Fraud costs banks N6.19bn in one year


banking-hallDeposit Money Banks (DMBs) in Nigeria reported 10,612 fraud cases in 2014, compared with 3,786 cases reported in 2013, representing an increase of 182.77 percent, the Nigeria Deposit Insurance Corporation (NDIC) said, Tuesday.

In the same vein, the amount involved increased by 3.81 billion or 17.5 percent, from 21.80 billion in 2013 to 25.61 billion in 2014.

The NDIC’s annual 2014 report released on Tuesday revealed that expected/actual loss rose from 5.76 billion in 2013 to 6.19 billion in 2014. The increase of 7.57 percent in expected/actual loss in fraud and forgeries was mainly due to the astronomical increase in the incidence of web-based (online banking)/ATM and fraudulent transfer/withdrawal of deposits.

Analysts Tuesday questioned the regulators’ (CBN and NDIC) monitoring and supervisory role in spite of various policies and measures put in place for fraud reduction.

However, the banking industry performance and level of soundness in 2014 indicated that 23 DMBs were rated sound and satisfactory during the period under review.

The asset quality of the banking industry significantly improved during the period under review. The observed improved asset quality could be explained by the improved process of loan underwriting as well as the continued purchase of non-performing loans (NPLs) by Asset Management Corporation of Nigeria (AMCON).

The Capital Adequacy Ratio (CAR) of the DMBs declined by 1.26 percentage points from 17.18 percent in 2013 to 15.92 percent in 2014, but exceeded the minimum capital adequacy threshold of 10 percent.

The banking industry total loans and advances stood at 12.63 trillion in 2014, showing an increase of 25.73 percent over 10.04 trillion granted in 2013.
The report indicated that the industry’s volume of non-performing loans increased by 10.26 percent from 321.66 billion in 2013 to 354.84 billion in 2014, while non-performing loans to total loans ratio improved from 3.20 percent in 2013 to 2.81 percent in 2014, and was within the regulatory threshold of 5 percent.

The unaudited profit-before-tax (PBT) of the banking industry stood at 601.02 billion, representing an increase of 11.31 percent over 539.97 billion reported in 2013. Return on Assets (ROA) and Return on Equity (ROE) declined marginally by 1.70 percent and 1.76 percent from 2.33 percent and 20.71 percent to 2.29 percent and 20.34 percent in 2013 and 2014, respectively. Yield on earning assets also declined to 11.71 percent in 2014, from 13.10 percent in 2013.

The banking industry liquidity risk was moderate during the period under review. The industry average liquidity ratio rose from 50.63 percent in 2013 to 53.65 percent in 2014, showing an increase of 3.02 percent over the 50.63 percent in 2013.