2019 Banking Industry Report

The 2019 Banking Industry report provides an overview of the Banking industry, the operating terrain and the impact of the recent macro-economic uncertainties on the industry, it gives detailed insights and opinions of our highly experienced analysts who have sound understanding of the industry and have analysed the industry in Nigeria for decades. The report provides 2-year forecasts and projections for the asset base as well as profitability indicators and examines the following:

  1. Size and structure of the Banking Industry
  2. Impact of the macro-economic environment on the Industry
  3. Assessment of the Industry’s financial condition
  4. Regulatory environment of the Industry
  5. Recent developments in the Nigerian Banking Industry

Following the adoption IFRS 9, as of December 2018, 10.9% of the loan book representing ₦1.5trillion was in stage 3 according to the recently released Banking Industry Report by Agusto & Co. Stage 3 loans are loans with objective evidence of impairment at the reporting date. In the previous period, Stage 3 loans can be assumed to be “individually impaired or non-performing loans”. In 2017 non-performing loans was ₦1.3trillion, this accounted for 9.5% of the loan book. The 15% increase in stage 3 loans in 2018 compared to 2017 is evidence of the deterioration of the loan assets recognized by Nigerian banks, this is largely due to the fact that most companies are yet to recover from the economic recession particularly the impact of the foreign exchange rate crises.

The Industry’s Stage 2 loans and advances as of December 2018 were ₦2.9 trillion, this represents 22% of gross loans. In prior periods, Stage 2 loans can be assumed to be “past due but not impaired” and it amounted to ₦793 billion in 2017. Although Stage 2 loans do not have objective evidence of credit loss, these loans should be monitored closely to ensure that it does not deteriorate to Stage 3. If after 90 days, there is no longer evidence of a significant increase in credit risk, such loans could be transferred back to Stage 1. Comforting, however, the banking Industry has provided for 87.35% of the industry’s non-performing loans.

Agusto & Co. banking report also revealed that the Banking Industry’s total loans declined by 2.8%, this is largely due to the repayment by some customers and the cautious approach by banks towards extending further loans due to weak macro-economic climate.

The Report answers questions such as:

  • What is the size of the banking industry in Nigeria?
  • What are the current asset quality issues and what is the outlook in the short term?
  • How have recent regulatory changes impacted performance in the last 12 months and what are the implications for banks?
  • What opportunities are available to banks to increase market share?
  • What is the overall outlook for the Industry?
  • Provides an overview of the Nigerian business environment and its impact on the Industry
  • Analyses the market share of all the banks across different indicators.
  • Ranks each bank across key parameters on asset quality, profitability, capitalisation and liquidity
  • Tracks key regulations, Industry trends and opportunities
  • Provides 5 years financial information on the Industry