CENTRAL BANK OF NIGERIA
FINANCIAL
STABILITY
REPORT
FINANCIAL
STABILITY
REPORT
JUNE 2012
JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012

LIST OF TABLES
LIST OF FIGURES
BOX OF SUMMARY OF TEST RESULTS

viii
LIST OF APPENDICES

ix
LIST OF ABBREVIATIONS AND ACRONYMS

x
DEFINITION AND FUNCTION OF FINANCIAL STABILITY
GOVERNOR’S STATEMENT

xv
KEYNOTE REMARKS

xvi
EXECUTIVE SUMMARY ..

xvii
1.0
OVERVIEW


2.0
STRUCTURE OF THE NIGERIAN FINANCIAL SYSTEM
..
..
..


MACROECONOMIC AND FINANCIAL ENVIRONMENTS
..
..


vi

vii
..
..
..
xiii

Other Stakeholders in the Financial System
The Financial Services Regulation Coordinating
Committee (FSRCC)
Advisory Bodies
Self-Regulatory Organisations (SROs)
The Informal Sector
Global Economic and Financial Developments

Output
Inflation
Monetary Policy Rates


Global Equity Markets ..


Domestic Macroeconomic and Financial Developments
..

The Real Sector


Inflation


The Fiscal Sector


The Financial Sector


Monetary and Credit Developments..
..

Maturity Structure of DMBs’ Deposits and
Loans & Advances


Market Structure of the Banking Industry
..

Consumer Credit


Interest Rates ..


Yields on Government Securities
..
..

Capital Market


Nigerian Stock Market
..
..

Bond Market
..
..
..

Primary Market Auctions ..

Federal Government of
Nigeria Bonds
..
..

Sub-National Bonds
..

Corporate Bonds
..

..
..
..


..
..
..


3.1.4
T a b l e o f C o n t e n t s
iii
FINANCIAL STABILITY REPORT JUNE 2012
iv
Secondary Market Activities

External Reserve Management
..
..
..

External Reserve Movements
..
..
..

Foreign Exchange Flows


The External Sector


Demand and Supply of Foreign Exchange
..
..

Exchange Rate Movements ..
..
..
..

Outlook for the Second Half of 2012 ..
..
..

isks in the Banking System


Credit Risk


Liquidity Risk


Market Risk


Operational Risk


Reputational Risk


Strategic Risk ..


Risks Arising from e-payment Channels
..
..

ML/FT Risks


Promoting Financial System Stability ..
..
..
..

Update on the New Banking Model ..
..
..

Reforms in the Mortgage/Housing Finance Sector
..
..

Institutional Capacity Building


Financial Inclusion


Microfinance Banks


Primary Mortgage Banks


Entrepreneurship Development Initiatives
..
..

The Micro, Small and Medium Enterprises
Development Fund
(MSEDF) ..
..
..

Entrepreneurship Development Centres (EDCs)..

CBN Intervention Schemes


The Refinancing and Restructuring Facility (RRF)

The N200 Billion Small and Medium Enterprises
Credit Guarantee Scheme (SMECGS)
..

The Power and Airline Intervention Fund (PAIF)

The Commercial Agriculture Credit Scheme
(CACS)


Nigeria Incentive-based Risk-Sharing System for
Agricultural Lending (NIRSAL) ..
..
..

Non-Interest (Islamic) Banking (NIB)


Anti-Money Laundering/Combating the Financing of Terrorism
(AML/CFT)


International Economic Relations and Cooperation ..
..

The AACB 2012 Continental Seminar ..
..
..

Macro-Prudential Supervision
..
..
..

Financial Soundness Indicators
..
..
..

Banking Industry Stress Test


Framework for Enhancing Financial Stability ..
..

Licensing and Approvals


Non-Interest Banks


DEVELOPMENTS IN THE FINANCIAL SECTOR


Key R
REGULATORY AND SUPERVISORY ACTIVITIES ..
..
..
..


FINANCIAL STABILITY REPORT JUNE 2012
v


PRESERVING THE INTEGRITY OF THE FINANCIAL SYSTEM
..
..


CONCLUSION


GLOSSARY


Micro Finance Banks (MFBs)


Finance Companies


Primary Mortgage Banks (PMBs)
..
..
..

Merchant Banks


Supervision of Banks and Other Financial Institutions..
..

Deposit Money Banks


Discount Houses


Credit Bureaux


Specialized Banks


Non-Interest/Islamic Banks
..
..
..

Microfinance Banks (MFBs)
..
..
..

Primary Mortgage Banks (PMBs)
..
..

Cross-Border Supervision


Representative Offices and Subsidiaries
..
..

Investments in Subsidiaries


Joint Examination with Host Countries ..
..
..

College of Supervisors for WAMZ
..
..
..

Supervisory and Regulatory Challenges
..
..
..

The Legal Framework ..


Data Integrity ..


Corporate Governance


Activities of Illegal Finance Operators
..
..

Consumer Protection ..


The Payments System Vision 2020 (PSV 2020)..
..
..

Developments in the Payments System
..
..
..

The Real-Time Gross Settlement (RTGS) System
..

Cheque Clearing


Electronic Card Payments


ATM Transactions


Mobile Banking


Point-of-Sale (PoS) Transactions
..
..
..

Web-based (Internet) Transactions
..
..
..

Implications for Financial Stability


Compliance with the Basel Core Principles for
Effective Banking Supervision


Implementation of the International Financial Reporting
Standards (IFRS) and Basel II & III


Credit Information Bureaux


The CBN Credit Risk Management System (CRMS)
..

Private Credit Bureaux (PCBs)
..
..
..

The Asset Management Corporation of Nigeria (AMCON) ..

Financial System Strategy (FSS 2020 ) ..
..
..
..


THE PAYMENTS SYSTEM

FINANCIAL STABILITY REPORT JUNE 2012
Table 1:
Table 2:
Table 3:
Table 4:
Table 5:
Table 6:
Table 7:
Table 8:
Table 9:
Table 10:
Table 11:
Table 12:
Table 13:
Table 14:
Financial Institutions at end-June 2012


World Output Growth and Projections (2010-2013)
..
..

Global Consumer Price Inflation


Global Inflation Developments..


Policy Rates of Selected Central Banks..


Transactions on the Nigerian Stock Exchange
..
..
..

FGN Bond Auctions between January - June 2012
..
..

Sub-National Bonds Issued, January - June 2012 ..
..
..

Corporate Bonds Issued, January - June 2012
..
..
..

Distribution of RRF by Type ..


RRF Impact ..


PAIF Disbursement: January - June, 2012 ..
..
..
..

Analysis of CACS-Financed Projects by Value Chain
..
..

Nigeria's Compliance with the Basel Core Principles
..
..

L i s t o f T a b l e s
vi
FINANCIAL STABILITY REPORT JUNE 2012
Figure 1:
Figure 2:
Figure 3:
Figure 4:
Figure 5:
Figure 6:
Figure 7:
Figure 8:
Figure 9:
Figure 10:
Figure 11:
Figure 12:
Figure 13:
Figure 14:
Figure 15:
Figure 16:
Figure 17:
Figure 18:
Figure 19:
Figure 20:
Figure 21:
Figure 22:
Figure 23:
Figure 24:
Figure 25:
Figure 26:
Figure 27:
Figure 28:
Figure 29:
Structure of the Nigerian Financial System at end-June 2012
..

Percentage Growth Rate in Non-Oil GDP
..
..
..

Relative Contributions of the Non-Oil
Sub-sectors to GDP growth


Inflationary Trends (year-on-year)


Federal Government's Fiscal Operations
..
..
..

Trends in Major Monetary Aggregates


Distribution of DMBs’ Loans and Advances by Maturity ..
..

Distribution of DMBs’ Deposit Structure


Market Concentration Ratios of DMBs’ Assets
..
..
..

Consumer Credit ..


