IFRS 9 No Threat to Nigeria Banks'' Regulatory Capital – Fitch

Proshare

Thursday, August 09,  2018 11:48 AM / Fitch Ratings

Fitch Ratings says in a new report that regulatory capital ratios for rated Nigerian banks are not under threat following the first-time application of IFRS 9 accounting standard.

Nigerian banks have to reflect the full impact of additional expected loss reserves due under IFRS 9 in regulatory capital from 1 January 2018, the date on which the new accounting standard was introduced into the country. Some other regulators have allowed banks to stagger the impact on regulatory capital over a period of years, allowing them more time to make good any shortfalls, often over a five-year period.

Nigerian banks' end-March 2018 financial statements restate equity at 1 January 2018 to reflect the impact of additional IFRS 9 expected loss reserves required in line internal model calculations. The impact varies considerably across banks but no breaches of regulatory capital ratios materialised.

Despite the limited initial impact of IFRS 9, we continue to signal capital weakness in the sector, arising largely from the low coverage of impaired loans and sizeable credit concentrations that expose banks to potentially large losses.

While no material weakness in regulatory capital ratios emerged as a result of IFRS 9, we maintain that capitalisation remains at risk from weak asset quality and operating environment risks.

 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


Related News

1.       Asset Quality Replacing Foreign Currency Liquidity as Main Risk for Nigerian Banks - Fitch

2.      Moody's: Outlook Stable for Nigerian Banks as Higher Oil Prices Moderate Foreign Currency Risks

3.      ETI 2017 Results In Light Of Guidance From Fitch And PWC On Exchange Rates Per IFRS

4.      Investment Manager Views Show Strong Consensus as Credit Cycle Ages

5.      Nigerian Banks Plan Market-Based Reporting of FC Exposure

6.      Ecobank Nigeria Ltd Outlook Revised To Stable On Group Support; 'B-B' Ratings Affirmed

7.      Nigeria-Based Zenith Bank 'B-B' And 'ngBBB-ngA-2' Ratings Affirmed; Outlook Stable

8.     Nigeria-Based Guaranty Trust Bank 'B-B' And 'ngBBB-ngA-2' Ratings Affirmed; Outlook Stable

9.      Global Credit Growth to Stabilise in 2017; Low Macro-Prudential Risk in Most Markets

 

 

READ MORE:
Related News
SCROLL TO TOP