Nigeria’s Islamic finance industry will see strong growth in 2023-2024, driven by government sukuk issuances and policy initiatives, according to Fitch Ratings. The Central Bank of Nigeria has set a lower regulatory liquidity ratio for Islamic banks, and grants them a discount in calculating risk-weighted assets, allowing them to capture market share with less capital constraint on growth. However, Fitch notes that the industry is likely to remain nascent in the medium term despite government impetus.
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Nigeria: Banks have sufficient buffers to weather challenges -Fitch
Nigerian banks have sufficient capital and liquidity buffers to withstand macroeconomic challenges, according to Fitch Ratings. The rating agency said operating conditions for banks will weaken in 2023 due to high inflation, rising interest rates, US dollar shortages, regulatory intervention and the potential for disruption caused by the general election in February. However, Fitch expects stronger revenues to counteract greater impairment charges and non-interest expenses, resulting in a modest improvement in profitability in 2023.