Banks recorded less savings, current account openings in February

Against the backdrop of prolonged economic hardship in Nigeria, less than expected bank customers opened savings and current accounts with Deposit Money Banks last month, records from the Central Bank of Nigeria(CBN) has shown.

The Depository Corporations Survey for February 2017, recently published by CBN, indicates that commercial banks generated less demand deposits month on month (m-o-m) by 10.75 per cent to N8.60 trillion.

Demand deposits are amounts that are lying in the savings and current accounts which can be used at any point of time. They are accounts with a bank or other financial institutions that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days’ notice.

Banks are mandated to keep 22.5 per cent of their total deposit as Cash Reserve Ratio (CRR) with the Central Bank of Nigeria (CBN). Consequently, the apex bank, on a monthly basis, debits banks for 22.5 per cent of any increase in bank deposit for the month. However, if banks record decline in deposit, the CBN credits the industry 22.5 per cent of that decline in deposit.

Nigerian Tribune investigations reveal that the CBN debited banks N1.2 billion in the first week of February for January CRR, implying that banks’ deposit rose by N5.3 billion

Similarly, the CBN survey revealed that currency outside the banks declined m-o-m by 1.16 per cent to N1.61 trillion.

On asset creation, it stated that the public sector continued to crowd out the private sector as credit to the government increased m-o-m by 2.90 per cent to N4.41 trillion, outpacing the 0.09 per cent increase in credit to the private sector to N22.36 trillion. The mild growth in credit to the private sector according to the apex bank may have also been informed by relatively high non-performing loans.

The CBN report further showed that in February, the accommodative monetary policy stance remained in effect, reflected in the monthly decline in Reserve money by 1.61 per cent(and year-to-date by 5.06 per cent) to N5.54 trillion in the month of February as bank reserves decreased month-on-month by 2.28 per cent (year-to-date by 2.86 per cent) to N3.22 trillion while currency in circulation fell m-o-m by 0.79 per cent (and 9.19 per cent y-t-d) to N1.98 trillion. Currency in circulation comprises currency with the public and cash in hand with banks. Consequently, Narrow money supply declined m-o-m by 9.36 per cent (and 11.35 per cent y-t-d) to N10.21 trillion.