Money Market Rates between June 2009 and June 2012
..

Lending and Deposit Rates between
June 2009 and June 2012


The Yield Curve in Second Half of 2011 and
First Half of 2012


FGN Bond Auctions, July - December 2011 and
January - June 2012


WDAS, Inter-Bank and BDC Rates, July 2011 - June 2012
..

Composition of Banking Industry NPLs


SDF/SLF/OBB/Repo Operations by Banks in Nigeria
January - June 2012


Trends of Deposit and Lending Rates between June 2011
and June 2012


Sectoral Distribution of RRF


CACS: Cumulative Agricultural Value Chain
..
..
..
Financing at end - June, 2012.. ..


Ratio of Banking Industry NPLs to Total Loans
..
..
..

Banking Industry Liquidity Indicators


Banking Industry Capital Adequacy Indicators ..
..
..

CBN RTGS Transactions– Value (N’ Billion) and Volume ..
..

Volume (‘000) and Value (N billion) of Cheques Cleared
..

Value of Electronic Card Transactions: January - June 2012
..

Volume of Electronic Card Transactions:
July - December 2011


Selected CRMS Statistics for end-June 2012 and
end-December 2011


WDAS-SPT Demand and Supply in US $ Million in
July 2011 - May 2012


L i s t o f F i g u r e s
vii
FINANCIAL STABILITY REPORT JUNE 2012
Box 1: Summary of Stress Test Results ..


Box of The Summary of Stress Test Results
viii
FINANCIAL STABILITY REPORT JUNE 2012
List Of Appendices
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Selected Financial Soundness Indicators of the Nigerian
Banking Industry


Summary of Assessment of Compliance with the Basel
Core Principles for Effective Banking Supervision
..
..

Details of Stress Test Results


Guidelines for Granting Liquid Asset Status to State
Government Bonds


Number of Clients Trained and Counselled by the Three
Implementing Agencies of the EDCs April 2008 - June 2012
..

ix
FINANCIAL STABILITY REPORT JUNE 2012
List of Abbreviations and Acronyms
AACBs
AADFIs
ACGSF
ACSS
AFC
AGRA
AIPs
AMCON
AML/CFT
ASCE
ASI
ATMs
AU
BCEAO
BDCs
BOA
BOFIA
BOI
BRICS
BSE Sensex
CAC 40
CACS
CAR
CBN
CIBN
CIFTS
CR6
CRMS
CSWAMZ
D-8
DAX
DFIs
DMBs
DMO
EGX CASE 30
EBAs
EMV
FATF
FCs
FCT
FGN
-
Association of African Central Banks
-
Association of African Development Finance Institutions
-
Agricultural Credit Guarantee Scheme Fund
-
Agricultural Credit Support Scheme
-
African Finance Corporation
-
Alliance for a Green Revolution in Africa
-
Approvals-in-Principle
-
Asset Management Corporation of Nigeria
-
Anti-Money Laundering and Combating the Financing of
Terrorism
-
Abuja Securities and Commodity Exchange
-
All Share Index (Nigerian Stock Exchange Index)
-
Automated Teller Machines
-
The African Union
-
Banque Centrale des Etats de l'Afrique de l'Ouest (Central Bank
of West African States)
-
Bureaux de Change
-
Bank of Agriculture
-
Banks and Other Financial Institutions Act 1991 (as amended)
-
Bank of Industry
-
Brazil, Russia, India, China, and South Africa
-
Bombay Stock Exchange Index (Indian Stock Index)
-
Cotation Assistée en Continu (French Stock Index)
-
Commercial Agricultural Credit Scheme
-
Capital Adequacy Ratio
-
Central Bank of Nigeria
-
Chartered Institute of Bankers of Nigeria
-
CBN Interbank Fund Transfer System
-
Concentration Ratio (of the six largest banks)
-
Credit Risk Management System
-
College of Supervisors of the West African Monetary Zone
-
Group of Eight Developing Countries
-
DeutscherAktien Index (German Stock Index)
-
Development Finance Institutions
-
Deposit Money Banks
-
Debt Management Office
-
Egyptian Stock Index (Cairo and Alexandria Stock Exchange)
-
Eligible Bank Assets
-
Euro MasterCard Visa
-
Financial Action Task Force
-
Finance Companies
-
Federal Capital Territory
-
Federal Government of Nigeria


x
FINANCIAL STABILITY REPORT JUNE 2012
FMBN
FMF
FSIs
FSRCC
FTSE 100
GDP
GIZ
GSE
HHI
IFC
IFRS
IFSB
IGBC
IILMC
IMF
JSE
KYC
L/C
LTROs
M1
M2
MCP
MDAs
MENA
MFBs
MFIs
MICEX
ML/FT
MoUs
MPR
NACRDB
NAICOM
NASB
NCC
NDIC
NEXIM
NFIU
NGAAP+
Nikkei 225
NIBSS
NIRSAL
NPLs
NSE
-
Federal Mortgage Bank of Nigeria
-
Federal Ministry of Finance
-
Financial Soundness Indicators
-
Financial Services Regulation Coordinating Committee
-
Financial Times Stock Exchange Index (UK Stock Index)
-
Gross Domestic Product
-
Ghanaian Stock Exchange Index
-
Herfindahl-Hirschman Index
-
Islamic Finance Council
-
International Financial Reporting Standards
-
Islamic Financial Services Board
-
Indice de la Bolsa de Valores de Columbia (Columbian Stock
Index)
-
International Islamic Liquidity Management Corporation
-
International Monetary Fund
-
Johannesburg Stock Exchange (South African Stock Index)
-
Know Your Customer
-
Letter of Credit
-
Longer-term Refinancing Operations
-
Narrow Money Supply
-
Broad Money Supply
-
Microfinance Certification Programme
-
Ministries, Departments and Agencies
-
Middle East and North African countries
-
Microfinance Banks
-
Microfinance Institutions
-
Moscow Inter-Bank Currency Exchange (Russian Stock Index)
-
Money Laundering and Financing of Terrorism
-
Memoranda of Understanding
-
Monetary Policy Rate
-
Nigerian Agricultural Co-operative and Rural Development Bank
-
National Insurance Commission
-
Nigerian Accounting Standards Board
-
Nigerian Communications Commission
-
Nigeria Deposit Insurance Corporation
-
Nigerian Export-Import Bank
-
Nigerian Financial Intelligence Unit
-
Nigerian Generally Accepted Accounting Principles
-
Japanese Stock Index
-
Nigerian Interbank Settlement System
-
Nigerian Incentive-based Risk Sharing System for Agricultural
Lending
-
Non-Performing Loans
-
Nigerian Stock Exchange
-
German Agency for International Cooperation (Die Deutsche
Gesellschaft für Internationale Zusammenarbeit)
xi
FINANCIAL STABILITY REPORT JUNE 2012
NSE 20
OBB
OFIs
PAIF
PCBs
PENCOM
PFAs
PFCs
PMIs
PoS
PSV 2020
ROSCAs
RTGS
S&P
SEC
SMEs
SMECGS
SROs
TSX
WAMZ
WDAS
WEO
-
Nairobi Stock Exchange (Kenyan Stock Index)
-
Open Buy Back
-
Other Financial Institutions
-
Power and Aviation Infrastructure Fund
-
Private Credit Bureaux
-
National Pension Commission of Nigeria
-
Pension Fund Administrators
-
Pension Fund Custodians
-
Primary Mortgage Institutions
-
Point of Sale
-
Payments System Vision 2020
-
Rotating Savings and Credit Associations
-
Real-Time Gross Settlement System
-
Standard and Poor's
-
Securities and Exchange Commission
-
Small and Medium Enterprises
-
Small and Medium Enterprises Credit Guarantee Scheme
-
Self Regulatory Organisations
-
Toronto Stock Exchange
-
West African Monetary Zone
-
Wholesale Dutch Auction System
-
World Economic Outlook
xii
FINANCIAL STABILITY REPORT JUNE 2012
Financial stability' is the resilience of the financial system to unanticipated adverse
shocks, while enabling the continuing smooth functioning of the financial system's
intermediation process. A stable financial system contributes to broader economic
growth and rising living standards. The financial system performs one of the most
important functions in the welfare of its citizens by supporting the ability of households
and firms to hold or transfer financial assets with confidence.
Definition And Function Of Financial Stability
xiii
FINANCIAL STABILITY REPORT JUNE 2012
In the first half of 2012, global economic performance showed improvements.
However, prospects for output growth remained weak in the face of the sovereign
debt crisis in the Euro-zone, the attendant financial market problems in Europe and the
effects of slow growth in the US on the emerging economies.
Despite inflationary pressures and mild exchange rate volatility, the domestic
economy recorded appreciable GDP growth, although at a lower rate than was
achieved in the second half of 2011. The banking system was generally stronger, as the
ratio of NPLs to total loans declined and weak banks were recapitalized.
We remain resolute in the pursuit of our mandate to ensure price and monetary
stability. The Bank is determined to ensure that the banking system is able, at all times,
to respond promptly and appropriately, to challenges as they emerge.
The Financial Stability Report continues to provide unique insights on developments in
the Nigerian financial system and their implications for financial system stability. This
edition, the fifth in the series, highlights measures taken by the Bank to strengthen
financial stability and is, therefore, recommended to stakeholders as a major source of
information on developments and opportunities in the Nigerian Financial System..
Sanusi Lamido Sanusi, CON
Governor, Central Bank of Nigeria
Governor’s Statement
xv
FINANCIAL STABILITY REPORT JUNE 2012
The global economic recovery continued to be weak in the first half of 2012, owing to
the Euro debt crisis, increased downside risks to output and the slow pace of economic
and financial policy implementation. The Bank continued to take proactive measures
aimed at improving the resilience of the Nigerian economy to potential risks from
internal and external shocks. This underscores the importance of the Bank's
commitment to its reforms aimed at reinforcing the stability and soundness of the
banking system.
The implementation of the new banking model continued in the period under review.
Meanwhile, the Bank's efforts at promoting financial inclusion gained momentum with
the commencement of operations by the institutions earlier licensed for non-interest
banking.
During the review period, the Bank upgraded the Consumer Protection Division of the
Financial Policy and Regulation Department to a full-fledged Department to carry out
advocacy, enlightenment, education and promotion of awareness among
consumers of financial services.
Significant progress was made in the implementation of the pilot scheme of the cashless policy in Lagos. The policy has deepened the use of alternative payment channels,
such as Point of Sale (PoS) terminals, ATM cards, internet banking and mobile money
transfers, among others. The upgrade of the electronic Financial Analysis and
Surveillance System (e-FASS) commenced in the first half of 2012 with the aim of
improving data integrity, disclosure and transparency in financial reporting by
reporting institutions.
AMCON has continued to stabilize the banking system, through the provision of
liquidity by the acquisition of Eligible Bank Assets (EBAs). Also, the Corporation made
appreciable progress in recapitalizing the three bridge banks.
This edition of the Financial Stability Report reviews ed key risks in the financial system
and the efforts made by the CBN to strengthen its soundness and stability. As with
previous editions, it is expected that the Report would continue to assist stakeholders to
appreciate the risks inherent in the system and facilitate informed discussion on the
development and stability of the Nigerian financial system.
Your feedback on this Report will be appreciated. Please send your feedback to:

