Why Banks Recorded Profits Despite Covid-19 Crisis—CIBN

The Chartered Institute of Bankers of Nigeria has said that banks in Nigeria were able to moderate profits from their half year operation of 2020 due to prior efforts at digitization of their operations.

It said the recent partnership with the Central Bank of Nigeria in disbursing intervention funds as participating financial institutions, also contributed to the profit margins of banks.

The President, Chartered Institute of Bankers of Nigeria, Bayo Olugbemi, said these on Channels TV Business Morning programme monitored by THE WHISTLER.

Most Deposit Money Banks in Nigeria maintained their half year profits despite the Covid- 19 pandemic.

Analysts had predicted a huge fall in bank earnings following the plunge in global oil prices which lowered to $25 per barrel from $75 dollar.  

But with gradual resurgence in global economic activities and rise in crude oil prices, banks in Africa’s largest oil exporter were able to moderate their earnings.

In the first half of the year, about ten banks in Nigeria realized a total of N435.41bn, despite the impact of the pandemic on the sector.

The CIBN President said, “The fact that most of our banking institutions have always been on online banking services and digitisation has made it very easy for them to adjust.

“The fact that we have adjusted mechanisms and that we have gone digital over the years made it very easy for us to readjust to the realities of the covid- 19.”

The CIBN chief linked the performance to the palliatives and incentives given by the CBN to every sector through the banking industry.

This, according to him, had assisted the banking industry to stay afloat, while sustaining profitability.

Banks in Nigeria have seen greater part of the half year dominated by Cash Reserve Ratio debit by the apex bank apart from other statutory debits. 

But Olugbemi said the CBN is trying to stimulate the economy in a manner that would encourage banks to lend to the various sectors of the economy.

“If they are unable to reach the threshold, the apex bank has an obligation to debit them,” he added.

He said in the long run both the banks and other sectors of the economy will benefit from the impact of the apex bank’s policy.

While acknowledging that the CRR policy is currently tough on the banking sector, Olugbemi explained that banks will adjust to the reality and begin to lend.