Banks suffer fraud cases worth N16.5bn in three years

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CBN Governor, Mr. Godwin Emefiele
  • Stock market Investors gain N2.2tr in bullish run

The banking sector recorded 31,736 fraud cases involving the sum of N16.5bn between January 2014 and December 2016, figures obtained by our correspondent from the Central Bank of Nigeria have revealed.

The fraud statistics are contained in the Nigerian Electronic Fraud Report, which was prepared by the Banking and Systems Payment Department of the CBN.

The frauds were perpetrated through various payment channels in the banking sector such as Across the Counter, Automated Teller Machines, cheques and electronic-commerce platforms.

Others are Internet banking, mobile banking, Point-of-Sale and web transactions.

The report stated that in the last three years, there had been more attempts in the number of fraud cases, adding that the development might be linked to the economic hardship being experienced in the country.

For instance, the report stated that the volume of fraud cases rose by 635.3 per cent from 1,461 incidents in 2014 to 10,743 in 2015.

Between 2015 and 2016, the report stated that the incidents of fraud rose by 81.8 per cent from 10,743 to 19,532 cases.

Cumulatively, the incidence of fraud rose by 1,236 per cent during the three-year period.

In monetary terms, an analysis of the report showed that while there had been an increase in fraud volume, the rate of increase could not be achieved financially.

For instance, the report stated that in 2014, out of the total transaction value of N43.85tn in the banking sector, about N7.75bn was fraud-related.

However, it noted that while the transaction volume rose from N43.85tn in 2014 to N48.93tn in 2015, the amount involved in fraud-related transactions declined by N3.38bn or 43.6 per cent from N7.75bn to N4.37bn.

Between 2015 and 2016, the report stated that while the value of financial transactions rose significantly from N48.93tn to N64.18tn, the amount of fraud involved during the period dropped marginally from N4.37bn to N4.36bn.

The report read in part, “Although, values of the year 2016 are almost same with those of 2015, the difference in its volume when compared to 2015 suggests more success in curbing fraud.

“More attempts in volume can be seen over a period of three years, and the rate is expected to increase significantly if the current recession is to be taken into consideration.

“The current economic recession has and will always drive persons deeper into fraudulent activities.”

In terms of payment channels from which the frauds were perpetrated, the report stated that in 2014, fraudulent transactions conducted through the ATM were 491 cases; Internet banking, 287 cases; and web channels, 218 cases, were the top three.

In 2015, there were 5,133 ATM fraud incidents; PoS, 1,853 cases; and web, 1,463 cases, accounting for the top three most used channels to perpetrate fraudulent transactions.

In 2016, ATM with 9,522 cases; mobile, 3,832; and web channels, 2,677, were the three most used channels.

In the meantime, reflecting   uptick in economic activities buoyed by improved   foreign exchange inflow courtesy of oil price rebound and increased foreign investment inflow occasioned by new foreign exchange policy of the Central Bank of Nigeria, CBN, investors’   fortunes on the Nigeria Stock Exchange   (NSE) soared by whopping   N2.2 trillion in the first half of the year (H1’17).

Specifically, the NSE market capitalisation, which represents total value of shares on the Exchange, went up by 23.8 per cent or N2.205 trillion to N11.5 trillion at the close of trading on Friday June 30th, 2017, against N9.246 trillion at the end of December 2016.

Also when compared with the   corresponding period in 2016 (H1’16) the improved return on investment for investors represented 12.7 per cent growth   from   N10.165 trillion   at the end of June 2016.

Financial Vanguard’s analysis of the current NSE data shows the impressive H1’17 performance in the following sector indices:  NSE All Share Index, which measures the price movement of stocks traded on the Exchange, surged by 23.2 per cent or 6,242.86 points to 33,117.48 points at the close of business on Friday from 26,874.62 points at the beginning of the year; the NSE 30 Banking Index surged by 448.5 per cent to 1,504.44 points from 274 points; NSE Industrial Index appreciated by 21.1 points to close at 1,932.20 points from 1,595.33 points; NSE Consumer Goods Index rose  by 11.6 per cent to 795 .40 points from 712.65; NSE Insurance Index rose by 9.2 per cent to 137.86 points from 126.29 points; while NSE Oil and Gas index inched up by 3.4 per cent to 323.16 points from 321.68 points.

Further review of the market for H1’17 shows that the top 10 price gainers are: May & Baker Nigeria Plc, Fidson Healthcare Plc, United Bank for Africa, UBA Plc, Cement Company of Northern Nigeria, CCNN, First Bank Nigeria, FBN Holding Plc, Presco Plc. Others include: Beta Glass, International Breweries Plc, Access Bank Plc, and PZ Cussons Nigeria Plc. Conversely, the top ten price losers are: Forte Oil Plc, 7up Bottling Company Plc, Meyer Plc, Trans-nationwide Express Plc, Tripple Gee Plc, University Press Plc.

Others include: Union Dicon Salt Plc, Guinness Nigeria Plc, John Holt Plc, and AG Leventis Plc.

Analysts’ projections The impressive growth aligns with projections by market operators and analysts at the beginning of the year. They had projected that 2017 would be better because the economy has recovered to levels last seen in 2015/16.

For example Ayo Teriba, an economist, in his projections for 2017, said:   “The brighter outlook will be premised on government holding up some of the monetary and economic policies throughout 2017. But it is reasonable to expect that they would. If they do, Nigeria can expect a resumption of growth, a moderation of inflation, a return of stability to the foreign exchange market, a convergence of exchange rates, and a sustained strengthening of the inter-bank rate.”

Also analysts at ARM Research had stated: “In our H1 17 Nigeria Strategy Report, we projected a nuanced outlook for naira equities against the backdrop of subsisting reticence of foreign and local investors towards naira equities as well as weak fundamentals.

Pertinently, US interest rate normalisation, rising political concerns on the global front and FX worries in the domestic market, continue to drive foreign apathy while local support continues to dissipate as rising yields which aside from raising discount rate for equity valuations provided a significantly compelling investment outlet in the fixed income market.

“Over the second quarter of 2017, political uncertainty in Europe, swelling predictions of geo-political crisis, prospects of further rate hike by the US Federal Reserve should continue to drive cautious approach to EM/frontier market investing.

Whilst domestic FX markets have seen improved liquidity since March 2017, we expect Foreign Portfolio Investment, FPI participation to be gradual with more allocation in the FI market. Complicating the outlook for equities is the elevated domestic yield environment which works to dilute local investor interest in equities.”

Meanwhile, market operators and financial analysts have expressed optimism of better market performance in their projection for the third quarter of 2017 (Q3’17

They stressed that improvement in the monetary and fiscal policies, among other factors such as global oil prices will determine the sustainability of the bullish run witnessed in the just ended H1’17.

Punch with additional report from Vanguard