Lagos - A global markets watcher has projected
Nigeria to remain in a recession for longer than anticipated if the banking
sector fails to adapt to prevailing market conditions.
The projection by Rand Merchant Bank (RMB) comes in the wake
of the Central Bank of Nigeria’s (CBN’s) most recent financial stability report
recounts the dismal performance of the economy in the first half of the current
RMB pointed out the report by the apex bank highlighted a
stark deterioration in the quality of banking sector assets, particularly oil
and gas loans, on account of inefficiencies within the foreign exchange market.
Also read: Nigeria's economy is in bad shape - CBN
“The bank’s findings, which were presented by Governor
(Godwin) Emefiele, reinforce our view that the macroeconomic environment will
remain challenging over the next 12 to 18 months,” RMB stated.
RMB projected non-performing loans, which breached the 10
percent mark in the first half of 2016 after ending 2015 at less than 5,5
percent, would continue to rise due to exorbitant loan charges and the
inability of debtors' to service dollar borrowings.
This week, Emefiele noted that “the increasing quantum of
non-performing loans posed a major concern for regulators in the review
period”, but maintained that a banking crisis would be averted.
- CAJ News