Dr. Kingsley C. Moghalu
Deputy Governor, Financial System Stability
Keynote Remarks
xvi
FINANCIAL STABILITY REPORT JUNE 2012
Global GDP growth in the first half of 2012
was mixed. While, output increased to
3.6 per cent in the first quarter, second
quarter growth was expected to slow
down as unemployment in some
advanced countries worsened,
exacerbating the deepening sovereign
debt crisis in the Euro-zone and weak
exports by major emerging economies.
Consequently, global growth was
projected at 3.5 per cent for 2012, from
as against the earlier projection of 4.0
per cent.
The slow growth helped to ease
inflationary pressure globally in the
review period, as commodity prices
generally stabilised. Global inflation was
estimated to average 2.8 per cent in
June 2012, compared with 3.6 per cent
at the end of 2011 (IMF WEO, April 2012).
Monetary policy remained largely
accommodating in most economies, as
many central banks either reduced or
retained their policy rates in the review
period. In some countries, the need to
improve liquidity and engender
confidence in the markets was the main
reason for monetary policy easing.
Most global equity market indices rose in
the first half of the year 2012. This was
partly attributed to improved
confidence in stocks, largely driven by
the easing of financial conditions in
response to the ECB's refinancing
operations for distressed banks in the
Euro-zone, and improvements in global
trade.
On the domestic front, macroeconomic
performance was modest in the first half
of 2012, as GDP growth rate stood at 6.4
Executive Summary
per cent, compared with 7.6 per cent
recorded in the second half of 2011. The
non-oil sector continued to drive growth
in GDP, as it grew by 12.8 per cent in the
review period. In the review period,
interest rates were generally stable,
though average yields on government
securities were higher in the first half of
2012 than in the second half of 2011.
Headline inflation, year-on-year, rose to
12.9 per cent at end-June 2012, from 10.3
per cent at end-December 2011. The
development was attributed to the
partial removal of the subsidy on
petroleum products in January 2012,
coupled with increases in the prices of
some staple foods and electricity tariffs.
In the foreign exchange market, the
average Naira exchange rate
depreciated by 1.88 per cent to
157.44/US$ at the WDAS-SPT window at
end-June 2012, from 154.54/US$ at endDecember 2011. Also, at the inter-bank
segment of the market, the rate
depreciated by 3.20 per cent to
162.33/US$, while at the BDC segment it
depreciated by 1.00 per cent to
163.43/US$.
The Bank's interventions in various sectors
of the economy continued to yield
positive results, with improved job
creation and business expansion in the
relevant sectors in the review period.
Some of the intervention schemes
highlighted in this edition of the Report
include the Micro, Small and Medium
Enterprises Development Fund, the
Refinancing and Restructuring Facility,
the Small and Medium Enterprises Credit
Guarantee Scheme, the Power and
N
N
N
N
xvii
FINANCIAL STABILITY REPORT JUNE 2012
Airline Intervention Fund and the
Commercial Agriculture Credit Scheme.
The results of a stress test conducted at
end-June 2012 showed increasing
resilience to shocks by the Nigerian
banking industry. The exercise
evaluated the solvency risks in the
banking industry's balance sheet and
the imbalance in the financial system. It
is expected that the on-going banking
industry reforms and the current short- to
medium-term monetary and financial
policy stance of the Bank would address
liquidity and exchange rate volatility
concerns emerging from the result of the
test.
In its efforts to further strengthen the
payments system, the Bank continued
to pursue the achievement of the
Payment System Vision 2020. It also
commenced the implementation of the
cash-less policy in Lagos, which was
expected to increase the use of other
modes of payment. During the review
period, the Bank granted a licence to
one mobile payment operator, following
the conduct of a pre-licensing
examination of 15 mobile payment
operators earlier granted AIP status to
ascertain compliance with the Mobile
Payments Regulatory Framework.
In the first half of 2012, a self-assessment
of Nigeria's level of implementation of the
Core Principles for Effective Banking
Supervision was conducted, in
preparation for the an IMF/World Bank
Financial Sector Assessment Programme
update visit. The exercise showed a
significant improvement in the country's
compliance with the Core Principles,
since the last assessment by the
IMF/World Bank in May 2002.
FINANCIAL STABILITY REPORT JUNE 2012
OVERVIEW
1.0

FINANCIAL STABILITY REPORT JUNE 2012
STRUCTURE OF THE NIGERIAN FINANCIAL
SYSTEM
2.0
Table 1: Financial Institutions as at end-June 2012
Institutions

Number

Deposit Money Banks (DMBs)

Discount Houses (DHs)

Private Credit Bureaux (PCBs)

Development Finance Institutions
(DFIs)

Primary Mortgage Banks (PMBs)

Microfinance Banks (MFBs)

Finance Companies (FCs)

Bureaux de Change (BDCs)

2,052

Pension Fund Custodians (PFCs)

Pension Fund Administrators (PFAs)1

Stock Exchange

Securities and Commodity Exchange

Securities Brokerage Firms

Registrars

Insurance

Companies

Reinsurance Companies

Insurance Brokers

Loss Adjusters

Asset Management Corporation of
Nigeria

Including 7 closed-PFAs.

