Nigeria’s banks have endured a challenging year. Recent regulatory changes, imposed by the Central Bank of Nigeria, have weighed heavily on the sector’s profitability. These measures, including increases to the banks’ cash reserve ratio and a cut in the commission on turnover, were intended to diversify the income streams of the country’s lenders while reducing their risk profiles. Yet, they have also dampened the banks’ short-term outlook.
“The next 12 months will be challenging for Nigeria’s banking sector,” says Herbert Wigwe, group managing director and chief executive of Access Bank, Nigeria’s fifth-largest lender by total assets, according to The Banker Database. “Regulatory headwinds have forced the country’s lenders to realign their balance sheets to meet stricter operating and reserve requirements, which have hit the profitability of the sector. Nearly N130bn has been taken out of the profits of the entire industry through these changes.”
