Banks might reassess customer loans due to the decline in the value of the naira.

Date:

The recent easing of foreign exchange regulations is expected to have a moderate effect on banks’ Lending to Deposit Ratio, as per a report from Cordros Securities.

The report, titled ‘Impact of CBN’s Strategy to Reinforce LDR in Tier 1 Banks,’ suggests that banks might need to reassess their foreign currency loans and deposits due to the current sharp depreciation of FX.

 

Cordros highlights that the Central Bank of Nigeria conveyed its commitment to maintaining the minimum LDR at 65%, and plans to enforce this directive again from July 31, 2023.

Non-compliant Deposit Money Banks could face an additional Cash Reserve Requirement of around 50% on the lending shortfall based on the target LDR.

The circular also indicates that this policy aims to regulate excess liquidity in the financial system and support the real sector in Nigeria.

Cordros’ analysis shows that all the banks covered in their report have consistently fallen short of complying with the 65% minimum LDR directive, with tier 1 banks averaging a 50% LDR over the past three years, compared to the industry average of 65.9%. Preliminary figures for 2023 further underscore this trend.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Subscribe

spot_imgspot_img

Popular

More like this
Related

Equatorial Guinea restricts WhatsApp amid govt official’s sex scandal

The Government of Equatorial Guinea has restricted its citizens...

Nigerian Box office revenue to hit N50 billion in 4 years – CEAN President

Nigeria’s film industry, known as Nollywood, has emerged as...

Press Release: Sales Yakata 3.0 Brings Affordable Shopping to Lagos to Combat Rising Prices

In the face of rising costs, BrandTell Nigeria, a...

Equatorial Guinea’s financial crime boss Baltasar Ebang Engonga caught in s3x scandal

Equatorial Guinea’s financial crime boss Baltasar Ebang Engonga caught...