FINANCIAL STABILITY REPORT JUNE 2012
Figure 1: Structure of the Nigerian Financial System at end-June 2012


Presidency

FMF

CBN

NAICOM

NDIC

PENCOM
SEC

DMO

AMCON

ASCE

NSE


Finance Companies
Primary Mortgage Banks
Private Credit Bureaux
Microfinance Banks
Deposit Money Banks
Discount Houses
Bureaux–de-Change
Development Finance Institutions
Pension Fund Administrators
Pension Fund Custodians
Insurance Brokers & Loss Adjusters
Reinsurance Companies
Insurance Companies
Registrars
Securities Brokerage Firms
Issuing Houses

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
3.0
MACROECONOMIC AND FINANCIAL
DEVELOPMENTS

FINANCIAL STABILITY REPORT JUNE 2012

Country


Projections

World
Output

5.3

3.9

3.5

3.9

Adv.
Economies

3.2

1.6

1.4

1.9

United States

1.7

2.3

Euro-zone

1.9

1.5

-0.3

0.7

Germany

3.6

3.1

1.4

France

1.7

1.7

0.3

0.8

Italy

1.8

0.4

-1.9

-0.3

Spain

-0.1

0.7

-1.5

-0.6

Japan

4.4

-0.7

2.4

1.5

United
Kingdom

2.1

0.7

0.2

1.4

Emerging
and Dev.
Economies

7.5

6.2

5.6

5.9

Sub-Saharan
Africa

5.3

5.2

5.4

5.3

China

10.4

9.2

8.5

India

10.8

7.1

6.1

6.5

Brazil

7.5

2.7

2.5

4.6

Mexico

5.6

3.9

3.9

3.6

MENA

3.5

5.5

3.7

Source: IMF’s WEO, April 2012 (updated July 2012)

Table 2 : World Output Growth and Projections (2010-2013)
FINANCIAL STABILITY REPORT JUNE 2012
3.1.2
Inflation
Inflationary pressure eased globally in
the review period on the heels of slower
economic activity and moderation of
global commodity prices. The
estimated average world inflation was
2.8 per cent in June 2012, compared
with 3.6 per cent at the end of 2011. In
the advanced economies, consumer
price inflation was projected to fall from
2.7 per cent in 2011 to 2.0 per cent in
2012, while in the emerging and
developing countries, inflation was
projected to fall to 6.3 per cent in 2012,
from 7.2 per cent in 2011 (Table 3).


Regions

Advanced
Economies

1.5
2.7
2.0

1.6
Emerging
and
Developing
Economies
6.1
7.2
6.3

5.6

Country
Dec. 2011
Jun. 2012

projections

World
3.6
2.8

N/A

Euro-zone
2.9
2.5

N/A

BRICS
5.8
4.3

N/A

US
3.3
1.9

2.2

Canada
2.9
1.5

2.1

UK
4.7
2.7

2.8

France
2.6
2.3

2.2

Germany

2.7

2.1

2.1

Japan

-0.3

0.13

0.2

China

4.6

2.9

3.7

India

8.4

10.1

7.4

Brazil

6.7

5.5

Russia

6.7

3.8

4.6

Mexico

N/A

4.4

3.6

South
Africa

5.7

5.5

Egypt

N/A

7.3

9.2

Ghana

N/A

9.4

8.8

Nigeria

10.0

12.9

13.5

Sources:

NBS, Bloomberg and the www.eiu.com

Table 4: Global Inflation Developments
Table 3 : Global Consumer Price Inflation
Source: IMF’s WEO, April 2012 (updated July 2012)
Projections

FINANCIAL STABILITY REPORT JUNE 2012

Country

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.

Feb.

Mar.

Apr.

May
Jun.
Ghana

12.5

12.5

12.5

12.5

12.5

12.5

12.5

13.5

13.5

14.5

14.5

S. Africa

5.5

5.5

5.5

5.5

5.5

5.5

5.5

5.5

5.5

5.5

5.5

5.5
5.5
Kenya

6.25

6.25

6.25

6.25

16.5

Nigeria

8.75

8.75

8.75

Brazil

12.25

12.5

11.5

11.5

10.75

10.75

9.75

8.5
8.5
Chile

5.25

5.25

5.25

5.25

5.25

5.25

USA

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25

0.25
0.25
Japan

0.1

0.1

0.1

0.1

0.1

0.1

0.1

0.1
0.1
Euro-zone

1.25

1.5

1.5

1.5

1.25

1.25

India

7.5

8.5

8.5

8.5

8.5

8.5

8.5

Russia

8.25

8.25

8.25

8.25

8.25

8.25

China

6.31

6.56

6.56

6.56

6.56

6.56

6.56

6.56

6.56

6.56

6.56

UK

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5
0.5
Indonesia


Sources: Bloomberg and Reuters
Table 5 : Policy Rates of Selected Central Banks
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012

Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12
Core (Non-food)
Food
Headline
Percent
Figure 4 : Inflationary Trends (year-on-year), 2009 - 2012
FINANCIAL STABILITY REPORT JUNE 2012
Figure 5: Federal Government's Fiscal Operations

-600
-100

1,400
1,900
FG-Retained
Revenue
Total
Expenditure
Deficit


H2' 11
H1'12
-5

Jun 11
Dec 11
Jun 12
M2
M1
NDC
Percent
Figure 6 : Trends in Major Monetary Aggregates
FINANCIAL STABILITY REPORT JUNE 2012
3.2.4.2 Maturity Structure of DMBs'
Deposits and Loans & Advances
The structure of DMBs' credit at end-June
2012 showed that short-term maturities
remained dominant. Outstanding loans
and advances maturing one year and
below accounted for 59.1 per cent,
compared with 60.0 per cent at the end
of the second half of 2011. The mediumterm (≥1yr and < 3yrs) and long-term
maturities (3yrs and above) stood at 14.8
and 26.1 per cent, compared with 15.2
and 24.8 per cent, respectively, at the
end of the second half of 2011 (Figure 7).
Similarly, deposits below one year

Figure 7 : Distribution of DMBs' Loans and Advances
by Maturity, March 2010 - June 2012

Mar 10
Jun 10
Sep 10
Dec 10
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Short-term
Medium-term
Long-term
Per cent
Figure 8 : Distribution of DMBs' Deposit Structure,
March 2010 - June 2012


Mar 10 Jun 10 Sep 10 Dec 10 Mar-11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12
Short-term - LHS axis
Medium-term -RHS axis
Long-term - RHS axis
Per cent
Per cent
constituted 97.6 per cent of the total.
Further analysis showed that 77.3 per
cent of the deposits had a maturity of less
than 30 days, while long-term deposits of
more than three years constituted 0.01
per cent at end-June 2012, compared
with 0.08 per cent at the end of the
second half of 2011 (Figure 8).
In addition to the consequences of a
maturity mismatch, the near-absence of
long-term deposits continued to
constrain the ability of banks to create
long-tenored risk assets crucial for
economic development.
FINANCIAL STABILITY REPORT JUNE 2012

