Council of Experts
(FRACE) Series 1 was published during the review period to engender comprehensive
understanding of NIFIs products and services.

The total assets of non-interest banks (NIBs) stood at N547.08 billion at end-June 2022,
representing 0.84 per cent of total banking industry assets. Additionally, their total deposits
and total credits of N199.35 billion and N208.20 billion represented 0.47 and 0.77 per cent
of the industry deposit and credit, respectively.
3.3.4 Supervision of Domestic Systemically Important Banks
In the review period, the Bank conducted a bi-annual assessment of banks in accordance
with the Framework for the Regulation and Supervision of Domestic Systemically Important
Banks (D-SIBs). Five banks maintained the designation as D-SIBs and continue to be
subjected to enhanced supervision in view of the significant impact of the failure of any of
the institutions on the financial system.

At end-June 2022, the five D-SIBs accounted for N37.73 trillion (57.62 per cent) of the
industry’s total assets of N65.48 trillion, compared with N34.20 trillion (57.73 per cent) in the
preceding period. Similarly, D-SIBs held N25.41 trillion (60.45 per cent) of total industry
deposits of N42.03 trillion, as against N23.06 trillion (60.02 per cent) of total industry deposits
in the preceding period. Also, D-SIBs accounted for N15.22 trillion (56.25 per cent) of the
aggregate industry credit of N27.06 trillion, compared with N13.78 trillion (56.05 per cent) of
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
the aggregate industry credit in the preceding period. The D-SIBs were compliant with the
prudential requirements during the review period.
3.3.4.1 Recovery and Resolution Plans
The D-SIBs submitted their Recovery and Resolution Plans (RRPs) in compliance with the
D-SIB Supervisory Framework. Some lapses were observed in the RRPs, and the affected
D-SIBs were required to address them in their subsequent submissions.
3.3.5 Asset Management Corporation of Nigeria
The value of AMCON’s liabilities increased marginally to N5.72 trillion at end-June 2022,
from N5.54 trillion at end-December 2021. Of this amount, the combined value of the
AMCON Note of N3.86 trillion and Loan of N500.00 billion represented 76.26 per cent of the
total liabilities. The Note would mature on December 27, 2023, while the N500.00 billion Loan
is due for redemption on December 30, 2022. The Corporation’s total assets, net of
impairment, stood at N896.49 billion at end-June 2022, representing 15.58 per cent of the
total liabilities.
During the review period, cash recoveries stood at N17.08 billion, while total assets forfeited
in settlement of loans was N633.22 million. These brought the cumulative recoveries to
N971.13 billion, comprising cash of N549.89 billion, and asset and shares forfeiture of
N421.24 billion.
3.3.6 Cross Border Supervision of Nigerian Banks
3.3.6.1 Foreign Subsidiaries of Nigerian Banks
At end-June 2022, the number of offshore entities of Nigerian banks was 64, comprising 55
subsidiaries, four representative offices, one affiliate, three international branches and one
agent banking arrangement.
The virtual risk-based supervision (RBS) examination of four offshore banking subsidiaries
of a bank was conducted during the review period. The examination of the entities was a
means of assessing the financial soundness of the banks and their compliance with extant
laws and regulations, validating the returns submitted by the parent bank and addressing
supervisory concerns noted in the operations of the offshore subsidiaries.

3.3.7 Credit Risk Management System
The Credit Risk Management System (CRMS) database remained a veritable source of
credit information and an additional risk management tool for the banking industry.
At end-June 2022, total number of credit facilities on the CRMS database stood at
34,344,280 reflecting an increase of 17.56 per cent over the end-December 2021 position of
29,213,129. The number comprised 33,491,862 credit facilities to individuals and 852,418 to
non-individuals.
However, the total number of facilities with outstanding balances on the CRMS database,
increased by 9.12 per cent to 5,344,602 at end-June 2022, from 4,898,075 at end-December
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
2021. The former number was made up of 5,260,750 credit facilities to individuals and 83,852
to non-individuals.

Table 3:10 Credit Risk Management System
Borrowers from the Banking Industry (Commercial, Merchant and Non-Interest Banks)
Description


December 2021
June 2022
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 number of licensed credit bureaux remained three at end-June 2022. The aggregate
credit records in the databases of the credit bureaux stood at 186.51 million, reflecting an
increase of 25.27 million (15.67 per cent) from 161.24 million at end-December 2021. Also,
there was a 6.44 per cent increase in the average number of subscribers which was
attributed mainly to credit growth, increased coverage of the credit reporting system and
improved awareness of the role of credit bureaux in the management of credit risk. The Bank
continued to conduct routine offsite and onsite supervisory activities of the bureaux in the
review period.

