Regulatory Alerts2025-12-09
NDIC Quarterly Vol 39 No 3&4 2024 – Financial Performance and Condition of Deposit Money Banks in the Third & Fourth Quarter of 2024
The Nigerian Deposit Money Banks (DMBs) experienced a slight overall improvement in the fourth quarter of 2024, with total assets growing by 1.81% to N160,596.96 billion and Profit Before Tax (PBT) surging by 42.20% to N1,534.48 billion, primarily due to increased operating income and a substantial rise in recoveries. The industry's capital position strengthened as the Capital Adequacy Ratio (CAR) improved by 124 basis points to 15.25%, and asset quality positively shifted with the Impaired Credit to Total Credit ratio declining to 4.50%, below the prudential limit. However, the Average Liquidity Ratio (ALR) decreased by 613 basis points to 49.96%, indicating reduced liquidity, even as the Capital Market sector saw a significant 61.38% increase in credit exposure.
NDIC QUARTERLY JOURNAL SEP/DEC 2024 VOLUME 39, NUMBER 3 & 4
Financial Condition and Performance of Deposit Money Banks in the Third and Fourth Quarter, 2024
3.0 Introduction
This section highlights the financial condition and performance of Deposit Money Banks (DMBs) in Nigeria. There were thirty-five (35) licensed DMBs in Nigeria as at the end of the fourth quarter of 2024, comprising twenty-five (25) Commercial Banks, six (6) Merchant Banks, four (4) Non-Interest Banks (NIBs) and one (1) Non-Interest Banking Windows (NIB Windows). The financial condition and performance of Deposit Money Banks in the fourth quarter of 2024 was compared with that of the third quarter ended September 30, 2024.
3.1 Structure of Assets and Liabilities
The DMBs Total Assets stood at N160,596.96 billion as at the end of the fourth quarter of 2024. This was a growth of 1.81 per cent from the N157,747.16 billion recorded as at the end of the third quarter of 2024. The marginal growth in total assets was driven by an increase in the Balances with Banks & Central Bank (7.07 per cent), Assets pledged as collateral (25.85 per cent) and Property, Plant and Equipment (14.32 per cent). In the same vein, Loans & Advances to Banks, Other Assets and Financial Assets held as Fair Value through Other Comprehensive Income (FVOCI) increased by 2.22, 6.44 and 6.60 per cent, respectively, as shown in Table 3.1.
On the liability side, deposit from customers, debt instruments and other liabilities grew by 3.53, 5.72 and 9.59 per cent to N99,193.62 billion, N6,971.46 billion and N23,241.30 billion, respectively, as at the end of the fourth quarter 2024. The Shareholders' funds, which represent 7.41 per cent of total liabilities as at end of fourth quarter 2024 rose by 14.66 per cent to N11,895.36 billion, accounting for the highest percentage growth among the liabilities category.
Table 3.1: Structure of DMBs' Assets and Liabilities for the Third and Fourth Quarter, 2024
| PARAMETER | As At December 31, 2024 N Billion | As At December 31, 2024 % of Total Assets | As At September 30, 2024 N Billion | As At September 30, 2024 % of Total Assets | % Change Between December 2024 and September 2024 |
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash Balances | 1,073.85 | 0.67 | 1,172.55 | 0.74 | -8.42 |
| Balances with Banks & Central Bank | 54,507.97 | 33.94 | 50,910.32 | 32.27 | 7.07 |
| Loans & Advances to Banks | 3,246.93 | 2.02 | 3,560.37 | 2.26 | -8.80 |
| Loans & Advances to Customers | 50,631.28 | 31.53 | 49,529.63 | 31.40 | 2.22 |
| Financial Assets Held for Trading | 7,487.29 | 4.66 | 9,808.14 | 6.22 | -23.66 |
| Financial Assets held as Fair Value through Other Comprehensive Income (FVOCI) | 13,086.30 | 8.15 | 12,276.20 | 7.78 | 6.60 |
