CBN 2024 financial performance an indicator Cardoso’s twerking yielding results

The Central Bank of Nigeria (CBN) under the able leadership of Governor Yemi Cardoso has released the apex bank’s 2024 financial statements. The results reflect the bank’s commitment to economic stability, sound policy implementation, and strategic financial management. The financial performance further highlights improvements in external reserves, asset quality, cost efficiency and overall bottom-line improvement.

An indicator of Cardoso’s policy direction being on the right track is manifested by the CBN posting in its latest financial statement showing the country’s external reserves growing from $36.6billion in 2023 to $38.8billion in 2024.

This is phenomenal achievement is largely attributable to the apex bank’s improvement in accretion to external reserves from portfolio investors, diaspora remittances and the federal government receipts following improved confidence in the Nigerian economy, facilitated by better coordination with the Nigerian National Petroleum Company (NNPC) and diaspora engagement strategies.

Another contributory factor is the proper investment management decisions taking by the CBN governor, aimed at boosting the reserves of the bank. This glowing performance reflects the CBN’s firm commitment to external sector stability, ensuring Nigeria is better positioned to meet its international obligations, stabilize the naira, and boost macroeconomic confidence.

Remarkably, the CBN fianancial statement also showed that the bank’s bottom-line improved from a deficit position of ₦1.3trillion in 2023 to a surplus of ₦165billon in 2024. This turnaround is attributable to a direct consequence of apex bank’s effective containment of expenditure, gains on investments made by the bank and increased income from foreign exchange transactions under the Cardoso regime.

The financial statement further showed a notable reduction in loans and receivables from ₦16.1trillion to ₦11.9trillion, due primarily to significant recoveries from earlier intervention lending programmes; a deliberate policy shift away from previous intervention lending and monetary financing through ways and means in line with the bank’s new stance on allowing market mechanisms to drive credit allocation and financial sector development.

To reflect Cardoso’s enthroning of a cost-conscious culture at the CBN, the apex bank adopted a strategy of optimizing and streamlining it’s operating expenses in 2024, through strategic cost rationalization initiatives, including reduction in non-essential spending and streamlined operations across regional branches and departments.

Furthermore, 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. This approach resulted in enhanced transparency and accountability in financial reporting, strengthening institutional governance and internal risk controls, and aligning with international best practices in central bank operations

As a testament to the effectiveness of this initiative, the joint external auditors issued an independent assurance report declaring the CBN’s ICFR framework to be “effective” for the 2024 reporting period. However, it wasn’t all cheering news all the way because while the Central Bank of Nigeria’s 2024 financial results reflect operational improvements, some expenditure lines posed challenges.

One of the notable upticks in the apex bank’s expenses in 2024 was related to liquidity management operations. These costs rose to ₦4.5trillion from ₦1.5trillion in 2023. This increase can be traceable to the tightening monetary policy stance adopted by the CBN governor to combat inflationary pressures throughout the year.

In pursuit of that objective, the CBN 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 huge responsibility CBN is carrying out on behalf of the federation, whereas in some jurisdictions, this cost is borne by the government.

The financial statements also reflect an increase in the loss on settled derivative contracts during the year from ₦6.3trillion in 2023 to ₦13.9trillion in 2024. This development is a direct consequence of the high volume of derivative contracts settled by the apex bank in 2024. These are legacy transactions which the Cardoso management met on resumption of 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, restoring credibility to Nigeria’s forward markets and address legacy obligations transparently.

It can be said that the improved performance of the Central Bank of Nigeria in 2024 is not coincidental but a product of deliberate, and strategic management efforts undertaken by Governor Cardoso. The bank’s leadership has reinforced governance and accountability, instilling operational discipline in the running of the CBN. It has also pursued a balanced monetary policy stance, ensuring price and financial system stability.

These reforms enunciated by Governor Cardoso since his appointment by President Bola Tinubu have collectively repositioned the CBN as a credible monetary authority, with its 2024 financial results serving as proof of its unwavering resolve to support the economic recovery programme of the current administration, safeguard financial stability, and build public trust.

Dr. Ibrahim Modibbo is a public affairs analyst and writes from Abuja.