Deposits of banks declined by 18.4 percent, leading to a decline of 12.1 per cent of total deposits at the Central Bank of Nigeria (CBN), which amounted to N14.08 trillion at the end of August 2019.
The regulator had for the second time this year, raised deposit money banks’ portion of minimum loanable deposits to 65 in October.
Banks’ loans-to-deposit ratio stood at 61.1 per cent in August, which was 3.5 percentage points higher than the level at the end of June 2019, but 18.9 percentage points lower than the prescribed maximum of 80.0 per cent.
The Federal Government and the private sector’s deposit also declined by 9.3 percent and 5.8 percent respectively at the end of August, according to the economic report for the third quarter of 2019 released on Friday by the CBN.
The share of the Federal Government from the total deposits at the CBN (N14.08 trillion) was 44.3 percent, while the shares of banks and the private sector were 35.2 per cent and 20.5 per cent, respectively.
According to the report, reserve money fell by 13.7 per cent to N6.97 trillion at the end of August 2019, in contrast to the increase of 11.6 per cent at the end of June 2018. The development reflected the fall in banks’ deposits with the CBN.
Currency-in-circulation at the end of August 2019, rose by 0.1 per cent to N2.02 trillion, in contrast to the decline of 7.3 percent at the end of June 2019. The development, relative to the preceding quarter, reflected mainly the increase in its currency outside banks and demand deposit components.
Banks’ credit to the domestic economy stood at N21.81 trillion at the end of August 2019, which represented an increase of 3.5 per cent, compared with the level at end-June 2019. The development reflected, largely, the 3.7 per cent and 3.4 per cent rise in claims on the Federal Government and the private sector, respectively, in the review period.
Total assets and liabilities of commercial banks stood at N39.58 trillion at the end of August 2019, representing a 0.1 percent fall below the level at end-June 2019. Funds were sourced largely from increased foreign liabilities, realisation of foreign assets and reduction of claims on the Central Bank of Nigeria.
The funds were used, mainly, to reduce unclassified liabilities, settlement of time savings and foreign currency deposits and increased claims on the private sector.
Total specified liquid assets of the commercial banks was N13.78 trillion at the end of August 2019, representing 59.4 percent of the total current liabilities. At that level, the liquidity ratio was 5.5 percentage points and 29.4 percentage points above the level at the end of June 2019 and the stipulated minimum ratio of 30.0 per cent, respectively.
The report noted that developments in banks’ deposit and lending rates were mixed in the review quarter. With the exception of the 6-month deposit rate, which rose by 0.04 percentage point to 10.26 per cent, all other deposit rates of various maturities fell from a range of 3.68 – 10.37 per cent in the preceding quarter to 3.18 – 10.12 per cent in the third quarter of 2019.
The average term deposit rate fell by 0.28 percentage point to 8.45 percent in the third quarter of 2019, compared with 8.73 per cent in the second quarter of 2019, while the average savings deposit rate rose by 0.92 percentage point to 5.27 per cent at end-September 2019. The average maximum lending rate was 31.05 per cent, while the average prime lending rate stood at 15.55 per cent at end-September 2019.
Consequently, the spread between the weighted average term deposit and maximum lending rates widened by 0.29 percentage point to 22.60 percentage points at the end of September 2019. Similarly, the margin between the average savings deposit and maximum lending rates widened by 0.01 percentage point to 27.12 percentage points in the review quart