| Financial Assets held as Amortised Cost | 13,393.48 | 8.34 | 15,237.92 | 9.66 | -12.10 |
| Assets Pledged as Collateral | 5,772.24 | 3.59 | 4,586.67 | 2.91 | 25.85 |
| Investment in Subsidiaries & Associates | 1,122.55 | 0.70 | 1,132.33 | 0.72 | -0.86 |
| Property Plant and Equipment | 2,186.29 | 1.36 | 1,912.48 | 1.21 | 14.32 |
| Other Assets | 7,991.00 | 4.98 | 7,507.51 | 4.76 | 6.44 |
| Asset Classified as Held for Sale & Discontinued Operations | 97.79 | 0.06 | 113.05 | 0.07 | -13.50 |
| TOTAL ASSETS | 160,596.96 | 100.00 | 157,747.16 | 100.00 | 1.81 |
| LIABILITIES | |||||
| Deposit from Banks | 9,617.30 | 5.99 | 11,264.59 | 7.14 | -14.62 |
| Deposit from Customers | 99,193.62 | 61.77 | 95,811.61 | 60.74 | 3.53 |
| Financial Liabilities Held for Trading | 217.22 | 0.14 | 412.66 | 0.26 | -47.36 |
| Borrowings | 9,460.71 | 5.89 | 12,082.46 | 7.66 | -21.70 |
| Debt Instruments | 6,971.46 | 4.34 | 6,594.28 | 4.18 | 5.72 |
| Other Liabilities | 23,241.30 | 14.47 | 21,206.95 | 13.44 | 9.59 |
| TOTAL LIABILITIES | 148,701.60 | 92.59 | 147,372.55 | 93.42 | 0.90 |
| Shareholders' Fund | 11,895.36 | 7.41 | 10,374.61 | 6.58 | 14.66 |
| TOTAL LIABILITIES & SHF | 160,596.96 | 100.00 | 157,747.16 | 100.00 | 1.81 |
| CONTINGENT LIABILITIES | 30,490.53 | 18.99 | 29,692.85 | 18.82 | 2.69 |
Page 34 of 79 Page 35 of 79
Table: Number of Banks and Shareholders' Fund to Total Liabilities
| PARAMETER | As At December 31, 2024 N Billion | As At December 31, 2024 % of Total Assets | As At September 30, 2024 N Billion | As At September 30, 2024 % of Total Assets | % Change Between December 2024 and September 2024 |
|---|---|---|---|---|---|
| NUMBER OF BANKS | 35 & 1 Window | 35 & 1 Window | |||
| Shareholders' Fund to Total Liabilities | 7.41 | 6.58 |
Source: NDIC
3.2.0 Financial Condition of DMBS
3.2.1 Capital Adequacy
As shown in Table 3.2, the Average Capital Adequacy Ratio (CAR) of DMBs increased by 124 basis points to 15.25 per cent as at December 31, 2024, from 14.01 per cent as at September 30, 2024. The improvement derived from the increase in Total Qualifying Capital (TQC) by 15.71 per cent to N10,037.02 billion as at December 31, 2024 from N8,674.28 billion as at September 30, 2024, compared with 6.26 per cent growth in risk-weighted assets over the period.
Table 3.2: DMBs' Capital Adequacy Position
| PARAMETERS | As at December 31, 2024 N Billion | As at September 30, 2024 N Billion | % CHANGE BTW DEC 2024 & SEP 2024 |
|---|---|---|---|
| Primary Capital (Tier 1 Capital) | 8,497.37 | 7,393.25 | 14.93 |
| Qualifying Secondary Capital (Tier II Capital) | 1,539.65 | 1,281.04 | 20.19 |
| Total Qualifying Capital | 10,037.02 | 8,674.28 | 15.71 |
| Total Risk Weighted Assets | 65,800.58 | 61,922.62 | 6.26 |
| Capital to Risk Weighted Assets (%) | 15.25 | 14.01 | 1.24 |
| Capital to Total Assets Ratio (%) | 6.25 | 5.50 | 0.75 |
| Adjusted Capital Ratio (%) | 14.93 | 13.23 | 1.70 |
Source: NDIC Page 36 of 79
3.2.2 Asset Quality
The ratio of Impaired Credit to Total Credit declined from 4.58 per cent as at end September, 2024 to 4.50 per cent as at end December, 2024, below the prudential limit of 5.0 per cent. The decline in this ratio signaled significant improvement in the asset quality. While Total Credit increased slightly by N764.47 billion or 1.29 per cent to N59,829.73 billion as at end of fourth quarter, 2024 from N59,065.26 billion as at end of third quarter, 2024, impaired credits fell marginally by N13.71 billion (0.51 per cent) to N2,693.34 billion from N2,707.05 billion. Furthermore, the share of Total Earning Assets to Total Assets slightly increased by 78 basis points to 54.11 per cent as at end December, 2024 from 54.11 per cent as at end September, 2024, as shown in Table 3.3.
