Wednesday , November 29 2023

CBN’s Credit Loss Expenses Rise by N377 Billion, Hit N875.2 Billion in One Year

In its newly released audited financial statements for 2016-2022, the Central Bank of Nigeria (CBN) has disclosed that credit loss expense for the banking regulator increased to N875.2bn in 2022 from N498.2bn in 2021.

The latest result, which was signed by the suspended governor of the bank, Godwin Emefiele, and audited by Ernst & Young and KPMG, was released and posted on its website amid an ongoing investigation of its operations.

The apex bank said the financial statements of the last seven years — posted on its website — had been approved by its board in accordance with the provisions of the CBN Act of 2007.

Recall in the last couple of years, Godwin Emefiele, the suspended CBN governor, had been severely criticised for not releasing the apex bank’s financial statements to the public.

Since 2005 when it started publishing details of its annual report on its website, CBN never failed to publish the report until 2016 when the regulator abruptly stopped the publication of the document — an act that contravenes the law regulating its operations.

According to the CBN Act 2007, the apex bank is expected to publish its report within two months after the end of each financial year.

It’s lending to the government constituted as much as 74 per cent of the loans and receivables that contributed N610 billion of both the total impairment loss and credit loss expenses for the year.

Ernst & Young and KPMG, the independent auditors, had in their report highlighted the bank’s impaired loans as the key audit matter of their scrutiny, saying “the impairment of loans and advances using the expected credit losses approach in line with the relevant accounting standards and the recommendations of the guideline as issued by the Financial Reporting Council of Nigeria is considered to be key audit matter due to the significance of the amount and the level of subjectivity, uncertainty and complexity involved in estimating the key assumptions that impact the recoverability of loans and advances.

Also Read: CBN Unveils Guidelines for Credit Guarantee Companies, Sets N10 Billion as Capital Base

“Loans and receivables of the CBN had soared from N8.01 trillion in 2016 to N31.46 trillion in 2022 with the financials showing that the apex bank earned a net interest income of N1.8 trillion compared to N1 trillion a year earlier representing an 80 per cent surge in net interest income.

“Net operating income was N1.2 trillion compared to N1.1 trillion in the same period in 2021. Total operating expenses also rose from N1.1 trillion in 2021 compared to N1.2 trillion in 2022.”

CBN recorded a profit of N65.63 billion in 2022 — more than double the figure it reported a year earlier (N31.04 billion).

In the period under review, CBN (the Group) recorded a profit of N103.85 billion. The Group refers to CBN and its subsidiaries including the Nigerian Security Printing & Minting Plc (MINT), Nigerian Electricity Supply Industry Stabilisation Strategy Limited (NESI SS Ltd), among others.

“The Group and bank’s profit for the year was N103,854 million and N65,626 million respectively (2021: N75,125 million and N31,044 million respectively). In line with the provision of the Fiscal Responsibility Act 2011, 20 per cent of the net income of the bank will be credited to retained earnings, while the balance will be paid to the federal government of Nigeria,” the report reads.

About Bukola Olanrewaju

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