Nigerian bank earnings to be crimped by segulation---- Fitch

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(Nigeria) Nigerian banks will see profitability decline because of tougher regulations and higher funding costs, said Fitch Ratings, reports Bloomberg.
“We expect new limits on bank charges imposed by the Central Bank of Nigeria, CBN, to dent what have been highly profitable fees and commissions, particularly for those with large retail franchises,” Fitch said in a statement today. “Monetary policy continues to be tight with the central bank last week raising the cash reserve requirement on public sector deposits.”
Nigeria’s central bank introduced a 50 percent cash reserve requirement on public sector funds on July 23 after warning of the risk of excess liquidity in the banking system. The regulation, which applies to about N1.3 trillion ($8.1 billion) of deposits, could result in N500 billion of liquidity being withdrawn, Fitch said.
Lower Treasury bill yields this year may weaken interest income, said Fitch. An increase in the annual levy paid by the country’s banks to fund the Asset Management Corp. of Nigeria, which the government set up in 2010 to buy lenders’ bad debts, may boots cost-to-income ratios, the ratings company said. The charge was raised to 0.5 percent of bank assets, from 0.3 percent.
The Nigerian Stock Exchange Banking 10 Index, which tracks the 10 largest lenders by market value, has advanced 19 percent this year, trailing the 35 percent increase of the Nigerian Stock Exchange All-Share Index.

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