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Banks’ assets, liabilities hit N28 trillion

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The nation’s economic challenges and financial system’s recent policy fluidity notwithstanding, the Deposit Money Banks (DMBs) may have added more billions to their portfolios of assets and liabilities.

Specifically, the total assets and liabilities of the commercial banks rose to N27.67 trillion in January 2015, representing one per cent increase above the level at the end of December 2014.

The funds, which were sourced mainly from draw down on reserves; in foreign assets disposal; unclassified liabilities; and mobilisation of demand deposits, were also used mostly for acquisition of Federal Government securities; unclassified assets; and reduction in time, savings and foreign currency deposits.

According to the Central Bank of Nigeria (CBN) in its Economic Report for January, the total specified liquid assets of the commercial banks stood at N6.62 trillion, representing 36.8 per cent of their total current liabilities.

The liquidity ratio, which measures the ability to meet short term demands, rose by 2.3 percentage points above the level in the preceding month and was 6.8 percentage points above the stipulated minimum ratio of 30 per cent.

The loans-to-deposit ratio, at 64.5 per cent, was also a 0.9-percentage point above the level at the end of the preceding month, but 15.5 percentage points below the prescribed maximum ratio of 80.0 per cent, respectively.

However, the aggregate banking system credit to the domestic economy at end-January 2015 rose by 7.1 per cent to N17.28 trillion, when measured on month-on-month basis.

The record compares with the growth of 7.2 per cent at the end of the corresponding period of 2014 (January), and 1.5 per cent decline at end of December 2014.

Banking system’s credit (net) to the Federal Government, on month-on-month basis, rose by 55.4 per cent to negative N899.7 billion, compared with the growth of 71.1 per cent at the end of the corresponding month of 2014, but was in contrast to the 15.4 per cent decline at the end of the preceding month.

Also, the banking system’s credit to the private sector increased by 0.2 per cent to N18.18 trillion, over the preceding month’s level, compared with the 0.1 per cent increase at the end of the preceding month.

Meanwhile, the report, which also showed mixed developments in banks’ deposit and lending rates during the period under review, generally tended towards a wider margin.

For example, the seven-day, six-month and over 12-month deposit rates fell by 0.08, 0.03 and 0.04 percentage points to 4.37 per cent, 9.74 per cent and 10.10 per cent, respectively.

However, except the 12-month deposit rate, which remained unchanged at 9.51 per cent, all other deposit rates of various maturities rose from a range of 3.46 per cent – 9.48 per cent to 3.48 – 9.64 per cent.

At 8.66 per cent, the average term deposit rate rose marginally by 0.01 percentage point above the level in the preceding month, while the average maximum and prime lending rates rose by 0.06 and 0.98 percentage point to 25.97 and 16.86 per cent, respectively.

Consequently, the spread between the weighted average term deposit and maximum lending rates rose by 0.05 percentage point to 17.31 per cent in January 2015.

Also, the spread between the average savings deposit and maximum lending rates also widened by 0.04 percentage point to 22.49 per cent at the end of the review period.

At the inter-bank call segment (Overnight), the weighted average rate, which stood at 24.30 per cent in the preceding month, fell by 14.09 percentage points to 10.21 per cent in January 2015.

In the same vein, the weighted average rate, at the Open-Buy-Back (OBB) segment, fell by 13.63 percentage points to 8.65 per cent in the review month, from 22.28 per cent in December 2014.

The Nigeria Inter-Bank Offered Rate (NIBOR) for seven-day and 30-day tenors also fell to 10.61 and 13.65 per cent, at the end of the review period from their respective levels of 25.51 and 13.71 per cent in the preceding month.



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