‘Regulatory direction’ Stanbic IBTC showcases compliance with CBN’s LDR policy

Stanbic IBTC Bank has stated that it is fully complying with the Central Bank of Nigeria’s (CBN) directive that lenders maintain a minimum Loan to Deposit Ratio (LDR) of 65 percent, as well as an average daily LDR compliance of 65 percent, claiming that this has resulted in a significant increase in lending to the real sector.

The lender stated in a press statement that since the CBN issued the regulatory direction, it has increased its focus on the growth of its credit exposures to the real sector of the economy, which has resulted in a two-year increase in its risk asset portfolio.

According to the statement, “the loan book increased by 18 pet cent from FY 2019 position of N556.4 billion to N655.3 billion as at December 31, 2020.

The bank also saw a 30 percent increase in loan growth from December 31, 2020 to September 30, 2021, resulting in a gross risk asset position of N854.9 billion.

It’s worth noting that the bank’s risk asset growth of 18 percent and 30 percent in FY 2020 and Q3:2021, respectively, is much greater than the industry average growth of 18 percent and 8% in FY 2020 and Q3:2021, respectively.

“Consequent upon the significant growth recorded in the bank’s risk asset growth in 2020 and YTD 2021, the Bank has remained compliant with the CBN’s daily minimum LDR requirement of 65 per cent with a FY 2020 daily LDR average of 65.84 pet cent and 2021 YTD daily average of 69.86 pet cent.

It is important to note that the Bank suffered no Cash Reserve Requirement (CRR) debits by the CBN for non-compliance with the regulatory LDR directive over the period.”

Further, the lender noted that the growth in its CRR position from N369.0 billion as at December 31, 2020 to N462.6 billion as at September 30, 2021 has been largely on account of the monetary policy actions introduced by the CBN to curb inflationary and exchange rate pressures in the economy.

However, it pointed out that special CRR debits, which are over and above the minimum regulatory cash reserving requirement of 27.5 per cent of customer deposit growth, were introduced by the CBN to sterilise surplus market liquidity.

“These special CRR debits which are over and above the minimum regulatory cash reserving requirement of 27.5 per cent of customer deposit growth have indeed been responsible for the growth in Stanbic IBTC Bank’s total and effective CRR positions which stood at N462.6 billion and 60.09 per cent respectively as at 30 September 2021,” the statement said.

It said: “Notwithstanding the financial constraints arising from the sterilized liquidity from the CBN, Stanbic IBTC Bank remains very liquid and adequately capitalised with liquidity ratio and capital adequacy ratio standing at 96.2 per cent and 15.7 per cent respectively as at 30 September 2021 and above the regulatory minimum of 30 per cent for liquidity ratio and eight per cent for capital adequacy ratio.”

Rtn. Victor Ojelabi

Ojelabi, the publisher of Freelanews, is an award winning and professionally trained mass communicator, who writes ruthlessly about pop culture, religion, politics and entertainment.