Thu. Jun 13th, 2024

Banks took N319b CBN loan for liquidity control- Report

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Commercial banks and merchant banks have accessed N319.28 billion loan from the Central Bank of Nigeria (CBN) to control their liquidity positions and maintain industry stability, the CBN Economic report for October released yesterday has shown.

It also showed that the loans came through the Standing Facilities and were meant to allow the lenders square-up their positions in October.

According to the report, CBN standing facilities were available at the discount window for banks to meet up with their liquidity obligations by either borrowing from the standing lending facilities (SLF) or depositing excess funds at the standing deposit facilities (SDF) windows at the end of each business day.

The report said trend at the CBN standing facilities window showed more patronage at the Standing Deposit Facility (SDF) window. Applicable rates for the Standing Lending Facility (SLF) and SDF remained at 15.50 and 8.50 per cent, respectively.

The loans, which came as Standing Lending Facility (SLF) including the Intra-day Lending Facilities (ILF), were accessed by the banks to enable them either meet their short-term liquidity needs or place their surpluses.

The total SLF granted during the review period was N319.28 billion comprising of N227.68 billion direct SLF and N91.60 billion ILF converted to overnight repo.

It said daily average was N17.74 billion in the 18 transaction days from October 1 – 25, 2019. Daily request ranged from between N0.42 billion to N148.96 billion while total interest earned was N0.18 billion.

The total SDF granted during the period under review was N545.71 billion with a daily average of N30.32 billion in the 18 transaction days from October 1- 25, 2019. Daily request ranged from N6.90 billion to N43.90 billion while cost incurred on SDF in the month stood at N0.18 billion.

The SLF is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value. Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets. The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit. The rates for SDF and SLF remained at nine and 16 per cent, respectively.

The report also showed that total assets and liabilities of commercial banks amounted to N39.6 trillion  at end-September 2019, showing 0.1 per cent increase, compared with the level at the end of the preceding month. Funds were sourced, mainly, from sale of foreign assets, credit from the Bank and the realisation of claims on the Federal Government. The funds were used, mainly, to increase claims on the private sector, reduce unclassified liabilities and shore up capital.

Commercial banks’ credit to the domestic economy rose by 1.4 per cent to N22.1 trillion at end-September 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 component.

Total specified liquid assets of banks stood at N13.7 trillion at end- September 2019, representing 59.0 per cent of their total current liabilities. At that level, the liquidity ratio was 0.4 percentage point lower than the level at the end of the preceding month, and was 29.0 percentage points above the stipulated minimum liquidity ratio of 30.0 per cent. The loans- to-deposit ratio, at 62.1 per cent, was 1.1 percentage point above the level at the end of the preceding month and was lower than the maximum ratio of 80.0 per cent by 17.9 percentage points.

(The Nation)

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