Figure 9 : Market Concentration Ratios of DMBs'
Assets March 2010 - June 2012

Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sept 11 DEC 11 Mar 12 June 12
CR
HHI
HHI (Deposits)
HHI (Assets)
CR6(Deposits)
CR6( Assets)
FINANCIAL STABILITY REPORT JUNE 2012
-10
-5

Dec 10
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Consumer Credit
Growth over end-December(rhs)
N Billion
Growth (%)
Figure 10: Consumer Credit, December 2010 – June 2012

FINANCIAL STABILITY REPORT JUNE 2012

JanJun '09
Jul-Dec
'09
JanJun '10
Jul-Dec
'10
JanJun '11
Jul-Dec
'11
JanJun '12
Per cent
MPR
Int.Bank Call
OBB
NIBOR 7-day
Figure 11: Money Market Rates between June 2009 and June 2012
Figure 12 : Lending and Deposit Rates between June 2009 and June 2012

Jan-Jun
'09
Jul-Dec
'09
Jan-Jun
'10
Jul-Dec
'10
Jan-Jun
'11
Jul-Dec
'11
Jan-Jun
'12
Percentage point

Per cent

Saving
Average Term

FINANCIAL STABILITY REPORT JUNE 2012
Figure 13 : The Yield Curve in Second Half of 2011 and First Half of 2012

Per cent

TTM

PAR YIELD Jan-Jun '12
PAR YIELD Jul-Dec '11

Table 6: Transactions on the Nigerian Stock Exchange
Period

Vol.
(Bn)

Val.

( N′ Bn)
Market Cap.
(N′
Tn)
No. of
Deals

Index

January –

June 2012

46.04


July –

December

39.97


Percentage
Change

15.19

21.32
5.67
-10.00

4.02

Source: NSE
FINANCIAL STABILITY REPORT JUNE 2012

Figure 14 : FGN Bond Auctions,
July - December 2011
and January - June 2012
Offer
Subcription
Sales
Jul -Dec 2011
394.77
874.47
394.77
Jan - Jun

453.67
849.62
437.57

FINANCIAL STABILITY REPORT JUNE 2012

Table 7 : FGN Bond Auctions, January - June 2012
Bond Tranches
Tenor
(Years)
Issue
(N’ Billion)
Subscription
(N’ Billion)
Allotment
(N’ Billion)
Range of
Bids (%)
Cut-off
Rate
Maturity
Date
January

10.70%FGN2018

22.40

19.76

14.500017.9989

16.9870

May 30,

7.00%FGN2018

35.00

27.03

18.90

13.000018.0100

16.0000

Oct. 23,

16.39%FGN2018

35.00

59.92

35.00

12.000022.0000

16.3900

Jan. 25,

Sub-Total


89.76

109.35

73.66


February

7.00%FGN2018

35.00

59.36

35.00

12.000017.7849

16.1600

Oct. 23,

16.39%FGN2018

35.00

82.29

35.00

12.000018.1499

15.8930

Jan. 27,

Sub-Total


70.00

141.65

70.00


March

7.00%FGN2018

20.00

63.30

20.00

12.000016.9989

15.3000

Oct. 23,

16.39%FGN2018

30.00

68.10
30.00

12.000017.4400

15.4100

Jan. 27,

Sub-Total


50.00

131.40
50.00


April
10.50% FGN
MAR 2014

20.00

62.38
20.00

13.000016.6800

14.9480

Mar. 18,

15.10% FGN
APR 2017

35.00

78.12
35.00

12.000017.6900

15.1000

Apr 27,

16.39% FGN
JAN 2022

35.00

65.33

35.00

12.000017.2200

15.4718

Jan 27,

Sub-Total


90.00

205.83

90.00


May

15.10% FGN
APR 2017

35.00

62.80

35.00

13.500016.5000

15.2492

Apr 27,

16.39%FGN2018

35.00

68.90

35.00

13.500016.9400

15.4500

Apr 27,

Sub-Total


70.00

131.70

70.00


June

15.10% FGN
APR 2017

30.00

55.84

30.00

12.500017.0386

15.8590

Apr 27,

16.00% FGB
JUN 2019

30.00

40.17

30.00

14.000017.0400

16.0000

Jun 29,

16.39%FGN2018


Jan 27,

Sub-Total
83.91
129.69
83.91
Total

FINANCIAL STABILITY REPORT JUNE 2012
Table 8: Sub-National Bonds Issued, January - June 2012
Table 9: Corporate Bonds Issued, January - June 2012
Source: Securities and Exchange Commission

Issuer

Issue
Date

Mat.
Date
Tenor

Offer

Allotment
(N’ Bn)

Rate

Crusader
Nig. Plc

Feb. 17,

Feb. 17,

years

2.26

2.26

MPR
+
5%

(N’ Bn)
Issuer
Issue
Date


Maturity
Date

Allotment

(N’ Bn)

Tenor

(Years)

Rate
Ondo
State

14Feb-

14 Feb

27.00

27.00

15.5
Offer

(N’

Bn)

Source: Securities and Exchange Commission
FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
Figure 15: WDAS-SPT Demand and Supply in US$ Million,
July 2011 - May 2012


Amount Offered
Amount Demanded
Amount Sold
FINANCIAL STABILITY REPORT JUNE 2012
Figure 16: WDAS, Inter-bank and BDC Rates for
July 2011 - June 2012

WDAS
Inter-Bank
BDC

WDAS exchange rates include a 1% commission

FINANCIAL STABILITY REPORT JUNE 2012
Figure 17: Composition of Banking Industry NPLs

Jun 2011
Dec. 2011
Jun 2012
Sub-Standard
Doubtful
Lost
Provision
-50


(N'BN)
OBB (N'B)
SDF (N'B)
SLF (N'B)
REPO (N'B)
Figure 18 : SDF/SLF/OBB/Repo Operations by Banks
in Nigeria (January - June 2012)
FINANCIAL STABILITY REPORT JUNE 2012

Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Savings Deposit
3 Months Deposit
Figure 19: Trends of Deposit and Lending
Rates between June 2011 and June 2012

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
4.0
DEVELOPMENTS IN THE FINANCIAL
SECTOR

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012

Figure 20: Sectoral Distribution of the RRF

FINANCIAL STABILITY REPORT JUNE 2012
Table 10: Distribution of the RRF by Type
Table 11: RRF's Impact

S/N
Description
Amount

( N ’ Million)
(%)

Long-term Loans

(longer

than 5
years)

142,765.83

64.57

Medium-term Loan
(36 months)

58,779.33

26.58

Working Capital

19,551.62

8.84

Lease Finance

8.45

0.01
Total
221,105.23
100.00
Indicator

PreInterventi
on

Post–Intervention
Increm
ent
(%)
Dec 31, 2011

Mar 31,

Employment

86,513

104,700
107,841
3.0
Turnover (N

’Billion)

2,972

6,151

6,458
5.0
Average cap.
Utilisation (%)

48.6
2.9
FINANCIAL STABILITY REPORT JUNE 2012
Figure 12: WDAS-SPT Demand and Supply in US$ Million,
July 2011 - May 2012

Category
Number (%)
of Projects
Value ( N’ billions
and %)
Input Supplies

0.45
1.7
1.1
Production

48.64
53.7
33.8
Processing

38.64
82.1
51.7
Marketing

7.27
15.3
9.6
Storage

5.0
6.1
3.83
Total

158.9

Table 13: Analysis of CACS-financed Projects by Value Chain
S/N
Project

January – June
Cumulative from
inception to date
No.

of
projects
Amount
(N)
Billion

No.

of
projects
Amount
(N)
Billion

Airline

6.288

92.7

Power

13.474

85.92
Total

19.762

178.62
FINANCIAL STABILITY REPORT JUNE 2012
Figure 21 : CACS: Cumulative Agricultural Value
Chain Financing, at end June, 2012

