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Nigeria Commercial Banking Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2007 Product Code: R302-2452 Description Key IssuesThis quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran. All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local-currency growth in total assets was 17.2% (in Croatia). The median local-currency growth in total loans was 18.2% (in Bangladesh). The median localcurrency growth in total deposits was 16.9% (in Algeria). In almost all countries, local currencies were stable or rising, relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation. Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data. The single most important issue in Nigeria is that the banking sector remains underdeveloped. On the basis of total per-capita deposits, Nigeria now ranks the lowest of the 59 countries we surveyed, with per-capita deposits having dropped to US$140. While growth rates of loans and total assets continued to be strong, the growth rate of deposits has gone form an upward trajectory to a drop of 6.1% Political instability continues to affect the country’s economic and social prosperity. The new government of President Umaru Yar'Adua has brought some relief to the violence in the Niger Delta oil fields; however, it is too early to tell how successful the government will be in instigating its overall economic reforms and getting maximum oil production back on track. The new government appears to have genuine plans to implement necessary economic reforms, macroeconomic stability and greater stimulus of the private sector. Yar'Adua's has pledged to subject the state-run Nigerian National Petroleum Corporation (NNPC) to more intense public scrutiny. A positive point is that the Nigerian Debt Management Office says that the nation's external debt is now a mere US$2.6bn, with domestic debt at US$14.62bn. The new President has restated the need for continued discipline, despite the current mild burden of liabilities. Consolidation and merger activity continues in the sector, with the number of banks operating in Nigeria having dropped from 89 in 2004 to 25 currently. A combined spreadsheet of banks shows that their deposits have fallen to less than half of total assets. This indicates that a lowering of the portion of the money being deposited in banks is being recycled as loans to non-bank customers than previously. Table of Contents
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