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No fewer than 8 banks have accessed the standby liquidity facilities window of the Central Bank of Nigeria (CBN) for the month of October.
Analysts say though they cannot point to the ones that used the widow, the aforementioned scenario shows some of the banks may be having liquidity stress for relying on the apex Bank to meet their cash needs.
“We have to be careful as analysts not to mention anyone. But the large banks have been crowding out the small ones in terms of deposits,” said Ayodeji Ebo, managing director and Chief Executive Officer of Afrinvest Securities Limited.
“The total deposits of Tier one banks have continued to increase at the expense of Tier 2 banks. That’s why the small banks are major participants in the window albeit the big ones also participate,” said Ebo.
Tier one bank make up 68.85 percent of total deposit of N16.12 trillion for 12 lenders collated by BusinessDay.
The banks are: Zenith, Access, Diamond Bank, Fidelity Bank, First City Monument Bank (FCMB), Guaranty Trust Bank (GTBank), Stanbic IBTC Holdings, First Bank of Nigeria Holding (FBNH), United Bank for Africa (UBA), Union Bank, Sterling Bank and Wema.
Nigerian banks’ deposit growth has hit a 3 year low due to increased appetite for Treasury Bills by customers and their move to clear pent up foreign exchange (FX) obligations.
Analysts interviewed by BusinessDay agree in tandem that the slow growth in customer deposits is also partly explained by the high interest rates, which necessitated a deliberate reduction (by banks) in the expensive components of their deposits.
The cumulative total deposits from customers of the 12 lenders increased by 1.0 percent to N16.97 trillion from N16.87 trillion the previous year.
In accessing the CBN window, “the fewer the banks the better,” said Johnson Chukwu, managing director and Chief Executive Officer of Cowry Asset Management Limited.
The rate of growth of bank deposits has been trending lower since the middle of last year.
Drilling down into the numbers Guaranty Trust Bank Plc’s, the largest lender by market value, had total deposits from customers dip by 4 percent to N1.87 trillion in the third quarter, 2017, while Access Bank’s and United Bank for Africa (UBA)’s total deposits fell by 8.21 percent and 1 percent to N1.92 trillion and N2.51 trillion respectively in Q3, 2017, compared to the earlier 2016 period.
Interbank interest rates (NIBOR) swung between the extremes of 120 percent p.a. – 20 percent p.a., according to available data.
“Naira shortage continues and market liquidity will remain tight pending debt maturies. The average opening balance of the banking system was N131.29bn short in October,” said Bismarck Rewane, CEO of Financial Derivatives Company.
BALA AUGIE