Input
Supplies,
1.7, 1%

Production,
53.7, 34%

Processing,
82.1, 52%

Marketing,
15.3, 9%

Storage, 6.1,
4%

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
5.0
REGULATORY AND SUPERVISORY
ACTIVITIES
Figure 22: Ratio of Banking Industry NPLs to Total Loans

11.6

4.9

4.3

End-June

End-Dec

End-June

Per cent

End-June

End-Dec

End-June

Per cent

Liquidity Assets (core) to total asset
Figure 23: Banking Industry Liquidity Indicators
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
Credit Risk
The banking industry's vulnerability to credit risk lessened as the impact of
the most severe shock (200% rise in NPLs) on capital was adequately
absorbed with a CAR of 11.4 per cent. However, it remains the key risk in the
banking system.
Liquidity Risk
Liquidity risk was adjudged significant as the impact of a 10 per cent general
run on the banking industry's liquidity resulted in an 815 basis points reduction
in liquidity ratio. The results further showed that small and medium banks were
less vulnerable to liquidity risk than the big ones.
Interest Rate Risk
The result of the test on the net position of interest-sensitive instruments, in
terms of “return on assets” and “return on equity” revealed that the entire
banking industry, “categorized banks” and individual banks, maintained a
less vulnerable position to interest rate risk as pre-shock positions (in terms of
capital impairment, ROA and ROE) declined marginally after the most
strained shocks were applied.
Exchange Rate Risk
The result of the stress test in the period under review was consistent with that
of December 2011. The banking industry's vulnerability to foreign exchange
rate risk, especially strained exchange rate appreciation shocks, was
unchanged. This was largely due to a high foreign exchange asset position
relative to total risk-weighted assets, and a total qualifying capital, which
stood at 16.01 per cent and 85.52 per cent, respectively.
Foreign Exchange Trading Risk
The banking industry was found to be less vulnerable to foreign exchange
trading risk as pre-shock positions, in terms of impact on ROA and ROE,
declined marginally at extreme shock (100%) on foreign exchange trading
income, due mainly to the high net profit positions of the banks, relative to the
size of the foreign exchange trading income.
Box 1: Summary of Stress Test Results

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
6.0
THE PAYMENTS SYSTEM

FINANCIAL STABILITY REPORT JUNE 2012

Figure 25: CBN RTGS Transactions– Value (N' Billion) and Volume


VALUE
VOLUME
Dec-11
Jun-12
FINANCIAL STABILITY REPORT JUNE 2012
Figure 26: Volume ('000) and Value (N billion) of Cheques Cleared


VALUE
VOLUME
Dec-11
Jun-12

FINANCIAL STABILITY REPORT JUNE 2012
Figure 27: Value of Electronic Card
Transactions: January - June 2012

ATM
WEB
PoS
MOBILE
Figure 28 : Volume of Electronic Card
Transactions: January - June 2012
ATM
PoS
WEB
MOBILE
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
7.0
PRESERVING THE INTEGRITY OF THE
FINANCIAL SYSTEM

Table 14: Nigeria's Compliance with the Basel Core Principles
Degree of Compliance

No. of Core Principles

Compliant

Largely compliant

Materially noncompliant

Non compliant

FINANCIAL STABILITY REPORT JUNE 2012

Figure 29: Selected CRMS Statistics for end-June 2012
and end-December 2011
84,090


77,246

26,119


26,854


33,833


32,614

4,635

4,649
end-June 2012
end-December 2011
No. Of borrowers
No. Of Credit borrowers
No. Of Credits
Total outstanding Amount (
billions)
N
FINANCIAL STABILITY REPORT JUNE 2012

FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
Economic performance in the first half
of 2012 suggested that the global
economy had tilted towards weakness.
Key among the indicators of a downturn

were the continuing debt crisis in the
Euro-zone, the slow pace of economic
recovery in the United States, and the
declining rate of growth of the emerging
FINANCIAL STABILITY REPORT JUNE 2012
Appendix 1: Selected Financial Soundness Indicators of the
Nigerian Banking Industry

(All figures in percentages, except otherwise indicated)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)*
(9)**
EndJune

EndDec

EndJune

EndDec

EndJune

EndDec

EndJune

EndDec

EndJune
1. Asset-based Indicators


NPL to total gross loans

4.0

6.3

8.5

27.6

28.8

15.7

11.6

4.9

4.3
Liquid assets (core) to total assets

24.4

17.6

15.6

16.5

17.2

17.2

22.6

25.7

24.3
Liquid assets (core) to short-

term liabilities

33.9

24.2

21.5

22.3

19.4

19.8

25.7

31.2

28.1
Return on assets (ROA)

2.1

3.7

1.7

-8.9

1.0

3.9

0.9

0.0

1.5
2.Capital-based Indicators


Regulatory capital to risk-weighted assets

23.7

21.9

22.4

4.1

1.5

1.8

4.2

17.8

17.7
Tier 1 capital to risk-weighted assets

23.2

21.5

21.9

4.9

2.4

2.2

4.5

18.1

17.8
NPLs net of provision to capital

3.5

9.1

12.5

106.8

289.8

192.7

74.3

12.1

6.8
Return on equity (ROE)

11.5

20.7

8.9

-222.8

50.2

265.0

29.4

0.5

13.1
3. Income and Expense-based Indicators


Interest margin to gross income

54.6

58.3

60.1
57.8
54.0

53.7

50.8

45.2

64.6
Non-interest expenses to gross income

57.8
59.6
64.5

81.2
80.5
66.9

72.9

75.4
64.8
Personnel expenses to non-interest expenses

FSIs are computed based on IMF guidelines, * Revised, **Provisional,

FINANCIAL STABILITY REPORT JUNE 2012
Appendix 2: Summary of Assessment of Compliance with
the Basel Core Principles for Effective Banking Supervision
Core Principle
C1/
LC2/
MNC3/
NC4/

1. Objectives, independence, powers, transparency and
cooperation

X


1.1Responsibilities and Objectives
x


1.2 Independence, accountability and Transparency


x


1.3 Legal Framework

x


1.4 Legal Powers
x


1.5 Legal Protection
x


1.6 Cooperation

x


2. Permissible Activities

X


3. Licensing Criteria

X


4. Transfer of Significant Ownership


X


5. Major Acquisition

X


6. Capital Adequacy

X


7. Risk Management Process


X


8. Credit Risk


X


9. Problem Assets, Provisions & Reserves


X


10. Large Exposure Limits


X


11. Exposures to related parties


X


12. Country and transfer risks


X


13. Market risk


X


14. Liquidity Risk


X


15. Operational Risk


X


16. Interest rate risk in the banking book


X


17. Internal Control and Audit

X


18. Abuse of financial services


X


19. Supervisory Approach


X


20. Supervisory Techniques


X


21. Supervisory Reporting

X


22. Accounting and disclosure


X


23. Corrective and remedial powers of supervisors

X


24. Consolidated Supervision


X


25. Home-host relationships


X


1/ C: Compliant. 2/

LC: Largely compliant. 3/

MNC: Materially non -compliant.4/ NC: Noncompliant.

