Banking industry recorded N18bn fraud in 2012 –NDIC

The banking sector recorded 3,380 fraud cases involving the sum of N17.97bn in the 2012 fiscal year.

This information was contained in the annual reports and accounts of the Nigeria Deposit Insurance Corporation released on Tuesday in Abuja.

In the report, the corporation said of the N17.97bn fraud, the contingent or expected loss stood at N4.52bn.

The expected/contingent loss, it said, had increased by N455m or 10 per cent as against the N4.072bn reported in 2011.

The report said while the number of reported fraud cases rose by 43.7 per cent from 2,352 in 2011 to 3,380 in 2012, the amount involved decreased by 36.4 per cent from N28.40bn to N18.04bn in the period under review.

The report stated, “The DMBs reported 3,380 fraud cases involving the sum of N17.97bn with expected/contingent loss of about N4.52bn in 2012. The expected/contingent loss had increased by N455m (10.9 per cent) as against N4.072bn reported in 2011.

“Notwithstanding the 43.7 per cent increase in the number of reported fraud cases from 2,352 in 2011 to 3,380 in 2012, the amount involved decreased by 36.4 per cent from N28.40bn in 2011 to N18.04bn in 2012.”

With regards to banks’ performance, the report stated that the banking industry recorded a significant improvement in its financial condition and performance in 2012 as revealed by all major financial indicators when compared to the previous year.

For instance, it noted that the banking industry’s total assets grew from N21.89tn in 2011 to N24.58tn in 2012.

It further stated, “Out of the total industry’s assets of N24.58tn, total loans and advances stood at N8.15tn, representing over 33 per cent or one-third of the total assets.

“Of the banking industry’s total loans, the sum of N4.48tn or 54.97 per cent was extended to the real sector of the economy in 2012 as against N3.88tn (or 53.37 per cent) and N3.51tn (or 48.95 per cent) in 2011 and 2010, respectively.

“Of particular note was the rising trend in the banking industry’s credits to the agricultural sector, which stood at 3.60 per cent of the total loans and advances in 2012 compared to the 2.15 per cent and 3.11 per cent recorded in 2010 and 2011, respectively.”

The report further stated that the banking industry was adequately capitalised in the year under review with a capital adequacy ratio of 18.07 per cent compared to 17.71 per cent recorded in 2011.

All the Deposit Money Banks, it stated, also met the minimum liquidity threshold of 30 per cent with their asset quality significantly improving during the year as the ratio of non-performing loans to total loans decreased from 4.95 per cent in 2011 to 3.51 per cent in 2012.

The report attributed the improvement in the banking industry’s asset quality to the purchase of the non-performing loans of the DMBs by the Assets Management Company of Nigeria and the enhanced credit risk management by the banks.

“The overall effect was an improvement in the industry’s profit before tax, which increased from a loss of N6.7bn in 2011 to a profit of N525.34bn in 2012,” it added.

In terms of the level of soundness, 10 banks were rated sound; nine, satisfactory; and only one was rated marginal.

Thus, the industry could be considered to be relatively stable in 2012 as there was no unsound bank in the banking sector as of December 31, 2012, the NDIC report stated.

For the microfinance sector, the report noted that 310 out of the 323 MFBs that rendered returns had met the minimum paid-up capital of N20m.

It stated that a total of 302 MFBs had capital adequacy ratio of more than 10 per cent.

“The remaining 555 did not render returns and that situation continued to be a source of concern to the NDIC as it was impossible to assess their financial condition and performance on a continuous basis during the year under review,” it added.

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