International rating agency, Fitch Ratings, recently said very high Nigerian treasury bills’ yields are helping banks maintain margins.

Fitch says Nigerian banks’ lending opportunities have been constrained by weak economic growth, continued soft oil prices and sluggish consumer demand.

The agency considers Nigerian banks’ capital adequacy to be weak, in general, adding that high yields on Nigerian banks’ investments in T-bills compensating for scarcity of opportunities for profitable new lending to private sector.

T-Bill is a short-term debt instrument issued by the Federal Government through the central bank to provide funding for the government. They are by nature, the most liquid money market securities and are backed by the guarantee of the Federal Government.

The Central Bank issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

According to CBN data, T-Bill investments increased due to fall in volumes of naira time and savings deposits held by the banking sector.

T-Bill yields still ranked higher than savings deposit rates, which are capped at 30 per cent of the current monetary policy rate of 14 per cent, the report said.

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