Tony Chukwunyem 
The impressive financial performance posted by the Central Bank of Nigeria (CBN) in 2024 has boosted investors and stakeholders’ confidence in the ability of the apex bank’s management to promote economic stability, writes Tony Chukwunyem
Among other key pronouncements that he made in the keynote address he delivered at the Chartered Institute of Bankers of Nigeria’s (CIBN) 58th Annual Bankers’ Dinner held in Lagos in November 2023-his first major public appearance following his assumption of duty as acting Central Bank of Nigeria (CBN) Governor on September15 2023 and subsequent confirmation by the Senate – Mr. Olayemi Cardoso, pledged that the apex bank, under his leadership, would restore corporate governance and emphasise transparency.
Specifically, he said: “I am aware that events over the past few years have also put the CBN in bad light. These issues can be attributed to various factors,
such as corporate governance failures, diminished institutional autonomy of the Central Bank of Nigeria, a deviation from the core mandate of the bank, unorthodox use of monetary tools, an inefficient and opaque foreign exchange market that hindered clear access, a foray into fiscal activities under the cover of development finance activities.
There was also a lack of clarity in the relationship between fiscal and monetary policies, among other challenges. “Hitherto, the CBN had strayed from its core mandates and was engaged in quasi-fiscal activities that pumped over N10 trillion in the economy through almost different initiatives in sectors ranging from agriculture, aviation, power, youth and many others.
These clearly distracted the bank from achieving its own objectives and took it into areas where it clearly had limited expertise.
“Under my leadership, the Central Bank of Nigeria will vigorously address these issues. We will tackle institutional deficiencies, restore corporate governance, strengthen regulations, and implement prudent policies.
We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures.”
Although the CBN, since then, has periodically published data showing that its measures are yielding results, the audited 2024 financial statements released by the apex bank last Friday, clearly reflect its commitment to economic stability, sound policy implementation and strategic financial management.
External reserves
A breakdown of the numbers indicates that the external reserves increased from $36.6 billion in 2023 to $38.8 billion in 2024, a development, analysts attribute largely to improvement in accretion to external reserves from portfolio investors, diaspora remittances and Federal Government receipts following improvement in the confidence in the economy which was facilitated by the CBN’s enhanced coordination with the Nigerian National Petroleum Company (NNPC), its diaspora engagement strategies as well as proper investment management decisions aimed at boosting the reserves.
Analysts note that the accretion of reserves reflects the CBN’s commitment to external sector stability, ensuring that the country is better positioned to meet its international obligations, stabilize the naira, and boost macroeconomic confidence.
Bottom-line performance
Also, the financial statements show that the CBN’s bottom-line improved from a deficit position of N1.3 trillion in 2023 to a sur – plus of N165 billion in 2024.
According to analysts, the significant turnaround is a direct consequence of effective containment of expenditure, gains on investments made by the apex bank and increased income from foreign exchange transactions.
The financial statements also show a notable reduction in loans and receivables from N16.1 trillion to N11.9 trillion, which analysts attribute to significant recoveries from earlier intervention lending programmes and a deliberate policy shift away from intervention lending and monetary financing through ways and means in line with the stance of the Cardoso-led management of the Bank on allowing market mechanisms to drive credit allocation and financial sector de velopment.
Other operating expenses
Further analysis of the financial statements, shows that the CBN’s operating expenses in
In pursuit of that the Bank conducted more frequent and highervalue Open Market Operations (OMO) to mop up excess liquidity arising from fiscal injections at a significant cost
2024 were well-managed and optimised, reflecting a cost-conscious culture. According a statement issued by the bank, “this was achieved through strategic cost rationalization initiatives, including reduction in non-essential spending and streamlined operations across regional branches and departments.”
Timely, successful adoption of Internal Control over Financial Reporting (ICFR) Indeed, the statement said: “In line with the Financial Reporting Council (FRC) regulatory requirement on ICFR, it is worthy to note that the Central Bank was able to carry out an assessment of its internal controls which was further certified effective by the joint external audit team.
“As a testament to the effectiveness of this initiative, the joint external auditors issued an independent assurance report declaring the Bank’s ICFR framework to be ‘effective’ for the 2024 reporting period.”
However, while the CBN’s 2024 financial results reflect operational improvements, there were issues with some expenditure lines.
Liquidity management expenses
For instance, one of the notable upticks in the apex bank’s expenses in 2024 was related to liquidity management operations as this cost rose to N4.5 trillion from N1.5 trillion in 2023.
In its statement, the CBN said that this increase was in tandem with the tightening monetary policy stance adopted to combat inflationary pressures throughout the year.
“In pursuit of that the Bank conducted more frequent and higher-value Open Market Operations (OMO) to mop up excess liquidity arising from fiscal injections at a significant cost.
This is a responsibility CBN is carrying out on behalf of the Federation, in some jurisdictions, this cost is borne by the government,” the statement added.
Derivative contracts
Similarly, the financial statements also reflect an increase in the loss on settled derivative contracts during the year from N6.3 trillion in 2023 to N13.9 trillion in 2024.
According to the CBN statement, “this development is a direct consequence of the high volume of derivative contracts settled by the Bank in 2024. These are legacy transactions which the current management met on resumption of their office.
This proactive settlement effort was undertaken as part of management’s broader strategy to Reduce outstanding foreign exchange liabilities, thus lowering its FX exposure, boost net foreign reserves, thereby improving Nigeria’s external buffer and investor confidence, restore credibility to Nigeria’s forward markets and address legacy obligations trans parently.”
Analysts note that in a statement it issued on April 1st, the CBN disclosed that Nigeria’s Net Foreign Exchange Reserves (NFER), rose significantly to $23.11 billion at the end of 2024, compared with $3.99 billion recorded at the end of 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
The statement reported Cardoso as attributing the increase in the NFER to strategic policy decisions taken by the apex bank, aimed at enhancing investor confidence, reducing vulnerabilities, and building a more robust reserve position.
“This improvement in our net reserves is not accidental; it is the outcome of deliberate policy choices aimed at rebuilding confidence, reducing vulnerabilities, and laying the foundation for long-term stability,” the CBN Governor said.
The statement also highlighted several factors that contributed to the improved NFER position.
These include reduction in shortterm FX liabilities, which saw the regulator significantly reducing its exposure to short-term foreign exchange obligations, such as swaps and forwards that previously posed risks to liquidity; increased FX inflows from non-oil sources and the CBN’s introduction of reforms aimed at rebuilding confidence.
Conclusion
Although the audited 2024 financial statements released by the apex bank last Friday is still attracting reactions, the consensus among experts is that the improved performance of the CBN in 2024 is undoubtedly a product of deliberate, and strategic man agreement efforts.
The reforms introduced by the bank’s management have strengthened the financial institution’s position as a credible monetary authority, as its strong financial performance last year is conclusive evidence of its resolve to support economic recovery and build public trust.
