Banks deposit average of N100.22bn excess liquidity with CBN daily

Even as manufacturers continue to blame lack of funds for poor performance of the sector, fresh facts have emerged that Deposit Money Banks keep a daily average of N100.22 billion with the Central Bank of Nigeria (CBN) to earn interest.

The latest CBN second quarter 2016 economic report available on its website indicated that total deposit by banks at the Standing Deposit Facility (SDF) window during the review period was N6.012 trillion with a daily average of N100.22 billion, compared with N6. 614 trillion recorded in the first quarter of 2016.

The cost incurred by CBN which is the net interest earned by banks from placing their excess liquidity as deposit with the CBN in the past six months stood at N1.74 billion, compared with N1.08 billion, in the preceding quarter.

Similarly, the report stated that “total request for Standing Lending Facility (inclusive of Intra- day lending facilities converted to overnight repo) during the review period amounted to N4.066 trillion, with N1.46 billion in interest earned, compared with SLF of N560.80 billion and interest earned of N0.28 billion in the preceding quarter.

Banks access the SLF to borrow from the CBN while they access the SDF to place deposit with the CBN. Currently the CBN charges 14 percent as interest rate on loans to banks through the SLF while it pays 7.0 per cent as interest on deposit placement through the SDF.

The CBN’s report also indicated that the fiscal operations of the Federal Government resulted in an estimated deficit of N1.090trillion, indicating an increase of 96.4 per cent above the provisional quarterly budget deficit of N555.49 billion.

Provisional data indicated that federally-collected revenue during the second quarter of 2016 was N1.159 trillion. This was 51.3 per cent and 8.6 per cent lower than the quarterly budget estimate and the receipts in the preceding quarter, respectively.

Also, data indicated that the total assets and liabilities of the commercial banks stood at N31.231trillion at the end of the preceding quarter of 2016, representing an increase of 9.6 per cent over the level at the end of the preceding quarter.

The funds were sourced, mainly, from time, savings and foreign currency deposits, foreign liabilities and unclassified liabilities. The funds were used, mainly, to increase claims on private sector, acquire foreign and unclassified assets.

At N20.406trillion, banks’credit according to the apex bank, to the domestic economy, rose by 11.2 per cent, compared with 0.9 per cent at the end of the preceding quarter. The development was attributed to the significant increase in claims on the private sector, during the review quarter

Central Bank?s credit to the commercial banks rose by 34.2 per cent to N1.041trillion, at the end of the review quarter, while ttal specified liquid assets of the banks stood at N6.536 billion, representing 34.9 per cent of their total current liabilities.

At that level it stated, the liquidity ratio fell by 5.0 percentage points below the level at the end of the preceding quarter but was 4.9 percentage points above the stipulated minimum ratio of 30.0 per cent. The loans-to-deposit ratio, at 74.9 per cent, was 7.0 percentage points, above the level at the end of the preceding quarter, but 5.1 percentage point below the prescribed maximum of 80.0 per cent.

Furthermore, provisional data showed that foreign exchange inflow and outflow through the CBN amounted to US$5.89 billion and US$6.09 billion, respectively, resulting in a net outflow of US$0.20 billion. Foreign exchange sales by the CBN to the authorized dealers amounted to US$4.31 billion, and the average exchange rate of the naira vis-à-vis the US dollar at the inter-bank was N209.13/US$ the reported showed.

The average exchange rate at the inter-bank segment was N209.13/US$, compared with N197.00/US$ in the first quarter of 2016 and indicated a depreciation of 6.2 per cent relative to the rate in the preceding quarter.