Table 3:11 Credit Bureaux Statistics
S/N
CRC
Credit
Bureau Ltd
CR
Services
Credit Bureau
Plc
First
Central
Credit Bureau
Ltd
Total

Number
of
credit
records


Value of Credit Facilities
(N’Tn)

FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Number of borrowers


Number of subscribers
1,667

1,394
3,752

3.4 Supervision of Other Financial Institutions
During the review period, the Bank conducted target examination and Anti-Money
Laundering, Combating the Financing of Terrorism (AML/CFT) examination of 204 OFIs. The
target examination was conducted on 114 MFBs to ascertain their capital in line with the recapitalisation deadline of April 2022.
The onsite AML/CFT examination of 90 OFIs, comprising 48 MFBs, four DFIs, 26 FCs and
12 PMBs, was conducted to ascertain their compliance with the extant AML/CFT regulations.
Furthermore, the Money Laundering and Financing of Terrorism (ML/FT) risks of the OFIs
were evaluated in line with the Inter-Governmental Action Group against Money Laundering
in West Africa (GIABA) assessment requirements. The examination revealed some
infractions and appropriate regulatory actions were taken on the affected institutions.

3.5 Other Developments in the Financial System
3.5.1 Anti-Money Laundering, Combating the Financing of Terrorism
The Bank, in collaboration with relevant agencies, sustained efforts aimed at maintaining a
robust and effective Anti-Money Laundering, Combating the Financing of Terrorism and
Countering Proliferation Financing (AML/CFT/CPF) regime equipped to respond to evolving
risks and vulnerabilities in the financial system.
During the review period, the following laws and regulations came into effect to strengthen
AML/CFT/CPF regime in Nigeria:
▪ The Money Laundering (Prevention and Prohibition) Act (MLPPA), 2022;
▪ The Terrorism (Prevention and Prohibition) Act (TPPA), 2022;
▪ The Proceed of Crimes Act (POCA), 2022;
▪ Regulations for the Implementation of Targeted Financial Sanctions on Terrorism
Financing; and
▪ Regulations for the Implementation of Targeted Financial Sanctions on Proliferation
Financing.
The Bank also issued the “CBN Anti-Money Laundering, Combating the Financing of
Terrorism and Countering Proliferation Financing of Weapons of Mass Destruction in
Financial Institutions Regulations 2022”, which replaced the CBN AML/CFT Regulations
2013. The new regulation aims to safeguard financial institutions from being used for
financial crimes through: adoption of appropriate policies to comply with AML/CFT/CPF
regulations; formulation and implementation of internal controls and procedures to deter
criminals; and adoption of risk-based approach in identification, assessment and
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
management of money laundering, terrorist financing and proliferation financing risks, among
others.

In addition, the Bank issued a guidance note on the CBN AML/CFT/CPF Regulations 2022
to OFIs to address challenges in the sub-sector and enable OFIs develop and implement
effective risk-based AML/CFT/CPF programmes in line with the provisions of extant
AML/CFT/CPF laws and regulations.

3.5.2 Capacity Building and Collaboration on AML/CFT/CPF
In the first half of 2022, the Bank conducted AML/CFT/CPF training for 630 staff of CMBs,
MFBs, PMBs, DFIs, FCs and BDCs, and participated in the Financial Action Task Force
(FATF) Standard Training to promote and deepen implementation of AML/CFT/CPF
measures.
The Bank also participated in the 37th Plenary organised by the GIABA held in Saly, Senegal,
as part of its collaborative effort with domestic and international stakeholders.

3.5.2.1 Anti-Money Laundering, Combating the Financing of Terrorism Cross-Border
Examination
During the review period, on-site cross-border examination was conducted on two foreign
subsidiaries of Nigerian banks to assess their compliance with home and host countries’
AML/CFT laws and regulations. The examination revealed no issues of regulatory concern.
3.5.3 Activities of the Financial Services Regulation Coordinating Committee
The Financial Services Regulation Coordinating Committee (FSRCC) is an inter-agency
body set-up by the CBN Act 2007 to promote financial system stability. Section 44 of the Act
mandates the FSRCC, amongst others, to co-ordinate the supervision of financial institutions
especially conglomerates; reduce arbitrage opportunities usually created by differing
regulation and supervision standards amongst supervisory authorities; and eliminate any
information gap encountered by any regulatory agency in its relationship with any group of
financial intermediaries.
The FSRCC comprises of the CBN, SEC, Nigeria Deposit Insurance Corporation (NDIC),
National Insurance Commission (NAICOM), Corporate Affairs Commission (CAC), National
Pension Commission (PenCom), Federal Ministry of Finance, Budget and National Planning,
and other observer members.
During the review period, the FSRCC continued its sensitisation against the activities of
Ponzi schemes and illegal fund operators (IFOs). It published notices on the websites of all
member agencies, and in ten National Dailies including one television station, cautioning the
general public against patronising IFOs.

FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
3.5.4 eNaira
3.5.4.1 Developments on eNaira Implementation
In the first half of 2022, the Bank sustained the implementation of eNaira, Africa’s first
Central Bank Digital Currency (CBDC). The Bank extended the charges-free regime
for transactions to promote eNaira adoption, and embarked on “Project Jaeger” aimed
at upgrading the eNaira technology stack for efficiency, robustness, scalability, inhouse control, and cyber and operational resilience.

A combo version of eNaira speed wallet app was developed for flexibility and ease of
accessibility. Web merchant wallet was also developed with functionalities that meet
users’
requirements,
including
dashboard
analytics,
centralised
account
management, payment approval workflows, and sub-wallets for big merchants.
Furthermore, the Bank developed an in-house Compliance & Anti-Money Laundering
(CAML) solution for eNaira operations, and referral functionality with incentives to
encourage eNaira wallet holders to onboard potential users and drive adoption of the
digital currency.
The Bank sustained its collaboration with domestic and international organisations
towards continuous improvement of the eNaira services, and hosted delegates from
the Bank of Uganda and Central Bank of Zimbabwe on eNaira study tour.

3.5.4.2 eNaira Statistics and Trends
The number of eNaira wallet downloads, onboarded customers and activated wallets
were 807,920; 244,340; and 182,790, respectively at end-June 2022, reflecting
increases of 32.45, 35.52, and 45.11 per cent over the preceding period figures.
Table 3:12 eNaira Wallet Holders

Dec-21
Jun-22 % Change


eNaira Wallets Downloads
610,000
807,920
32.45
Onboarded Customers
180,300
244,340
35.52
Activated Wallets
125,970
182,790
45.11

The total eNaira minted remained N2 billion, while eNaira in circulation stood at N1.55
billion, leaving the balance of N0.45 billion with the CBN at end-June 2022. Of the
total eNaira in circulation, N0.86 billion was held by financial institutions while N0.68
billion was with consumers and merchants.
Table 3:13 Minting and Holdings of eNaira

Dec-21
Jun-22 % Change
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
eNaira Minted
N2 Billion
N2 Billion
eNaira in Circulation:
940,450,000
1,545,350,000
64.32
In FIs' wallets
866,080,000
861,570,000
-0.52
In
Consumers
/
Merchants'
wallets
74,370,000
683,780,000
819.43
- In Stock with CBN
1,059,550,000
454,650,000
-57.09

3.5.5 Risk- Based Cybersecurity Assessment
The report of the CBN/NDIC Supervisory Review and Evaluation (SRE) of the annual
cybersecurity self-assessment of the relevant Financial Institutions as stipulated in the CBN
Risk-based Cybersecurity Framework and Guidelines was issued during the review period.
Banks were required to correct observed lapses and provide appropriate updates.
3.5.6 Nigeria Sustainable Banking Principles
At end-June 2022, the total number of women in the banking industry was 25,997,
representing 43.69 per cent of the total employees in the industry. Similarly, women had a
total of 892 (34.76 per cent) top management positions, and 82 (23.63 per cent) board
positions in the industry, compared with total female representation of 34,352 (36.90 per
cent) in the industry, with 662 (32.00 per cent) at senior management and 91 (29.55 per cent)
at board at end-December 2021.
Table 3:14 NSBP Statistics at end-June 2022

FEMALE REPRESENTATION IN THE BANKING INDUSTRY AS AT END-JUNE 2022
S/N
Item
Banking Industry
Female Representation
Percentage
of
Female
Representation (%)

Total Employees
59,505 25,997
43.69

Staff
in
Management
Position
2,566 892
34.76

Board Members
347 82
23.63

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.

3.5.7 Post IFRS Implementation
The Bank wound down the four-year IFRS 9 transitional arrangement on December 31,
2021. The transitional programme mitigated the day-one impact of the implementation of the
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Expected Credit Loss (ECL) model of credit impairment, thereby engendering financial
system stability. Consequently, audited financial statements of banks at end-June 2022 did
not contain the IFRS 9 day-one impact on capital adequacy ratio (CAR).

3.5.8 Implementation of Basel III
The parallel run for the implementation of Basel III continued in the review period. The
parallel run entails the rendition of returns by banks on the Basel III requirements alongside
the Basel II returns. The feedback from the banks and other stakeholders recommended for
further review of the Guidelines and reporting templates to enhance clarity and regulatory
expectations.

