Banks in
Moody's stated this in a report obtained yesterday.
Commenting on the report, Analyst at Moody's, Peter Mushangwe said: "Lower dollar inflows at a time when foreign currency borrowing will likely be more expensive for Nigerian banks will strain their foreign currency funding, despite substantial improvements compared to 2016.
"Our moderate scenario where foreign-currency deposits decline by 20 per cent, while loans remain constant, would increase rated banks' funding gap to N1.5 trillion (
Oil and gas exports contribute about 90 per cent of
"Prices within that range, or lower, in the second half of the year would lead to renewed dollar shortages at the banks," it added.
Furthermore, the report showed that Moody's-rated Nigerian banks reduced their foreign currency funding gap to a combined N354 billion (
It further explained that the smaller funding gap would enable the banks to better withstand unforeseen deposit withdrawals and likely higher borrowing costs.
"However, in the event of foreign currency deposits contracting by 20 per cent or more, banks' funding gaps will be significant," it stated.
"Nigerian banks have invested more of their dollar deposits in liquid assets than in 2016, improving their ability to cover sudden deposit withdrawals in times of stress. Liquid foreign-currency assets rose 58 per cent to N4.4 trillion between the end of 2016 and the end of 2019, although this largely reflects a weaker naira.
"In dollar terms, liquid foreign-currency assets increased five per cent to
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