Nigerian banks have declared cumulative after tax profits of N243.55 billion, in the six months to June 2012, a rise of 81.6 percent from the same period last year.

This is as rating agency Standard and Poor’s (S&P) yesterday released a cautious note on the industry capital adequacy ratios (CAR).

Access Bank rounded off the banks second quarter earnings season by reporting that half year net income was up 229 percent from a year ago, to N26.5 billion.

Nigerian banks are seeing increased earnings after Central Bank of Nigeria (CBN) reforms, following a debt crisis in 2008 and 2009, and had average Capital adequacy ratios (CAR) of 23 percent at the end of 2011, according to data from investment bank Renaissance Capital (Rencap).

The minimum regulatory capital requirement is 15 percent.

Standard & Poor’s Ratings Services, in its statement said it views the banks capitalisation as “moderate” or “adequate,” under its criteria, in contrast to Nigerian banks which often view their capitalisation as either strong or adequate.

“The average CAR for the eight largest Nigerian banks by asset size, according to publicly available financial statements, was 21.1 percent, versus the 15 percent regulatory minimum for banks with international operations,” said Standard & Poor’s credit analyst George Maisey.

“However, we calculate that capitalisation was a much lower 6.2 percent, on Dec. 31, 2011, according to our globally comparable risk-adjusted capital framework.”

S & P capital ratios for all of the banks they rate globally, are usually lower than regulatory CARs.

That’s mainly because their measure is adjusted for the risks that banks face--either because of the riskiness of the banking industry where they operate, or the exposures they hold.

Nigerian bank loan book have however become much cleaner, and systemic risks to the system have been falling.

Kemi Fatogbe, director of risk management, CBN, recently said the banking industry Non Performing Loan (NPL) ratio, which was over 30 percent in 2010 had fallen to “an industry average of fewer than 5 percent in June 2012.”

Data from the Asset Management Corporation of Nigeria (AMCON) shows it has issued bonds to the value of N3.89 billion ($25.1 billion), by the end of 2011 to absorb banks Non-Performing Loans (NPLs.)

“These banks have become a lot healthier from a balance sheet perspective and a lot of the risks hitherto priced into them have been effectively addressed,” Kayode Tinuoye, senior analyst at Skye Financial Services said.

Investors who pulled back from financial stocks in 2011, have recently piled into bank shares, helping to push the Nigerian Stock Exchange (NSE) up to multi–week highs.

The NSE banking index, down 33.7 percent in 2011, is up 44.01 percent year to date, outperforming the wider All Share Index (ASI), which is up 18.51 percent, for the same period.

The Nigerian banking sector is trading on a 2012 year end Price to Book (P/B) ratio of 0.8 times, according to Renaissance Capital.

Access Bank whose stock price closed at N9.1 yesterday, is the biggest mover in the sector, and is up 82.1 percent for the year.