Banking

Banks credit to economy fell to N21.06trn in May

by HOPE MOSES-ASHIKE

July 19, 2017 | 12:34 am
  |     |     |   Start Conversation

Banks’ credit to the domestic economy, which stood at N21.06 trillion in May 2017, fell by 1.1 percent, compared with the level at end-April 2017, a report by the Central Bank of Nigeria (CBN) revealed.

The development was attributed to the fall in claims on the Federal Government and the private sector, at the end of the review month.

Deposit Money Banks’ activities indicated that total assets and liabilities of the banks at end-May 2017 amounted to N32.91 trillion, showing a 0.6percent increase, compared with the level at end-April 2017.

Funds were sourced, mainly, from unclassified liabilities, claims on private sector and drawdown on reserves. The funds were used, mainly, for acquisition of unclassified and foreign assets, and redemption of time, savings and foreign currency deposits.

Total specified liquid assets of commercial banks stood at N7,03 trillion, representing 38.1 percent of their total current liabilities. At that level, the liquidity ratio was 1.3 percentage points below the level at the end of the preceding month, but was 8.1 percentage points above the stipulated minimum ratio of 30.0 per cent. The loans-to-deposit ratio, at 80.4 per cent, was 0.09 percentage point below the level at end-April 2017, but 0.4 percentage point above the maximum ratio of 80.0 per cent.

Banks’ deposit rates generally trended downward, while lending rates trended upward in May 2017. The average savings and term deposit rates fell to 4.08 per cent and 8.65 per cent, respectively, from 4.24 per cent and 9.10 per cent, in the preceding month.

With the exception of the 7-day deposit rate, which rose to 4.32 per cent in the review month, from 4.04 per cent in April 2017, all other deposit rates of various maturity fell from a range of 8.48 percent –13.08 per cent in the preceding month to 7.53–11.33 per cent in May 2017.

The average prime and maximum lending rates rose by 0.14 percentage point and 0.44 percentage point to 17.58percent and 30.75 per cent, respectively, at end-May 2017.

Consequently, the spread between the average term deposit and the maximum lending rates widened by 0.89 percentage point to 22.10 percentage points at end-May 2017.

Similarly, the spread between the average savings deposit and maximum lending rates widened by 0.16 percentage point to 26.43 percentage points at the end of the review month.

At the inter-bank call segment, the weighted average rate, which stood at 64.58 per cent in April 2017, fell significantly by 43.29 percentage points to 21.29 per cent in the review month.

Similarly, the weighted average rate at the open-buy-back (OBB) segment declined from 51.04 percent in the preceding month to 39.29 per cent in the review month.

The Nigerian inter-bank offered rate (NIBOR) for the 30-day tenor, also, fell to 30.48 per cent in the review period, below the 55.47 per cent recorded at end-April 2017.

The development reflected the liquidity condition in the market. Consequently, with the headline inflation at 16.3 per cent at end-May 2017, all deposit rates were negative in real terms, while the prime and maximum lending rates were positive in real terms.

 

HOPE MOSES-ASHIKE


by HOPE MOSES-ASHIKE

July 19, 2017 | 12:34 am
  |     |     |   Start Conversation

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