TheCentral Bank of Nigeria (CBN) has reaffirmed that Nigerian banks are sound. The apex bank said today that the recent top-down stress tests of Deposit Money Banks(DMBs) carried out byit revealed that the banks have adequate capital to absorb unexpected losses.

A CBN statement issued in Abuja disclosed thatthe unaudited results of banks, and the results released so far,indicated that economic headwinds hadnot significantly affected returns.

The statementfurther noted that banks have been directed to have effective risk management system in place especially price hedging, adding that the CBN would continue to monitor banks to ensure sufficient internal retention of capital to serve as buffers.

News Express recalls that the International Monetary Fund (IMF), in a press release on Wednesday, March 4, on the outcome of the IMF Executive Board 2014 Article IV Consultation with Nigeria, commended the efforts of the CBN in ensuring financial system soundness.

According to the IMF statement, “Directors noted that financial soundness indicators remain above prudential norms, but the concentration of credit risks and foreign currency exposures call for continued close oversight. They welcomed progress in strengthening supervision and regulation, including of cross border activities, and encouraged additional initiatives to foster financial market development, including of hedging instruments, and improve financial inclusion.”

The directors also commended the unification of rDAS and the interbank foreign exchange market rates, noting that greater exchange rate flexibility could help cushion external shocks.

The IMF statementfurther noted thatNigeria’s economic data are broadly adequate for surveillance, just as it agreed thattightening fiscal policy and allowing the exchange rate to depreciate while using some of the reserve buffer were appropriate responses to the recent fall inglobaloil prices.

•Photo shows CBN Governor Godwin Emefiele.