Bank Fraud, Forgeries Amounted To N120.79bn In 2020 – NDIC

The Nigeria Deposit Insurance Corporation (NDIC) has disclosed that the total amount resulting from bank fraud and forgery cases stood at N120.79 billion in 2020.

This, however, represented a decline by 40.98 per cent when compared with the N204.65 billion recorded in 2019.

Nonetheless, the number of fraud cases surged by 177.10 per cent to 146,183 in 2020 from 52,754 in 2019, according to the NDIC 2020 Annual Report, which was obtained from the corporation’s website.

The surge in fraud cases particularly in digital and electronic payment systems remained a growing concern in the financial system.

According to the NDIC, the total actual loss fell slightly from N5.46 billion in 2019, to N5.33 billion in the review period, adding that banks sustained the least actual loss of N325 million of the total amount involved during the second quarter of 2020.

The third quarter of 2020 recorded the highest actual loss of N2.51 billion or 25.73 per cent of the total value involved in that period.

According to the report, 10 out of 30 banks accounted for N119.204 billion or 99.17 per cent of the total amount involved in frauds and forgeries cases during the year in review.

The corporation also stated that the use of digital channels contributed to the rising cases of fraud and forgeries and stated that banks have continually improved their cyber-security platforms, in addition to continuous consumer education and sensitisation, to reduce the fraud and forgery success rate.

According to the NDIC, ATM card-related fraud had the highest frequency, accounting for 39.81 per cent of fraud cases followed by mobile banking with 17.35 per cent.

Also, fraudulent conversion of cheques contributed the least with 0.63 per cent, further indicating a shift to digital channels or instruments.

The report noted that a total of 474 bank staff were involved in fraud and forgery cases in 2020, representing a significant reduction from 835 staff in 2019.

In terms of asset quality in the banking industry, the report stated that the total risk assets of banks increased by 16.42 per cent from N17.50 trillion in 2019, to N20.37 trillion in 2020.

The NDIC attributed the growth in risk assets largely to increases in the funding available to banks from CBN-support facilities and the Loan to Deposit Ratio (LDR) policy, as part of the apex bank’s effort to spur economic growth amid the scourge of the COVID-19 pandemic.

In the same vein, the industry non-performing loans (NPLs) ratio as a percentage of total loans grew from 6.06 per cent in 2019, to 6.13 per cent in 2020, but remained slightly above the regulatory threshold of 5.0 per cent.

Relatedly, the NPL to shareholders’ fund ratio grew by 264 basis points from 32.97 per cent in 2019 to 35.61 per cent in the review period.

However, a breakdown of the total loans in the banking industry showed that eight out of 28 banks (excluding NIBs) had 74.05 per cent of total loans worth N20.37 trillion as at December 31, 2020, compared with 79.26 per cent recorded as at December 31, 2019.

The other 20 banks accounted for 25.95 per cent of the industry’s total loans, indicating a high concentration that exhibits oligopolistic tendencies in the control of loans in the banking industry.