E-Financial
Agusto & Co: Elevated CRR Level Moderated Banking Industry’s Performance in FY 2020
The Nigerian banking industry would have recorded a return on average equity (ROE) of 31.6 per cent if not for the aggressive implementation of the cash reserve requirement (CRR) policy in 2020, Agusto & Co. Limited has said.
In its flagship 2021 Banking Industry Report, the rating agency said the elevated CRR level moderated the banking industry’s performance and liquidity position during the year under review.
The report reviewed the banking industry structure, financial condition, the regulatory environment in addition to the macroeconomic environment and its impact on the Nigerian banking industry.
Specifically, Agusto & Co in the report stated that assuming the sterile CRR were invested in treasury securities at 5 per cent, N482 billion would have been added to the Industry’s profit before taxation.
This, they argued, would have increased the Industry’s return on average equity by 11 per cent to 31.6 per cent in the financial year ended 31 December 2020.
According to Agusto & Co, “The CBN’s policies targeted at lowering interest rates have persisted especially given the dire need to stimulate the economy following adversities created by the pandemic.
However, given the need to moderate inflation amidst efforts to maintain a stable exchange rate, the cash reserve requirement was increased and standardised to 27.5 per cent for both merchant and commercial banks.
The standardised CRR was implemented alongside discretionary deductions. As at FYE 2020, the Industry’s restricted cash reserves exceeded N9.5 trillion and translated to an effective CRR of 37 per cent.
“It is noteworthy that Nigeria has the highest reserve requirement in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRR’s of below 10 per cent. We believe the elevated CRR level moderated the Industry’s performance and liquidity position during the year under review.
Assuming the sterile CRR were invested in treasury securities at 5%, N482 billion would have been added to the Industry’s profit before taxation. This would have increased the Industry’s return on average equity (ROE) by 1110 per cent to 31.610 per cent in the financial year ended 31 December 2020.”
Agusto & Co. added that the reliability of business continuity measures was tested in 2020, considering the movement restrictions that lasted for months.
Most banks, Agusto & Co. stated, showed resilience through innovative measures including remote work arrangements and upgrade of network infrastructure to accommodate higher traffic on digital channels.
“These arrangements also provided support during the mandatory curfew elicited by the civic unrest that followed the #EndSARS protests in October 2020.
“Indeed, the pandemic brought to the fore, technology’s crucial role in deepening financial services as some banks recorded as much as a 50 per cent increase in digital banking transaction volumes.
However, these gains were limited by the CBN-induced reduction in bank charges, which took effect in January 2020. As a result, electronic banking income declined by 27.3 per cent, accounting for a lower 13.2 per cent (FY 2019: 21.1%) of non-interest income, “the report stated.
According to the report, the COVID-19 pandemic brought about an extraordinary test for the global community.
It added, “Although the global COVID mortality rate stands low at about 2.2 per cent, casualties increased from less than 3,000 in December 2019 to about 3.9 million as at 30 June 2021. Nigeria’s mortality rate stood comparably lower at about 1 per cent as at the same date.
However, the local economy had its fair share of pandemic-related adversities. However, leveraging lessons from the 2016/2017 economic recessions, the Nigerian banking industry was better prepared in 2020.
“Proactive measures in the form of forbearance granted by the Central Bank of Nigeria CBN, enabled banks to provide temporary and time-limited restructuring of facilities granted to households and businesses severely affected by COVID-19.
There was generally a cautious approach to lending in the Industry, given difficulties in the operating environment.
Although gross loans and advances grew by 12 per cent, loan growth was negative when the 19.3% naira devaluation is considered. Underpinned by the forbearance and proactive measures adopted by banks, the NPL ratio improved to 6.6 per cent (FYE 2019: 7.6%).”
Sterling Bank has launched a ₦2 billion scholarship initiative to support Nigerian students in private universities. The program, Beyond Education, was unveiled on Democracy Day and aims to remove financial barriers to higher learning.
The bank will fully sponsor 600 students from across Nigeria’s 36 states and the FCT to study Technology, Finance, Sales, and Public Health at Miva University, founded by Sim Shagaya. The selection process is merit-based, with candidates nominated by themselves or others, and final selection determined through public voting open to Sterling account holders.
Sterling Bank’s CEO, Abubakar Suleiman, described the initiative as an investment in Nigeria’s future, aligning with the bank’s commitment to Health, Education, Agriculture, Renewable Energy, and Transportation. The bank has already deployed over half a trillion naira in financing across these sectors.
According to Obinna Ukachukwu, Growth Executive at Sterling Bank, the program is about creating opportunities beyond education. The bank is shifting from short-term philanthropy to long-term ecosystem development, with investments in digitized healthcare, school financing, agricultural cooperatives, solar energy, and transport systems.
