The imperfect competition in the banking sector since the shake-up by the Central Bank of Nigeria in 2009 has continued as five out of the 20 banks in the country currently control 70 per cent of the market.

A report obtained from the Financial Derivative Company Limited on Friday listed the five banks as First Bank of Nigeria, Zenith Bank, Guaranty Trust Bank, United Bank for Africa and Access Bank.

The report presented by the Managing Director, FDC, Mr. Bismark Rewane, however, said that the competition was intensifying from tier two banks, saying. “The industry is consolidating at a faster pace with intensifying rivalry,” it added.

Also the report said, “The players are mainly indigenous banks. However, the bridge banks present opportunity for foreign banks to penetrate the market. Banking penetration remains low with total loans/Gross Domestic Product at about 40 per cent, significantly lower than 90 per cent for South Africa.”

It stated that the operating landscape was changing with increased competition and strict regulatory environment.

According to the report, average industry liquidity ratio has improved to 62.7 per cent, above the regulatory requirement of 30 per cent and 2011 level of 50.3 per cent.

It said, “Improved earnings, cumulative profit after tax of N362.2bn as at third quarter 2012, representing 88.2 per cent increase on the N192.4bn made in 2011.

“Projected profit before tax was N600bn for full year 2012. Healthy banks’ Capital Adequacy Ratio was above the minimum requirement of 10 per cent industry average of 17.7 per cent for half year 2012 compared with five per cent for half year 2011.”

It also pointed out that the industry recorded a non-performing loan ratio of 4.3 per cent, which was below the CBN mandated threshold of five per cent.

On the outlook for banks in 2013, the report said marginal increase in profitability would be driven by further reduction in NPL’s and improved efficiency.

It said, “Key objectives of Nigerian banks in 2013 will centre on enhanced return on capital, cost efficiency, excellent service delivery and asset protection. Play in power sector through loan syndications to swell loan book.

“Greater involvement in the operation of electricity distribution companies. Agriculture transformation agenda presents opportunity for value chain financing. Commercial real estate and construction will also require bank financing.”

It added that the customers would benefit from improved service delivery as banks struggle for market share and introduction of technological platforms for electronic banking.

Source: Punch (By Ademola Alawiye)