3.5.9 Internal Capital Adequacy Assessment Process
The CMBs submitted their 2022 Internal Capital Adequacy Assessment Process (ICAAP)
reports during the review period for the annual Supervisory Review and Evaluation Process
(SREP). The SREP was completed and the outcome would be integrated in the respective
banks’ Risk Based Supervisory Reports for 2022. The SREP revealed increased significance
and complexity of cyber security, climate and sustainability risks in banks. The analysis of
the reports also revealed that banks deployed various techniques for risk identification and
materiality assessment; including stress testing methodologies to ensure capital adequacy.
In all, the ICAAP documents substantially met the regulatory expectations.


3.6 Financial Literacy and Consumer Education
The Bank sustained the implementation of several initiatives in its efforts to deepen financial
literacy and consumer education during the review period, including: Financial Literacy
Awareness Workshops in collaboration with the Shared Agent Network Expansion Facility
(SANEF); Global Money Week in collaboration with Bankers’ Committee; Training of Trainers
Programmes for various segments of the society such as faith-based organisations, youth
groups and market associations.


3.7 Consumer Protection Compliance Examination of OFIs
The Bank conducted on-site Consumer Protection Compliance Examination of 18 OFIs to
assess compliance with the provisions of the 2020 Guide to Charges by Banks, Other
Financial Institutions and Non-Bank Financial Institutions, and the Consumer Protection
Regulations (CPR). Non-compliant banks were notified of the violations and directed to make
refunds to all affected customers as well as adopt measures to prevent reoccurrence.

3.8 Complaints Management and Resolution
The total number of complaints received against financial institutions in the period under
review were 2,432, indicating a 2.05 per cent decrease from 2,483 in the second half of 2021.
Out of the complaints received, 2,261 (93.00 per cent) were against banks and 171 (7.00 per
cent) were against OFIs.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Further analysis indicated that Electronic/Cards related complaints constituted the highest at
845 (34.75 per cent), followed by Fraud with 697 (28.66 per cent), Account Management 644
(26.48 per cent), Excess Charges 115 (4.73 per cent), while Others accounted for 131 (5.38
per cent).

Figure 3.12 Number of Complaints Received

Figure 3.13 Distribution of Complaints by Category: January to June 2022


During the review period, a total of 1,399 complaints were resolved with refunds to the
complainants, an increase of 63 (4.71 per cent) over the 1,336 recorded in the preceding
period. Also, complaints closed increased by 226 (20.64 per cent) to 1,321, as against the
ELECTRONIC/CARDS
35%
FRAUD 29%
ACCOUNT MGT 26%
EXCESS CHARGES
5%
OTHERS 5%
ELECTRONIC/CARDS
FRAUD
ACCOUNT MGT
EXCESS CHARGES
OTHERS
-100

Jul to Dec 21
Jan to Jun 22
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
1,095 recorded in the preceding period. The resolved cases included outstanding complaints
from the preceding period.


Figure 3.14 Complaints Resolved and Closed


Figure 3.15 Complaints Resolved/Closed

JAN
FEB
MAR
APR
MAY
JUN
TOTAL
NO. OF CASES RESOLVED
NO. OF CASES CLOSED
TOTAL
ELECTRONIC/CARDS
34%
FRAUD 28%
ACCOUNT MGT
24%
EXCESS CHARGES
6%
OTHERS 8%
ELECTRONIC/CARDS
FRAUD
ACCOUNT MGT
EXCESS CHARGES
OTHERS
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

Total claims in respect of the complaints stood at N8.13 billion and US$0.01 million in the
first half of 2022, compared with N15.88 billion and US$50.89 million in the second half of
2021, while total refunds amounted to N3.36 billion and US$0.03 million, compared with
N6.04 billion and US$0.94 million in the second half of 2021.

A total of 10 penalties were imposed on 5 financial institutions for various infractions during
the period under review, compared with 24 imposed on 11 financial institutions in the
preceding period.


FINANCIAL STABILITY REPORT – JUNE 2022

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 Bank Verification Number Operations
The Bank conducted an assessment of 28 banks and the Nigerian Interbank Settlement
System (NIBSS) to ascertain 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 and regulatory actions were taken.

Also, 2,722,518 BVNs were enrolled, bringing total BVN enrolment to 54,651,086, reflecting
an increase of 5.24 per cent over 51,928,568 enrolments at end-December 2021. The
number of accounts linked with BVNs was 130,569,656 out of 148,462,947 active customer
accounts, while the number of watch-listed BVNs associated with fraud and deceased
persons stood at 6,047 and 11,871, respectively.

Table 4:1 BVN Statistics

End-December 2021
End-June 2022
%
BVN enrolment
51,928,568
54,651,086
5.24
Accounts linked with BVN
117,551,302
130,569,656
11.07
Active Accounts
134,007,725
148,462,947
10.79
Watch-listed BVNs (Fraudulent)
5,347
6,047
13.09
Watch-listed BVNs (Deceased)
9,300
11,871
27.65

4.2 Nigeria Electronic Fraud Forum
During the first half of 2022, the Steering Committee of the Nigeria Electronic Fraud Forum
met once. The Forum sustained its efforts at reducing the incidence of fraud, enriching the
quality of regulatory reporting by banks and Payments Service Providers (PSPs), as well as
improving time taken to conclude investigations, prosecution and adjudication of reported efraud cases.