“Nigeria’s progress requires action,” Suleiman said. “We are funding the future architects of the country—those who will build the businesses, institutions, and innovations needed for national prosperity.”
Nominations for the Beyond Education scholarships are now open at www.sterling.ng/FUTURE. The initiative sets a precedent for private-sector-driven education investment, where success is measured not just in profit, but in people empowered.
Federal Government of Nigeria has signed a Memorandum of Understanding (MoU) with Investonaire Academy to train 100,000 young Nigerians annually in forex trading, financial planning, and risk management.
The agreement, signed in Abuja, was announced by Omolara Esan, Director of Information and Public Relations at the Federal Ministry of Youth Development. According to her, the initiative is part of the government’s broader strategy to reduce youth unemployment and enhance financial inclusion.
At the signing ceremony, Minister of Youth Development, Comrade Ayodele Olawande, described the partnership as a milestone in the ministry’s efforts to equip young Nigerians with practical financial skills. He emphasized that the programme would foster critical thinking, improve digital literacy, and expand access to global economic opportunities.
Speaking on the collaboration, Dr. Enefola Odiba, International Programme Director at Investonaire Academy, highlighted the importance of empowering youth with relevant financial and digital skills. He described young people as essential drivers of innovation and national development.
The ministry assured that the programme would be implemented with transparency and measurable outcomes, ensuring that participants gain practical expertise in forex trading and financial planning.
The Federal Government has recently intensified efforts to boost skill development across various sectors. A separate plan aims to train 100,000 artisans nationwide, following the successful upskilling of 29,000 individuals in previous phases. This initiative seeks to professionalize vocational trades, eliminate quackery, and introduce licensing systems.
Additionally, technicians from specialized institutions will receive industry-standard training to strengthen Nigeria’s labor force and increase self-reliance in skilled professions.
Through these efforts, the government hopes to position Nigerian youth for economic success both locally and globally.
Nigeria Deposit Insurance Corporation (NDIC) has begun the final phase of liquidation for the defunct Premier Commercial Bank, initiating the payment of liquidation dividends to verified creditors, nearly 25 years after the bank’s closure.
Premier Commercial Bank had its operating license revoked by the Central Bank of Nigeria (CBN) on December 20, 2000, following findings of financial instability and regulatory non-compliance.
Since then, the NDIC has overseen the bank’s liquidation process under a winding-up order from the Federal High Court, which designated the corporation as the official liquidator.
In a public announcement, the NDIC invited all eligible creditors to visit any of its zonal offices between June 2 and June 27, 2025, to verify and claim their entitlements.
This move marks a critical milestone in the final settlement of claims related to the bank’s collapse.
To facilitate the verification process, creditors are required to present proof of deposit or shareholding, such as a passbook, chequebook, term deposit certificate, or bank statement.
Additionally, valid identification documents must be submitted, including a driver’s license, international passport, national identity card, NIN slip/card, voter’s card, or a formal identification letter from a traditional ruler or local government chairman.
The NDIC assured the public that the ongoing settlement is part of a broader effort to bring closure to longstanding claims resulting from Premier Commercial Bank’s liquidation. The process, according to the corporation, has been designed to ensure efficient disbursement to all verified stakeholders.
Premier Commercial Bank is one of 53 deposit money banks whose licenses were revoked by the CBN between 1994 and 2018 due to various violations and signs of financial distress.
These closures were followed by legal procedures appointing the NDIC to manage asset recoveries and creditor settlements.
By initiating this final phase of payment, the NDIC is reaffirming its commitment to financial system stability and depositor protection while calling on all affected individuals and institutions to complete verification processes promptly to receive their due compensation.
China Expands Zero-Tariff Trade for Nigeria, 52 Other African Nations
Sterling Bank Pledges ₦2bn to Fully Fund University Scholarships
MTN Nigeria Unveils CPaaS Platform to Transform Business Communication
Aliko Dangote Signs out @ Dangote Sugar Refinery as Chairman
Court Declines Access Bank’s Request to Freeze MTNN Account over N180Bn Claims
General News2 days agoAfDB to Provide $184.1mfor Africa’s Largest Solar Energy, Battery Storage Project
News2 days agoReport Reveals New Malware Posing as an AI Assistant Steals User Data
Telecom3 days agongCERT Issues High Alert to Nigerians Using Android Phones
General News2 days agoCourt Declines Access Bank’s Request to Freeze MTNN Account over N180Bn Claims
Telecom3 days agoMTN and Ecobank Launch Chess Championship to Empower Nigeria’s Youth
Telecom2 days agoMTN Mulls Establishment of Fintech Firm in Nigeria, Others
General News3 days agoOSGOF, NASRDA Partner to Boost Geospatial Data, Others
E-Business2 days agoFG Mulls Fibre Optic Layout to Bridge Internet Gaps