FINANCIAL STABILITY REPORT JUNE 2012
Appendix 3: Details of Stress Test Results
Minimum Regulatory CAR :10%

Banking
Industry

Large Banks

Medium Banks

Small
Banks


Shocks/Impact on CAR:


Pre-Shock CAR

18.31

18.32

19.16

16.27
Solvency Ratio After Shocks

Impact of Asset Quality Shocks on CAR


General Non-performing Loan


Shock 1ai -

10%NPLs increase

17.99

18.06

18.84

15.60
Shock 1aii-15% NPLs increase

17.83

17.93

18.68

15.26
Shock 1aiii-20% NPLs increase

17.66

17.80

18.51

14.92
Shock 1aiv-30% NPLs increase

17.34

17.54

18.18

14.22
Shock 1av-50% NPLs increase

16.68

17.02

17.52

12.81
Shock 1avi-100% NPLs increase

15.09

15.77

15.91

9.28
Shock 1avii-200% NPLs increase

11.37

12.87

12.15

0.46
Category shift” from “substandard" to "doubtful and to
loss”


Shock 1bi-

NPLs “20% category shift” (from
“substandard" to "doubtful and loss”)

18.00
18.12

18.71

15.73
Shock 1bii -NPLs “50% category shift” (from
“substandard" to "doubtful and loss”)

17.68
17.86

18.38

15.06
Shock 1biii -

NPLs “100% category shift” (from
“substandard" to "doubtful and loss”)

17.05
17.43

17.51

13.88
Concentration


2ai - Single biggest corporate obligor credit facilities
shifted from pass-due to sub-standard (10%)

18.05
18.07

18.85

16.06
2aii - Single biggest corporate obligor credit facilities
shifted from sub-standard to Doubtful (50%)

16.98

17.05

17.57

15.19
2aiii- Single biggest corporate obligor credit facilities
shifted from Doubtful to Lost (100%)

15.60

15.75

15.92

14.09
2bi - Five biggest corporate obligor credit facilities shifted
from pass-

due to sub-standard (10%)

17.35

17.35

18.12

15.49
2bii- Five biggest corporate obligor credit facilities shifted
from sub-standard to Doubtful (50%)

13.25

13.26

13.68

12.21
2biii - Five biggest corporate obligor credit facilities
shifted from Doubtful to Lost (100%)

7.52

7.54

7.39

7.74


Banking
Industry

Large Banks

Medium Banks

Small Banks
Shock 3ai (Oil & Gas) 20% default

18.14

18.13

18.98

16.18
Shock 3aii (Oil & Gas) 50% default

17.87

17.85

18.71

16.05
Shock 3aiii (Oil & Gas) 100% default

17.43

17.37

18.25

15.83


Shock 3bi (Public Utilities 10% default)

18.31

18.32

19.16

16.27
Shock 3bii (Public Utilities 20% default)

18.31

18.32

19.16

16.27

FINANCIAL STABILITY REPORT JUNE 2012
Shock 3bii (Public Utilities 20% default)

Shock 3biii (Public Utilities 50% default)

Shock 3biv (Public Utilities 100% default)


Shock 3ci (General sector 20% default)

18.13

18.16

18.97

15.99
Shock 3cii (General sector 50% default)

17.86

17.92

18.69

15.58
Shock 3ciii (General sector 100% default)

17.41

17.53

18.21

14.87


Shock 3di (20% Gen com becomes NPLs)

17.86

17.95

18.55

15.79
Shock 3dii (50% Gen com becomes NPLs)

17.41

17.59

17.92

15.30
Shock 3diii (100% Gen com becomes NPLs)

16.04

18.32

15.99

13.81


Shock 3ei (Fin services 20%)

17.47

17.46

18.00

15.30
Shock 3eii (Fin services 50%)

16.18

16.13

16.79

15.05
Shock 3eiii (Fin services 100%)

13.94

13.83

14.28

13.79


Shock (3fi) 10% default in exposure to Real Estate
17.98
17.93

18.55

15.79
Shock (3fii) 20% default in exposure to Real Estate

17.64
17.54

18.53

16.06
Shock (3fiii) 30% default in exposure to Real Estate

16.61
16.36

17.56

15.74
Shock (3fiv) 50% default in exposure to Real Estate

16.61
16.36

17.56

15.74
Shock (3fv) 100% default in exposure to Real Estate
16.61
16.36

17.56

15.74


Shock (3gi) 10% default in exposure to Aviation

18.23

18.22

19.11

16.17
Shock (3gii) 20% default in exposure to Aviation

18.14

18.13

19.05

16.08
Shock (3giii) 50%

default in exposure to Aviation

17.89

17.85

18.89

15.79
Shock (3giv) 100% default in exposure to Aviation

17.47

17.37

18.62

15.30


Banking
Industry

Large Banks

Medium Banks

Small Banks
Shock (3hi) 20% default in exposure to Information and
Communication

17.47

17.41

18.34

15.77
Shock (3hii) 50% default in exposure to Information and
Communication

16.19

16.02

17.08

15.01
Shock (3hiii) 100% default in exposure to Information and
Communication

13.96

13.58

14.89

13.72


Shock (3ki) 10% default in exposure to power and Energy

18.28

18.31

19.06

16.26
Shock (3kii) 20% default in exposure to power and Energy

18.24

18.30

18.95

16.26
Shock (3kii) 20% default in exposure to power and Energy

Shock (3kiii) 50% default in exposure to power and
Energy


FINANCIAL STABILITY REPORT JUNE 2012


Shock (3kiv) 100% default in exposure to power and
Energy

Shock (3li) 10% default in exposure to Capital Market

18.21

18.26

19.15

16.24
Shock (3lii) 20% default in exposure to Capital Market

18.10

18.09

18.98

16.14
Shock (3liii) 50% default in exposure to Capital Market

17.79

17.74

18.69

15.96
Shock (3liv) 100% default in exposure to Capital Market

17.27

17.16

18.22

15.64


Shock (3mi) 20% default in exposure

to Government

18.03

18.01

18.89

16.14
Shock (3mii) 50% default in exposure to Government

17.76

17.70

18.62

16.02
Shock (3miii) 100% default in exposure to Government

16.92

16.77

17.79

15.64
Exchange Rate Volatility


Shock 4ai (10% depreciation against Naira)

19.87

20.05

20.32

17.92
Shock 4aii (20% depreciation against Naira)

21.44

21.78

21.47

19.57
Shock 4aiii (50% depreciation against Naira)

26.14

26.98

24.93

24.52
Shock 4aiv (100% depreciation against Naira

33.97

35.64

30.70

32.76
Shock 4bi (10% appreciation in favour of the Naira)
16.74

16.58

18.01

14.62
Shock 4bii (20% appreciation in favour of the Naira)
15.18

14.85

16.85

12.97
Banking
Industry

Large Banks

Medium Banks

Small Banks
Shock 4biii (50% appreciation in favour of the Naira)

10.48

9.66

13.39

8.02
Shock 4biv (100% appreciation in favour of the Naira)

2.65

1.00

7.62

-0.23
Interest Rate Volatility


Shock 5ai (200bps upward parallel shift in yield curve)

18.44

18.41

19.43

16.21
Shock 5aii (400bps upward parallel shift in yield curve)

18.56

18.51

19.71

16.14
Shock 5aiii (500bps upward parallel shift in yield curve)

18.63

18.56

19.84

16.11
Shock 5aiv (1000bps upward parallel shift in yield curve)

18.94

18.81

20.52

15.96
Shock 5bi (200bps downward parallel shift in yield curve)

18.18

18.22

18.89

16.33
Shock 5bii (400bps downward parallel shift in yield curve)

18.06

18.12

18.62

16.39
Shock 5biii (500bps downward parallel shift in yield
curve)

17.99

18.07

18.48

16.42
Shock 5biv (1000bps downward parallel shift in

yield
curve)

17.68

17.82

17.81

16.58


Impact of Parallel Shift in Yield Curve Shocks on ROA


Interest Rate Volatility


Shock 5ai (200bps upward parallel shift in yield curve)

1.84

2.26

1.48

0.84
Shock 5aii (400bps upward parallel shift in yield curve)

1.94

2.34

2.38

1.24
Shock 5aiii (500bps upward parallel shift in yield curve)

Shock 5aiv (1000bps upward parallel shift in yield curve)

Shock 5bi (200bps downward parallel shift in yield curve)


FINANCIAL STABILITY REPORT JUNE 2012
Shock 5bii (400bps downward parallel shift in yield curve)

Shock 5biii (500bps downward parallel shift in yield
curve)