4.3 Licensing of Payments System Participants
In the review period, 47 companies were issued with Approvals-in-Principle, comprising 43
in Payment Solution Services (PSS), two in Switching & Processing, and two in Mobile
Money Operator (MMO) categories. In addition, 21 companies were issued with commercial
licences, consisting of 17 in the PSS and four in the Switching & Processing categories.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Furthermore, two new Payment Service Banks (PSBs) were issued commercial licences,
bringing the total number of licensed PSBs to five.

Table 4:2 Payments System Participants
Licence Type
Dec 2021
Jun 2022
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 efforts to sustain a safe, reliable and efficient payments system, the Bank assessed
payments service providers to ascertain the institutions’ compliance with the relevant
framework and guidelines for the payments system.
Also, during the review period, onsite assessments were carried out on one Switch, one
MMO and two PSSPs, while off-site assessments were conducted on six PSPs.
Furthermore, the Bank facilitated the resolution of disputes among banks, government
agencies and PSPs.


4 Reduction in the number of card scheme participant is as a result of re-categorisation of one of the scheme – leading to
removal of Genesis Card

FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
4.4 Cheque Standards and Cheque Printers Accreditation Scheme
In line with the provisions of the Nigeria Cheque Printers’ Accreditation Scheme (NICPAS),
the Bank conducted accreditation of the Nigeria cheque printers. At the end of the exercise,
five security printing companies were re-accredited, while the number of cheque
personalisers remained seven.

4.5 Other Payments System Initiatives
During the review period, the Bank issued the following two circulars:
• Review of Operations of the NIBSS Instant Payment and Other Electronic Payment
Options with Similar Features, to increase allowable limit subject to enhanced
security; and
• Review of the Industry Quick Response (QR) Code Presentment Options to clarify
that QR code for payment shall be based on merchant or consumer presented mode.

The Pan African Payments and Settlement System (PAPSS) was also launched to facilitate
cross border transactions in local currency, reduce cost and enhance efficiency of cross
border payments within Africa. The Bank completed integration with the system and issued
Guidelines for the operation of PAPSS in Nigeria.
4.6 Payments System Statistics and Trend
4.6.1 Large Value Payments
The volume of inter-bank fund transfers through the RTGS system increased to 149,035 at
end-June 2022, from 145,919 at end-December 2021, reflecting an increase of 2.14 per cent.
Also, the value of inter-bank fund transfers increased to N36,913.90 billion at end-June 2022,
from N32,329.86 billion at end-December 2021, reflecting an increase of 14.18 per cent. The
increase was due largely to bulk upload of government payments through the system.

4.6.2 Retail Payments
4.6.2.1 Cheque Clearing
The volume and value of cheques cleared, decreased to 2,077,679 and N1,593.43 billion at
end-June 2022, from 2,201,288 and N1,623.60 billion at end-December 2021, respectively.
These outcomes indicated decreases of 5.62 and 1.86 per cent in volume and value,
respectively, reflecting customers’ preference for electronic transactions.

4.6.2.2 Electronic Transactions
The volume and value of electronic transactions increased by 7.40 per cent and 21.83 per
cent to 10,680,942,112 and N719,936.06 billion, respectively, during the review period. The
increased usage of electronic payments for banking transactions was due to the convenience
provided by the channels and increased public confidence in the banking system.

FINANCIAL STABILITY REPORT – JUNE 2022

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)
Dec
Jun
Jul-Dec 2021
Jan-Jun 2022
Jul-Dec 2021
Jan-Jun 2022

ATMs

POS

Mobile Money
N/A
N/A

Online
Transfers
(Internet/Web)
N/A
N/A

Mobile App
N/A
N/A

USSD
N/A
N/A

Direct Debit
N/A
N/A

ACH/NEFT
N/A
N/A

Total


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

PENSIONS
During the review period, the National Pension Commission (PenCom) sustained its efforts
at promoting the adoption of the Contributory Pension Scheme (CPS) by sub-national
governments and the informal sector. Pension fund assets were diversified to include
investments in infrastructure and other alternative asset classes. Also, PenCom continued
its drive to improve operational efficiency, effectiveness and quality of service delivery of the
Pension Funds Administrators (PFAs) as well as enhance public enlightenment.

Total membership of the Scheme grew by 0.12 million to 9.71 million at end-June 2022, from
9.59 million at end-December 2021. The growth was largely driven by the increased adoption
of the CPS by States and Local Governments as well as the steady uptake of the Micro
Pension Plan in the informal sector.