Table 3.3: Asset Quality
| Parameters | As at December 31, 2024 (N Billion) | As at September 30, 2024 (N Billion) |
|---|---|---|
| Total Assets | 160,596.96 | 157,747.16 |
| Total Earning Assets | 86,892.19 | 86,593.66 |
| Total Credit | 59,829.73 | 59,065.26 |
| Impaired Credit | 2,693.34 | 2,707.05 |
| Impaired Credit to Total Credit (%) | 4.50 | 4.58 |
| Total Earning Assets to Total Assets (%) | 54.11 | 54.89 |
| Total Impairment to Impaired Credit (%) | 82.23 | 80.42 |
| Impaired Credit to Shareholders' Fund (Adjusted) | 29.17 | 34.73 |
Source: NDIC Page 37 of 79
3.3 Sectoral Allocation of Credits
The Oil and Gas sector remained the largest recipient of credit allocation, accounting for 30.93 per cent and 28.77 per cent of total credit at end-September 2024 and end-December, respectively. Similarly, the Activities of Extraterritorial Organizations and Bodies sector maintained its position as the least recipient of credit allocation with 0.00 per cent across both quarters. Meanwhile, the Capital Market sector experienced the highest rise in credit uptake, with a 61.38 per cent increase in exposure across the two quarters.
Although the Water Supply Sewerage, Waste Management and Remediation Activities reported high levels of impaired assets across the two quarters (88.99 per cent and 88.17 per cent at end-September and end-December 2024, respectively), this sector represents a very small portion of the overall credit portfolio and is not indicative of broader systemic issues.
Improvements in asset quality were recorded across several key economic sectors during the period under review. Overall, the proportion of total impaired credits declined marginally to 4.58 per cent at end-December 2024 to 4.50 per cent at end-September 2024.
Table 3.4: Structure of Credit Allocation among Sectors (in %)
| S/N | Sectors | As at December 31, 2024 % of Total Credit | As at December 31, 2024 % of Impaired Credits | As at September 30, 2024 % of Total Credit | As at September 30, 2024 % of Impaired Credits | % Change Between Dec 2024 & Sep 2024 |
|---|---|---|---|---|---|---|
| 1 | OIL AND GAS | 28.77 | 3.81 | 30.54 | 4.16 | (5.79) |
| 2 | MANUFACTURING | 14.11 | 2.35 | 14.43 | 1.87 | (2.20) |
| 3 | GENERAL | 9.77 | 5.88 | 8.44 | 5.30 | 15.74 |
| 4 | FINANCE AND INSURANCE | 9.73 | 0.33 | 10.62 | 0.21 | (8.39) |
| 5 | GENERAL COMMERCE | 8.11 | 3.31 | 7.47 | 5.32 | 8.69 |
| 6 | AGRICULTURE | 4.94 | 10.68 | 3.98 | 12.94 | 24.18 |
| 7 | GOVERNMENT | 4.82 | 0.50 | 4.82 | 0.53 | 0.04 |
| 8 | CONSTRUCTION | 4.02 | 9.77 | 3.95 | 9.96 | 1.57 |
| 9 | INFORMATION AND COMMUNICATION | 3.20 | 10.16 | 2.84 | 10.64 | 12.88 |
| 10 | CAPITAL MARKET | 3.16 | 0.02 | 1.96 | 0.04 | 61.38 |
| 11 | POWER AND ENERGY | 2.97 | 12.92 | 3.03 | 9.80 | (2.01) |
| 12 | TRANSPORTATION AND STORAGE | 2.57 | 0.69 | 2.31 | 0.88 | 11.22 |
| 13 | REAL ESTATE | 1.72 | 10.99 | 1.78 | 11.74 | (3.25) |
| 14 | PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES | 0.62 | 2.90 | 0.71 | 2.88 | (13.08) |
| 15 | PUBLIC UTILITIES | 0.58 | 0.01 | 0.56 | 0.04 | 2.72 |
| 16 | WATER SUPPLY; SEWERAGE, WASTE MANAGEMENT AND REMEDIATION ACTIVITIES | 0.26 | 88.17 | 0.28 | 88.99 | (5.91) |
| 17 | HUMAN HEALTH AND SOCIAL WORK ACTIVITIES | 0.26 | 18.70 | 0.26 | 18.32 | (1.50) |
| 18 | EDUCATION | 0.16 | 8.00 | 0.16 | 12.31 | (2.84) |
| 19 | ADMINISTRATIVE AND SUPPORT SERVICE ACTIVITIES | 0.13 | 15.05 | 0.48 | 3.41 | (72.46) |
| 20 | MINING AND QUARRYING | 0.08 | 2.33 | 0.09 | 2.04 | (9.05) |
| 21 | ARTS, ENTERTAINMENT AND RECREATION | 0.07 | 27.81 | 0.07 | 15.36 | (0.33) |