Shock 5biv (1000bps downward parallel shift in yield
curve)
1.26

1.78

0.29

1.08


Banking
Industry

Large Banks

Medium Banks

Small
Banks
Impact of Parallel Shift in Yield Curve Shocks on ROE


INTEREST RATE VOLATILITY


Shock 5ai (200bps upward parallel shift in yield curve)

12.91

14.16

11.26

8.96
Shock 5aii (400bps upward parallel shift in yield curve)

13.60

14.66

12.77

8.55
Shock 5aiii (500bps upward parallel shift in yield curve)

13.94

14.91

13.53

8.35
Shock 5aiv (1000bps upward parallel shift in yield curve)

15.64

16.17

17.31

7.32
Shock 5bi (200bps downward parallel shift in yield curve)

11.55

13.15

8.24

9.79
Shock 5bii (400bps downward parallel shift in yield curve)

10.87

12.65

6.72

10.20
Shock 5biii (500bps downward parallel shift in yield
curve)
10.53

12.40

5.97

10.40
Shock 5biv (1000bps downward parallel shift in yield
curve)
8.82
11.14

2.19

11.43


IMPACT OF RUNS AND CONCENTRATION
SHOCKS ON LIQUIDITY


INITIAL LR

38.78%
33.64%

42.46%
57.36%
Shock 6ai (Gen run 10 %)

30.63%
24.65%

35.15%

51.60%
Shock 6aii (Gen run 15 %)

25.69%

19.18%

30.75%

48.10%
Shock 6aiii (Gen run 20%)

19.98%

12.86%

25.71%

44.06%
Shock 6aiv (Gen run 25%)

13.33%

5.46%

19.87%

39.32%
Shock 6av (Gen run 50%)

-48.30%

-64.31%

-31.92%

-5.13%
Shock 6bi ( Run on ST Dep 20%)

31.70%

25.71%

36.26%

52.49%
Shock 6bii ( Run on ST Dep 30%)

27.50%

20.99%

32.63%

49.61%
Shock 6biii ( Run on ST Dep 50%)

17.36%

9.49%

23.96%

42.67%
Shock 6biv ( Run on ST Dep 100%)

-27.12%

0.00%

-42.27%

0.00%
Shock 6ci ( Run on LT Dep 20%)

29.53%

23.57%

23.57%

50.68%
Shock 6cii ( Run on LT Dep 30%)

Shock 6ciii ( Run on LT Dep 50%)

8.90%

1.05%

1.05%

35.56%
Shock 6civ ( Run on LT Dep 100%)

-77.97%

-94.44%

-94.44%

-31.77%
Shock 6di ( 10% Run on LT and 20% on ST Dep)

26.30%

19.79%

31.39%

48.61%
Shock 6dii ( 15% Run on LT and 30% on ST Dep)

17.94%

10.46%

24.08%

42.75%
Shock 6diii ( 20% Run on LT and 50% on ST Dep)

-0.43%

-10.33%

8.45%

29.93%
Banking
Industry
Large Banks
Medium Banks
Small
Banks
Shock 6ei ( 20% Run on largest Deposit)


FINANCIAL STABILITY REPORT JUNE 2012
Shock 6eii ( 50% Run on largest Deposit)

Shock 6eiii (100% Run on largest Deposit)

Shock 6fi ( 5% Run on 5 largest Deposits)

38.32%

33.17%

42.10%

56.82%
Shock 6fii ( 10% Run on 5 largest Deposits)

37.86%

32.70%

41.73%

56.28%
Shock 6fiii ( 15% Run on largest Deposits)

37.38%

32.22%

41.36%

55.71%
Shock 6fiv ( 20% Run on 5 largest Deposits)

36.91%

31.73%

40.99%

55.14%
Shock 6gi ( 5% Run on 10 largest Deposits)

38.15%

32.99%

41.96%

56.66%
Shock 6gii ( 10% Run on 10 largest Deposits)

37.51%

32.33%

41.44%

55.94%
Shock 6giii ( 15% Run on 10 largest Deposits)

36.85%

31.66%

40.92%

55.19%
Shock 6hi ( 5% Run on 20 largest Deposits)

37.95%

32.78%

41.78%

56.48%
Shock 6hii ( 10% Run

on 20 largest Deposits)

37.09%

31.90%

41.08%

55.56%
Shock 6hiii ( 15% Run on 20 largest Deposits)

36.22%
30.99%

40.36%

54.60%


IMPACT OF FX TRADING SHOCKS ON ROA


INITIAL ROA

1.74
2.18

1.28

0.88
FX Trading Income Volatility


Shock 7ai (10% decline in FX trading Income)

1.71
2.15

1.25

0.84
Shock 7aii (20% decline in FX trading Income)

1.68

2.13

1.22

0.81
Shock 7aiii (50% decline in FX trading Income)

1.59

2.04

1.13

0.69
Shock 7aiv (100% decline in FX trading Income)

1.44

1.90

0.98

0.50
1.61

2.06

1.14

0.71


IMPACT OF FX TRADING SHOCKS ON ROE


INITIAL ROE

12.23

13.66

9.75

9.37
FX Trading Income Volatility


Shock 7ai (10% decline in FX trading Income)

12.02

13.48

9.52

8.97
Shock 7aii (20% decline in FX trading Income)

11.81

13.30

9.29

8.57
Shock 7aiii (50% decline in FX trading Income)

Shock 7aiv (100% decline in FX trading Income)


FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
Appendix 5 : Number of Clients Trained and Counselled by the Three
Implementing Agencies of the EDCs April 2008-June 2012

Implementing
Agencies


Future Entrepreneurs
Counselled/Trained
Males
Females

No. of University

Graduates.

Trained

No. of Sec.
School
Graduates

Trained

Total
Trained and
Counselled

%Target Met

(Target =

1,250
Trainees)

at
1,250/

Qtr/Centre

Counselled

Trained
Counselled
Trained
Counselled

Trained


Opportunities
Industrialisation Centres
Int. (Kano Centre)

22,960


4,882

4,405

6,608

33,973

51.83%

Centre for
Entrepreneurship and
Development Research
(Onitsha Centre)

50,156


5,108

2,046

8,098

60,300

47.74%

Africa Leadership Forum
(Lagos Centre)

17,294

16,041

5,597

4,791

11,697

11,250

4,338

11,703

33,335

75.49%

Total

90,410

37,198

55,858

15,958

34,552

21,240

10,789

26,409

127,608

58.35%


Grand Total

127,608

71,816

55,792

37,198

127,608

(Average for the
3 Centres)

FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
FINANCIAL STABILITY REPORT JUNE 2012
Money Supply
M1
M2
Operational Risk
Reputational Risk
Takaful
Sukuk
Financial inclusion
Eligible Bank Assets (EBA)
b.
Organizations in Nigeria's Financial Sector
The Asset Management Corporation of Nigeria (AMCON)
The Central Bank of Nigeria
This is the total money in circulation in an economy of a given country at a given time.
For policy purposes, there are two variants of money supply in Nigeria, M1 and M2.
This is the narrow measure of money supply which includes currency in circulation with
the non-bank public and demand deposits (current accounts) at the deposit money
banks.
This is the broad measure of money supply and includes M1, savings and time deposits
at the deposit money banks.
Operational risk is defined as the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events.
Reputational risk is any risk to an organization's reputation that is likely to destroy
shareholder value.
Insurance that is based on Islamic religious law. It is a type of Islamic insurance, where
members contribute money into a pool of funds in order to guarantee each other
against loss or damage.
Bonds that comply with Islamic Religious Law (Islamic Bond)
This is the delivery of financial services at affordable costs in a convenient manner to all
people that need and can use the service. The process of ensuring access to financial
services and timely and adequate credit where needed by vulnerable groups, such as
weaker sections and low income groups at an affordable cost.
Deposit Money banks' bad loans (Toxic Assets) that qualify to be sold to AMCON
AMCON was established through the AMCON Act of 2010, with responsibility for the
acquisition, management and disposal of the non-performing assets of Nigerian
banks.