By Dipo Olowookere
A senior analyst with the London-based Financial Institutions Group, Mr Mik Kabeya, has submitted that the Naira redesign policy of the Central Bank of Nigeria (CBN) will not heavily impact the profitability of commercial banks in the country.
He gave this submission at a podcast put together on Monday by a global rating company Moody’s tagged Moody’s Talks – Emerging Markets Decoded, which was monitored by Business Post.
The central bank, in October 2022, announced that it was redesigning the N200, N500, and N1,000 notes, stating that it would release the new banknotes into circulation from December 15, 2022.
It, thereafter, said the old notes would cease to be legal tender from January 31, 2023, but after pressure from different groups, it shifted the deadline to February 10.
However, on February 8, the governments of Kaduna, Kogi, and Zamfara State ran to the supreme court to stop the implementation of the policy. An interim order was given, and on March 3, the court extended the validity of the old currency notes till December 31, 2023.
Before the judgement, Nigerians found it difficult to get cash to complete their financial transactions as it became a scarce commodity, making citizens go through untold hardship, with some businesses crumbling.
This and others sparked protests in some places in the country, including in Lagos, Ibadan, Sagamu, Abeokuta, and others, with several banks destroyed and burnt by angry demonstrators.
But Mr Kabeya believes that this policy will not affect the profitability of deposit money banks (DMBs), especially those listed on the Nigerian Exchange (NGX) Limited, which must release their financial statements to the public.
“On the separate topic of the Naira redesign, which Ighosime (Oyofo) was talking about earlier, we expect that the redesign policy will have a limited impact on the banks’ profitability, but [will] create operational challenges for the banks, particular over the short term.
“This is because of the difficulties that were encountered in implementing the policy in the country has increased the volume of customers’ complaints significantly, pressured the banks’ IT systems and also raised the reputational risks for the banking sector,” Mr Kabeya stated.
