Discount houses’ assets, liabilities decline 10.3% in Q3 2014

Total assets/liabilities of discount houses stood at N155.3 billion at the end of the third quarter (Q3) of 2014, indicating a decline of 10.3 percent below the level in the preceding quarter, but showed an increase of 16.1 percent above the level at the end of the corresponding quarter of 2013.

The Economic report for Q3 2014 released by the Central Bank of Nigeria (CBN) shows that the decline in assets relative to the preceding quarter was accounted for largely by the fall in claims on others and cash and balances with banks, which more than offset the effect of the increase in claims on other assets and claims on state governments.
Correspondingly, the decline in total liabilities was attributed to the fall in all the components of total liabilities, except money at call which increased by 19.3 percent above the level in the preceding quarter.

Discount houses’ investment in Federal Government securities of less than 91-day maturity fell by 17.6 percent to N52.6 billion and represented 44.8 percent of their total deposit liabilities.

At this level, discount houses’ investment was 15.2 percentage points below the prescribed minimum level of 60 percent for fiscal year 2014. Total borrowing by the discount houses was N45.8 billion, while their capital and reserves stood at N29.9 billion. This resulted in a gearing ratio of 1.5:1, compared with the stipulated maximum of 50:1 for the fiscal year.

On the other hand, available data indicated that the total assets and liabilities of the commercial banks stood at N25,946.9 billion at the end of Q3 2014, representing an increase of 3.4 percent over the level at the end of the preceding quarter. Funds were sourced largely from increased mobilisation of time, savings and foreign currency deposits; foreign liabilities; and demand deposits were used mainly, for the extension of credit to the private sector, central government and acquisition of foreign assets.

At N13876.9 billion, banks’ credit to the domestic economy rose by 5 percent compared with the level in the preceding quarter. The development was attributed to the 6.2 percent and 3.6 percent increase in claims on the private sector and Federal Government, respectively, in the review period.

Meanwhile, CBN’s credit to the banks fell by 9.2 percent to N243.4 billion at the end of the review quarter, reflecting the decrease in CBN loans and advances to banks.

Total specified liquid assets of the banks stood at N6,542.6 billion, representing 37.8 percent of their total current liabilities. At that level, the liquidity ratio rose by 4.5 percentage point above the level in the preceding quarter, and was 16.5 percentage points above the stipulated minimum ratio of 30 percent. The loans-to-deposit ratio, at 59.9 percent was 3.1 percentage point above the level at the end of the preceding quarter, but was 20.1 percentage points below the prescribed maximum ratio of 80 percent.