Six Banks Maintain Market Dominance

The market share of the Nigerian banking industry remained largely dominated by six banks as at the end of June 2013, a report has revealed.
Although the Central Bank of Nigeria’s (CBN) “Financial Stability Report for June 2013,” that stated this did not disclose the identities of the six Deposit Money Banks (DMBs), they are expected to be among the eight banks that had been designated as Systemically Important Banks (SIBs).
The central bank had last year identified First Bank of Nigeria Limited, Guaranty Trust Bank Plc (GTBank), Zenith Bank Plc, United Bank for Africa Plc (UBA), Access Bank Plc, Skye Bank Plc, Ecobank Nigeria and Diamond Bank Plc as SIBs.
Continuing, the report posted on the central bank’s website at the weekend, showed that the average market share of assets and deposits of the six largest banks stood at 56.8 and 59.0 percent respectively.
In addition, it stated that the market share of the largest bank, with respect to assets and deposits, stood at 13.57 and 15.17 percent respectively, at the end of the review period, compared to the 14.99 and 13.47 percent respectively it was at the end of the preceding period of 2012. It however pointed out that the banking industry remained competitive in both deposits and assets as revealed by the respective Herfindahl-Hirschman Index (HHI) of 797.36 and 748.55 for total deposits and assets, compared to 790.66 and 741.43, respectively, in the preceding period.
“The Nigerian banking sector continued to record improvements in key performance indicators. For instance, capital adequacy and tier I capital to risk-weighted assets ratios increased to 19.2 and 17.2 per cent at end- June 2013, from 18.1 and 16.1 percent, respectively, at end-December 2012. “
The improvement in the ratios was due, mainly, to retained profits and the raising of additional tier II capital by some banks,” it added.

Furthermore, total loans increased to N8.814 trillion, from N8.150 trillion as at end- December 2012, reflecting an increase of N664 billion or 8.1 per cent at end-June 2013. Also, non-performing loans (NPLs) to total loans deteriorated to 3.7 per cent at end-June 2013, from 3.5 per cent at end- December 2012.
The NPL ratio, however, remained within the five per cent threshold as at the end of June 2013. The NPL coverage ratio improved to 71.2 per cent at the end of June 2013, from 68.7 percent as at the end of December 2012, indicating a reduction in the risk exposure of the sector. Also, total deposits increased to N15.157 trillion as at the review period, from N14.386 trillion as at the end of December 2012, reflecting an increase of N771 billion or 5.35 per cent.
The report also revealed that during the review period, the CBN executed an MoU with the Bank of Tanzania, and was in discussions with the central bank of Sudan and the Swiss Financial Market Authority with the aim of executing MoUs on supervision and information sharing.
Also, the CBN continued its collaboration with regulatory authorities in the sub-region towards the harmonisation of supervisory standards in West Africa.
“At end-June 2013, 10 banks had complied with the requirement for divestment from non-banking activities, in line with the Regulation on the Scope of Banking Activities and Ancillary Matters. Six of the compliant banks were issued with commercial banking licences, while four were being considered for the issuance of licences.
“Three other banks opted for a holding company structure and were granted approval to restructure their operations. At end-June 2013, two of the three banks had fully complied with the provisions of the regulation and were granted holding company licences as other financial institutions, while the third bank was granted an extension of the deadline for compliance. However, seven other banks were yet to fully comply,” it added.