| 22 | ACTIVITIES OF EXTRATERITORIAL ORGANIZATIONS AND BODIES | 0.000 | 9.63 | 0.00 | 2.20 | (74.75) |
| Grand Total | 100.00 | 4.50 | 100.00 | 4.58 | 1.29 |
Source: NDIC Page 37 of 79 Page 38 of 79
3.4 Earnings and Profitability
As shown in Table 3.5, the Operating Income of the DMBs increased by 16.83 per cent, reaching N2,837.24 billion in December 2024 from N2,428.43 billion recorded in September 2024, reflecting overall revenue growth driven by increased interest income. Profit Before Tax (PBT) of the DMBs during the period recorded an increase of 42.20 per cent, rising to N1,534.48 billion in December 2024 from N1,079.10 billion in September 2024. Return on Assets (ROA) grew slightly by 0.13 percentage points, to 3.44 per cent in December 2024 from 3.36 per cent in September 2024. However, Return on Equity (ROE) declined marginally by 0.03 percentage points, to 55.56 per cent in December 2024 from 55.59 per cent in September 2024. Recoveries experienced a remarkable increase of 834.39 per cent, to N111.75 billion in December 2024 from N11.96 billion in September 2024.
Table 3.5: Earning and Profitability Performance of the Banking Industry
| Parameter | At the end of December, 2024 (N Billion) | At the end of September, 2024 (N Billion) | % Change |
|---|---|---|---|
| Interest Income | 3,787.69 | 3,639.23 | 4.08 |
| Interest Expense | 1,895.72 | 1,758.13 | 7.83 |
| Net Interest Income | 1,891.97 | 1,881.10 | 0.58 |
| Trading Income | 1,089.33 | 357.04 | 205.10 |
| Recoveries | 111.75 | 11.96 | 834.39 |
| Operating Income | 2,837.24 | 2,428.43 | 16.83 |
| Total Operating Expenses | 1,419.00 | 1,368.24 | 3.71 |
| Profit Before Tax | 1,534.48 | 1,079.10 | 42.20 |
| Return On Assets (%) | 3.44 | 3.36 | 0.13 |
| Return On Equity (%) | 55.56 | 55.59 | (0.03) |
Source: NDIC Page 39 of 79
3.5 Liquidity Profile
The DMBs Total Deposit Liabilities grew by 3.53 per cent to N99,193.62 billion at end-December 2024 from N95,811.61 at end-September 2024. The Average Liquidity Ratio (ALR) of the DMBs decreased by 613 basis point to 49.96 per cent at end-December 2024 from 56.09 per cent recorded at end-September 30, 2023. The Loan to Deposit Ratio which measures banks' lending activities at end-December 2024 also decreased by 133 basis points to 60.32 per cent from 61.65 per cent at end-September 2024 as shown in Table 3.6.
Table 3.6: DMBs Liquidity Profile
| Parameters | As at December 31, 2024 (N Billion) | As at September 30, 2024 (N Billion) | % Change Between Dec 2024 & Sep 2024 |
|---|---|---|---|
| Total Credit | 59,829.73 | 59,065.26 | 1.29 |
| Total Deposits | 99,193.62 | 95,811.61 | 3.53 |
| Net Interbank takings | - | - | * |
| Liquidity Ratio (%) | 49.96 | 56.09 | -6.13 |
| Loan (TC) to Deposit Ratio (%) | 60.32 | 61.65 | -1.33 |
| Net Interbank Takings to Deposits (%) | 0.1500 | 0.0000 | 0.15 |
Source: NDIC Page 40 of 79
3.6 Conclusion
The performance of the banking industry improved slightly in the fourth quarter of the year when compared with the third quarter. During the period under review, the Total Assets of the industry increased by N2,849.8 billion (1.81%) to N160,596.96 billion as at December 31, 2024. The Capital Adequacy Ratio (CAR) of DMBs increased by 124 basis points to 15.25 per cent as at December 31, 2024 from 14.01 per cent as at September 30, 2024. Similarly, Return on Assets (ROA) grew slightly by 0.13 percentage points, to 3.44 per cent in December 2024 from 3.36 per cent in September 2024. However, Return on Equity (ROE) declined marginally by 0.03 percentage points, to 55.56 per cent in December 2024 from 55.59 per cent in September 2024.