The Kwara State Commissioner for Finance, Mr. Demola Banu, has said the depreciating value of naira was negatively affecting banks, other financial institutions and the entire economy.
He also said it was increasing loan default by bank customers, adding that many micro-finance banks in Nigeria that did not attach loans with securities were exposed to great risks.
Banu, who is the Chairman, Board of Directors of KCMB Microfinance Bank Limited, spoke on Friday during the institution’s 4th Annual General Meeting in Ilorin, the state capital.
He stated that KCMB had increased in retail commerce and improved agricultural lending activities.
He also said deposits of KCMB grew from N123m in 2014 to N204m in 2015 representing 66 per cent increase; while gross earnings in 2015 was N112m up from N103m in 2014.
According to him, profit after tax rose from N20.1m in 2014 to N37.3m in 2015, representing 81 per cent increase over the previous year.
Banu also said shareholders funds grew by 47 per cent from N69.9m in 2014 to N103 in 2015.
He further revealed that the bank will pay a total dividend of N3.6m to its shareholders.
Banu said, “The devaluation of naira has negative impact on microfinance banks. Devaluation will ultimately reduce the purchasing power of the people. So a businessman that is doing business and not selling as he should will have his capacity to repay loans affected.
“That is why MFBs that did not attach loans to securities must be very careful. That is why you have many MFBs having bad loans.
“Devaluation will definitely affect the banking industry because the income and the purchasing power of the people are reduced.”