The net Pension Assets under Management (AuM) grew by 6.30 per cent to N14.27 trillion
at end-June 2022, from N13.42 trillion at end-December 2021. The growth in AuM resulted
from returns on Investment and contributions received during the review period. The assets
were predominantly invested in FGN securities, while the balance was invested in other asset
classes such as State Government Securities, Ordinary Shares, Corporate Debt Securities,
Local Money Market Instruments, Supranational Bonds, Mutual Funds, Infrastructure Funds
and Private Equity Funds.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
Table 5:1 PENSION ASSETS


5.1 Other Developments in the Nigerian Pension Industry

5.1.1 Revised
Share
Capital
Requirement
for
Licensed
Pension
Fund
Administrators
At the expiration of the deadline of April 2022 for the implementation of the new Minimum
Regulatory Capital (Shareholders’ Funds), requirement of N5.00 billion for Pension Fund
Administrators (PFAs), all the PFAs had complied. However, the number of the PFAs
reduced to 20 from 22 owing to mergers and acquisitions.
ASSET CLASSES
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 SECURITES

* FED. GOVT BONDS

* TREASURY BILLS

* AGENCY BONDS (NMRC)

* SUKUK BONDS

* GREEN BONDS

STATE GOVT SECURITIES

CORP. DEBT SECURITIES

* CORPORATE BONDS (HTM)

* CORPORATE BONDS (AFS)

* CORPORATE INFRASTRUCTURE BONDS

* CORPORATE GREEN BONDS

MONEY MKT INSTR.

FIXED DEPOSIT/ BANK ACCEPTANCE

COMMERCIAL PAPERS

FOREIGN MONEY MKT INSTR.

MUTUAL FUNDS

OPEN/CLOSE FUNDS

REITs

SUPRA-NATIONAL BONDS

INFRASTRUCTURE FUNDS

REAL ESTATE

PRIVATE EQUITIES

CASH & OTHER ASSETS

CURRENT NET ASSET VALUE

UNAUDITED REPORT ON PENSION FUNDS INDUSTRY PORTFOLIO FOR THE PERIOD ENDED 30 JUNE 2022
APPROVED EXISTING SCHEMES, CLOSED PENSION FUND ADMINISTRATORS AND RSA FUNDS (INCLUDING UNREMITTED CONTRIBUTIONS @CBN & LEGACY FUNDS)
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
5.1.2 Revised Regulation for the Administration of Retirement and Terminal
Benefits
During the review period, the PenCom issued revised Regulation for the
Administration of Retirement and Terminal Benefits, which is aimed at enhancing the
efficiency of pension administration in the Country.

5.1.3 Operational Framework for Co-Investment
During the review period, the PenCom also issued the Operational Framework for CoInvestment by PFAs aimed at establishing standards and procedures, enhancing
diversification of AuM and improving returns on investment.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

INSURANCE
Developments in the insurance industry sector were mixed in the review period as
total assets grew, while premium income declined. The industry, however, remained
stable as solvency, liquidity and other key indicators were in healthy position.
6.1 Assets and Premium Income
The total assets of the insurance industry increased by 2.41 per cent to ₦2.28 trillion at endJune 2022, from ₦2.23 trillion at end-December 2021. Also, gross premium income
increased by 19.62 per cent to ₦369.21 billion in the first half of 2022, above the
N308.65 billion recorded in the second half of 2021. Furthermore, net premium income
grew by 16.89 per cent to N260.34 billion at end-June 2022, from ₦222.72 billion at endDecember 2021, while gross claims rose by 7.71 per cent to ₦174.78 billion in the review
period, from ₦162.27 billion in the preceding period. The growth in assets and premium
income was due to increased uptake of insurance policies.

Table 6:1 Key indicators
Period
Second Half of 2021
First Half of 2022
% Change
Gross Premium Income
308,645,033,675.40
369,210,079,717.00
19.62
Net Premium Income
222,720,012,192.40
260,335,407,430.00
16.89
Total (Gross) Claims
162,274,280,542.00
174,782,571,381.00
7.71
Total Assets
2,230,165,942,794.00
2,283,895,468,476.00
2.41

6.2 Key Insurance Industry 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, the CAR declined by
0.69 percentage points to 42.21 per cent at end-June 2022, from 42.90 per cent at endDecember 2021, driven largely by the recognition of the IFRS 9 impairment charges.
6.2.2 Liquidity Ratio
The industry maintained adequate liquidity position in the review period, with liquidity ratio
staying above the regulatory benchmark of 100.00 per cent. The liquidity ratio, measured by
ratio of liquid assets to current liabilities, was 116.65 per cent at end-June 2022, a decrease
of 4.40 percentage points from the level of 121.05 per cent at end-December 2021.
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
6.2.3 Combined Ratio of the Insurance Industry
The combined ratio of the industry, expressed as the sum of claims and expenses divided
by the earned premium, was within the regulatory limit of 75.00 per cent. It decreased by
6.89 percentage points to 66.38 per cent at end-June 2022, from 73.34 per cent at endDecember 2021, indicating improved profitability of the industry.

