Banks’ Credit to Economy Rises to N21trn - THISDAY
BY Obinna Chima
Banks’ credit to the domestic economy increased slightly by 0.6 per cent to N21.074 trillion at the end of June 2019, compared with the level at the end of the preceding month, data provided by the Central Bank of Nigeria (CBN) has revealed.
The central bank disclosed this in its monthly economic report for July 2019, obtained recently. The development was attributed to the rise in claims on the federal government.
Also, the report showed that total assets and liabilities of the banks amounted to N39.623 trillion at the end of June 2019, showing a 0.2 per cent increase, compared with the level at the end of the preceding month. Funds were sourced, mainly, from foreign liabilities, mobilisation of time, savings and foreign currency deposits and reduction in claims on central bank.
The funds were used mainly, to acquire foreign assets, shore up capital accounts and pay off demand deposits. According to the report, total specified liquid assets of banks stood at N13.880 trillion at the end of June 2019, representing 59.7 per cent of their total current liabilities. “At that level, the liquidity ratio was 1.5 percentage point below the level at the end of the preceding month, but was 29.7 percentage points above the stipulated minimum liquidity ratio of 30 per cent. “The loans-to-deposit ratio, at 57.64 per cent, was 0.3 percentage point higher, compared with the level at the end of the preceding month and was lower than the maximum ratio of 80 per cent by 22.4 percentage points,” the report stated.
In terms of money market developments, during the review period, major financial market indicators remained relatively stable, “due to efficient liquidity management strategy of the Bank in both the domestic and foreign exchange markets.”
It stated that the net liquidity position and interest rates in the economy reflected the impact of liquidity injections and the Bank’s liquidity management operations. Also, movements in domestic money market rates were influenced, largely, by the level of liquidity which was triggered, mainly, by inflow through fiscal disbursements, maturing CBN securities and Federal Government of Nigeria (FGN) securities, as well as, outflow arising from provisioning and market participants continued access to the Bank’s discount window.
In all, the total value of money market assets outstanding in July 2019, was N12.39 billion, showing an increase of 1.2 per cent, in contrast to the decline of 1.9 per cent in the preceding month. The development was attributed to the four per cent and 17.2 per cent increase in the FGN Bonds and Commercial Paper outstanding, respectively. “Money market rates were generally stable and moved in tandem with the level of liquidity in the review period. Provisional data indicated that movements in banks’ deposit rates were mixed, while lending rates generally trended upwards in July 2019.
“With the exception of the 6-month, 12-month and over 12-month deposit rates, which rose to 10.31 per cent, 10.42 per cent and 9.78 per cent, respectively, from its preceding month’s levels of 10.24 per cent, 10.36 per cent and 9.72 per cent, all other rates of various maturities, fell from a range of 3.64 per cent – 9.24 per cent in the preceding month to a range of 3.58 per cent – 9.19 per cent in July 2019.
“The weighted average prime and maximum lending rates rose by 0.61 percentage point and 0.08 percentage point to 16.82 per cent and 30.94 per cent, respectively, in July 2019. “Consequently, the spread between the average term deposit and the maximum lending rates widened by 0.12 percentage point to 22.24 percentage points at end-July 2019. “Similarly, the spread between the average savings deposit and maximum lending rates widened by 0.11 percentage point to 27.01percentage points at end-July 2019,” it added.
According to the report, the average inter-bank rate, which stood at 8.38 per cent at end-June 2019, rose by 0.79 percentage point to 9.17 per cent at end-July 2019. The Open-buy-back (OBB) rate, which stood at 8.71 per cent in the preceding month, rose by 2.36 percentage points to 11.07 per cent at end-July 2019.
Similarly, the Nigerian inter-bank offered rate (NIBOR), for the 30-day tenor, fell to 11.93 per cent in the review period, compared with 12.10 per cent at end-June 2019. With headline inflation estimated at 11.13 per cent in July 2019, all deposit rates remained negative in real terms, while lending rates were positive in real terms.
Furthermore, it revealed that Commercial Paper (CP) outstanding held by commercial banks stood at N41.20 billion at the end of the review month, showing an increase of 17.2 per cent, compared with N35.15 billion recorded in the month of June 2019. Thus, CP constituted 0.3 per cent of the total value of money market assets outstanding in the review period, same as in the preceding month.
SON Seeks Return to Seaports
The Director General of Standards Organisation of Nigeria(SON), Mr. Osita Aboloma, has reiterated the need for the agency to be returned to the seaports. He said this during a meeting with the Minister of Industry, Trade and Investment, Mr. Adeniyi Adebayo and the Minister of State in the Ministry, Ambassador Maryam Katagum, recently.
Aboloma, while enumerating the organisation’s challenges, stressed the dangers SON’s absence from the seaports were causing the nation. According to him, SON’s presence at the seaports would enable it undertake quality verification and prevent the influx of substandard and life threatening products.
In addition, he said lack of funding for the completion and equipping of the National Metrology Institute in Enugu and improved staff to strengthen the 42 state and six regional offices, were other challenges the agency was facing.
However, he listed SON’s achievements to include a robust development process for market-driven standards as well as championing the harmonisation of standards within the West African Region and the continent to promote seamless trading across borders.
He listed some other achievements to include near completion of an ultra-modern laboratory complex in Lagos as well as a National Metrology Institute in addition to an existing Engineering Laboratory at Enugu and a Textile and Leather Laboratory located in Kaduna as part of the development of the National Quality Infrastructure.
Aboloma, hailed the ministers on the Mandatory Conformity Assessment program (MANCAP) for certification of locally manufactured products and the offshore Conformity Assessment program (SONCAP) for imported products as part of measures to promote the competitiveness of made in Nigeria and protect the Nation from imported substandard and life-endangering products.
According to him, the recent revalidation of international accreditation of the SON Food Technology Laboratories for biological and chemical testing with increased scope of parameters were aimed at supporting the economic diversification agenda of the federal government and timely for the implementation of the African Continental Free Trade agreement.
Furthermore, he stated that the sustained fight against the influx and circulation of sub-standard and life-endangering products through the setting up of a rapid response squad and prosecution of standards infractions with capacity support from the office of the Attorney-General of the Federation would support the development and growth of MSMEs. He disclosed that SON has streamlined its processes to facilitate Ease of Doing business in compliance with the Presidential Executive Order.