Banks’ borrowing from CBN window declines by 107.5%

The Deposit Money Banks (DMBs) and the merchant banks continued to access the Standing Facilities window to square-up their positions in November 2019.

The trend at the CBN standing facilities window showed a decline at the Standing Lending Facility (SLF) window, as against the increased patronage at the Standing Deposit Facility (SDF) window.

Standing facilities are monetary policy operations which are initiated by central banks’ counterparties as opposed to open market operations, which are initiated by central banks. The marginal lending facility allows counterparties to quickly cover short-term liquidity requirements.

Consequently, the total SLF granted, during the review period, was N662.44 billion in November, which was 107.5 percent declined compared to N319.28 billion in October 2019, the economic report for the month of November 2019, released by the Central Bank of Nigeria (CBN) revealed.

The SLF granted was made up of (made up of N490.29 billion direct SLF and N172.15 billion Intraday Lending Facilities (ILF) converted to overnight repo). Daily average was N41.40 billion in the 16 transaction days from November 1 – 26, 2019. Daily request ranged from N0.48 billion to N126.74 billion. Total interest earned was N0.37 billion. Applicable rates for the SLF and SDF remained at 15.50 and 8.50 per cent, respectively.

The total SDF granted during the review period was N443.63 billion with a daily average of N26.09 billion in the 17 transaction days from November 1- 26, 2019. Daily request ranged from N6.30 billion to N42.75 billion. Cost incurred on SDF in the month stood at N0.16 billion.

Total assets and liabilities of commercial banks amounted to N41,425.1 billion at end-October 2019, showing 4.6 per cent increase, compared with the level at the end of the preceding month. Funds were sourced, mainly, from increase in unclassified liabilities, and the mobilisation of time, savings and foreign currency deposits. The funds were used, mainly, to acquire unclassified assets, foreign assets and to boost reserves.

According to the report, commercial banks’ credit to the domestic economy rose by 0.6 per cent to N22,261.0 billion at end-October 2019, compared with the level at the end of the preceding month. The development was attributed to the rise in its claims on the private sector.

The report show that Total specified liquid assets of banks stood at N14,272.4 billion at the end of October 2019, representing 59.3 per cent of their total current liabilities. At that level, the liquidity ratio was 0.9 percentage point lower than the level at the end of the preceding month, and was 29.30 percentage points above the stipulated minimum liquidity ratio of 30.0 per cent.

The loan-to deposit ratio, at 61.9 per cent, was 0.3 percentage point below the level at the end of the preceding month and was lower than the maximum ratio of 80.0 per cent by 18.10 percentage points.

 

HOPE MOSES-ASHIKE