6.2.4 Premium Debtors
Premium debtors, measured as a percentage of gross premium, deteriorated by 3.63
percentage points to 8.69 per cent at end-June 2022, from 5.06 per cent at end-December
2021. The increase was due largely to the higher volume of insurance cover in the first half
of the year.
6.2.5 Retention Ratio
The retention ratio, measured as the percentage of insurance premium retained to total
premium generated, declined marginally by 0.27 percentage points to 71.87 per cent at endJune 2022, from 72.14 per cent at end-December 2021.

Table 6:2 Insurance Industry Dashboard
KEY INDICATORS
Dec-21
Jun-22
CAR (Capital/Total Asset)
42.90
42.21
Liquidity Ratio (liquid assets/current liabilities)
121.05
116.65
Claims Ratio %
41.65
33.59
Expense Ratio %
31.68
32.79
Combined Ratio %
73.34
66.38
investment to Total Assets Ratio %
70.19
64.82
Change in Gross Written Premium (in %)
23.82
36.96
Change in Net Written Premium (in %)
29.82
35.57
Change in Capital & Surplus (in %)
14.47
3.03
Premium Debtors as a % of Equity
2.34
5.74
Premium Debtors as a % of Total Assets
1.30
2.93
Premium Debtors as a % of Gross Premium
5.06
8.69
Retention Ratio (in %)
72.14
71.87
Return on Assets (in %)
1.09
1.33


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
6.3 Key Insurance Industry Regulatory/Supervisory Developments
During the review period, key development in the Nigerian insurance industry included:
i.
The commissioning of the National Insurance Commission (NAICOM) reporting
portal (portal.naicom.gov.ng) by the Honourable Minister of Finance, Budget and
National Planning in May 2022;
ii.
The notification for the cancellation of certificates of registration of two insurance
companies by NAICOM;
iii.
Grant of licences by NAICOM to seven micro-insurance companies to boost
insurance penetration; and
iv.
Conduct of onsite Risk Based examination by NAICOM on seven insurance
companies. The examinations focused on corporate governance, risk
management and internal controls, solvency and liquidity of insurance institutions.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

RISKS TO THE FINANCIAL SYSTEM
7.1 Credit Risk


Risk Rating (Medium Risk, Stable)

Banking industry credit risk remained stable during the review period. Although the nonperforming loans ratio remained below the regulatory limit of 5 per cent, there was a marginal
increase to 4.95 per cent at end-June 2022, from 4.85 per cent at end-December 2021.
Credit risks is expected to remain stable in the second half of 2022. However, there are
downside risks due to the lingering challenges in the business environment and the imminent
transition to a full interest rate regime on loans that were granted forbearance in the wake of
the Covid-19 pandemic. Sustained implementation of various regulatory and supervisory
measures, including the Global Standing Instruction (GSI) and Guidelines for Regulation and
Supervision of Credit Guarantee Companies in Nigeria, is expected to moderate the risks in
the short to medium-term.

7.2 Liquidity Risk
Risk Rating (Low Risk, Stable)

Industry liquidity remained healthy and stable during the review period and was above the
regulatory threshold of 30.00 per cent. Banking industry liquidity ratio increased to 42.6 per
cent at end-June 2022, compared with 41.33 per cent at end-December 2021. The liquidity
coverage ratio for the industry stood at 42.60 per cent at end-June 2022, compared with
41.30 per cent at end-December 2021, driven by the increase in high quality liquid assets
during the period. The weighted average Open Buy Back rate stood at 10.89 per cent at endJune 2022, compared with 12.75 per cent at end-December 2021, reflecting higher liquidity
in the banking system.


Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-22
NPL RATIO
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as


Liquidity risk is expected to remain low and stable in the short to medium-term and the
banking industry is expected to maintain a robust liquidity position and resilience to shortterm liquidity shocks. However, downside risks persisted, including rollover risk, asset and
liability mismatches and funding gaps at the short-term maturity buckets.
7.3 Market Risk
Risk Rating (Medium Risk, Trending up)
Exchange rates remained generally stable at the Investors and Exporters (I&E) window
during the period under review. The naira depreciated slightly against the United States
dollar to N414.72/US$1 at end-June 2022, compared with N412.99/US$1 at end-December
2021.


