Quick Look At Fitch's Diagnosis Of Nigerian Banks

Fitch Ratings issued its latest comments on the Nigerian Banking sector on Wednesday spooking investors about the relative health of Nigerian Banks. The comments made reference to some potential headings that might be faced by Nigerian banks in the coming months.

Here is a summary of the key issues

• Fitch is worried that Nigerian banks may not be able to refinance their Eurobond obligations. A cross section of Nigerian banks issued Eurobonds about two years ago in a bid to shore up their asset base.
• Fitch Believes most Nigerian banks have high non-performing loans (NPL), particularly from the oil sector. They believe NPL’s could rise to as high as 12% by the time they release their half year results.
• Though banks made higher profits in 2016 compared to 2015, these were mostly because of gains on forex revaluation. These are thus one time events and may not reoccur.
• They even predict most banks could fall below the CBN’s capital adequacy ratio, paving the way for future capital raise.
• They believe that only the largest Nigerian banks appear to be coping better compared to smaller banks.