Although the Nigerian capital market recorded significant gains during the period under
review, market risk could trend upwards in the short term, owing to the risk of continued
capital reversal, oil price shocks, rising inflation and the steepening of the yield curve driven

OPEN BUY BACK (OBB) RATE (%)


Exchange Rate Movements at the I and E Window
USD
Euro
Pound Sterling
FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
by the hike in policy rates. The regulatory measures put in place would moderate this trend
in the short-to medium term.

7.4 Operational Risk
Risk Rating (High, Trending up)

Lingering structural rigidities continued to pose threats in the review period. The rise in
operating cost as a result of security and power challenges, as well as high energy prices
heightened operational risks. Cybersecurity challenges also remained elevated during the
period, with incidents of social engineering, unauthorised access to information,
insider threats and third-party risks. Reported losses from cases of fraud and forgeries in
banks increased to N2.71 billion in the first half of 2022, from N1.64 billion in the second half
of 2021. The banks reported 67,878 cases of fraud and forgeries in the first half of 2022,
compared with 46,761 cases in the preceding period.
Operational risk could remain high with an upward trend in the short to medium term.
7.5 Macroeconomic Risk
Risk Rating (High Risk, Trending up)
During the review period, the global economy witnessed an unprecedented rise in inflation
following sustained increases in the prices of food, energy, and other commodities. These
conditions were exacerbated by the Russian-Ukraine crisis, which resulted in supply chain
disruptions and the lingering headwinds associated with the Covid-19 pandemic. The
outbreak of the Marburg virus disease (MVD) and Monkey Pox virus, as declared by the
World Health Organisation (WHO), posed additional risk to the global macroeconomic
environment.
Available data indicated that global investors rebalanced their portfolios away from gold and
equities to fixed income securities, to take advantage of rising yields in the advanced
economies, with adverse implications for access to global capital by developing economies.
This would further slow global economic recovery and increase the risk of tightened global
financial conditions.
Macroeconomic risks remained elevated in the short to medium-term, with heightened debt
default risks in EMDEs and increasing risk of broad economic slowdown or global recession.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as

OUTLOOK
The medium-term economic outlook for the global and domestic economies is uncertain
owing to the effects of the Russian-Ukraine crisis, elevated global inflation and the lingering
impact of the Covid-19 pandemic and the threat of Marburg and Monkey Pox virus diseases.
Also, rising levels of corporate and public debt in most economies as well as the broad
shocks to foreign capital flows following the sustained interest rate hike by most central banks
continued to depress the outlook. Though aggregate global demand remained robust, the
supply-side constraints continued to undermine the recovery effort, at least in the short to
medium-term. Global growth is thus confronted with significant headwinds which could
further derail current growth projections.

On the domestic front, the Nigerian economy is expected to sustain its growth trajectory,
owing largely to the increasing contribution of the non-oil sector, and the sustained policy
support. However, the trend in key macroeconomic variables indicate the likelihood of
subdued output growth in 2022 owing to strong headwinds, including the shocks from the
external environment, persisting security challenges, and infrastructure deficit. Furthermore,
inflationary pressures are expected to continue in the build-up to the 2023 general elections,
given to the likelihood of increased spending. However, appropriate policy measures put in
place by the monetary and fiscal authorities are expected to moderate the risks.

To contain inflationary pressures many central banks will continue with tighter monetary
policy stance. This will reduce credit origination and increase non-performing loans, with
increasing financial system vulnerability in the short-to medium term. Financial regulators
need to continuously assess and monitor existing and emerging risks, and vulnerabilities to
the financial system with a view to deploying appropriate macro and micro prudential tools
to mitigate them.


FINANCIAL STABILITY REPORT – JUNE 2022

Classified as
ACKNOWLEDGEMENTS
LIST OF MAJOR CONTRIBUTORS
1. V.O. Ururuka (PhD.)
Financial Policy and Regulation Department
2. J. A. Mohammed
Ditto
3. M.L. Garo
Ditto
4.
A. Sylvanus-Dannana
Ditto
5. L. Mohammed
Ditto
6.
O. Abraham
Development Finance Department
7.
V.U Oboh
Monetary Policy Department
8.
J. Yakubu
Research Department
9.
N.A. Akwashiki
Banking Supervision Department
10.
A. Gambo
Statistics Department
11.
I. P. Akinbolaji
Risk Management Department
12.
E.O. Shonibare
Ditto
13.
Phebian N. Bewaji
Financial Markets Department
14.
V. A. Martins
Other Financial Institutions Supervision Department
15.
L.A. Sawa
Reserve Management Department
16. M.K. Muazu
Consumer Protection Department
17.
H. Abdullahi
Banking Services Department
18.
A. A. Isa-Olatinwo
Payments System Management Department
19. O. Umeano
Securities and Exchange Commission
20.
M. Mammada
Nigerian Insurance Commission
21.
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