Market News

In a bid to have more liquid assets to pay off current liabilities, the biggest banks in Nigeria have collectively reported a 120.7 percent increase in total cash and cash equivalents in the nine months of 2024.

The banks include: First Bank, United Bank for Africa, Guaranty Trust Holding Company, Access Bank, and Zenith Bank.

Data from the Nigerian Exchange Limited showed that cash and cash equivalents collectively reported by tier-one banks grew to N23.36 trillion in the nine months of 2024 from N10.6 trillion in the nine months of 2023, representing 120.4 percent increase over the period.

Cash equivalents are investment securities that are meant for short-term investing they have high credit quality and are highly liquid.

Analysts say an increase in cash and cash equivalents means better bank liquidity.

If the cash is earning interest or sitting idly in their account. If they have more money market instruments, they would earn interest on it, otherwise, the cash sits idly in their accounts.

Findings by BusinessDay show that three out of the five tier-one banks have more money market placements than cash in their accounts. Aggregate money market placements reported by these banks amounted to N5.09 trillion, while total cash held by the banks amounted to N5 trillion in the same period of 2024.

Bank Analysis

UBA

UBA’s cash and cash equivalents reported the highest growth by 270.5 percent to N5.85 trillion from N1.58 trillion.

Included in its cash and cash equivalents are N1.4 trillion of restricted balances with the central bank, N2.88 trillion of current balances with banks, N1.68 trillion worth of money market placements, N307 billion worth of cash, and N1.4 illion worth of unrestricted balances with the central bank.

Total cash generated from its core business activities used to cater for short-term obligations increased by 331.3 percent to N6.9 trillion from N1.8 trillion.

However, it generated a negative of N5.5 trillion from its investing activities during the period largely due to the purchase of investment securities, while net cash flow from financing activities was negative (N246 billion) due to repayments of borrowings.

Access Holdings Plc

Second on the list is Access Holdings with total cash and cash equivalent of N5.76 trillion, a 142.6 percent up from N2.37 trillion.

Its total cash and cash equivalents comprise N4.21 billion in cash and bank balances with banks, N279 billion in money market placements, and N678 billion in unrestricted balances with the central bank.

Furthermore, according to the movement in cash and cash equivalents, the tier-one bank generated N4.6 trillion from its core business activities, up from N1.4 trillion.

It also reported negative cash used in investing activities of N4.41 trillion largely due to the net acquisition of investment securities during the period and N209 billion negative from financing from repayment of interest-bearing borrowings.

FBN Holdings Plc

FBN Holdings cash and cash equivalent amounted to N4.63 trillion, 147.6 percent higher than the N1.87 trillion reported.

Its total cash and cash equivalents for the period comprise N3.3 billion in treasury bills included in financial assets at FVTPL, N1.2 trillion in treasury bills, and eligible bills excluding pledged treasury bills, N2.4 trillion loans and advances to banks excluding long-term placements, N364 billion in cash, and N603 billion balance with central banks other than mandatory reserve deposits.

From the movement of its total cash and cash equivalents during the period, FBN generated N3.9 trillion from its operations, up from N291 billion indicating that the bank grew cash generated from its core business activities enough to cover its short-term obligations.

Net cash flow from investing activities for the period was negative, amounting to N2.04 trillion largely due to the purchase of investment securities during the period.

Its net cash generated from financing activities grew on the back of proceeds received from borrowings, to N104 billion.

Zenith Bank

Zenith Bank’s cash and cash equivalents, despite being the lowest reported the highest growth by 270.5 percent to N5.85 trillion from N1.58 trillion.

Furthermore, a breakdown of the cash and cash equivalents reveals cash and bank balances with the CBN (less mandatory reserves) totaling N487 billion, due from banks worth N2.05 trillion, and treasury bills amounting to N295 billion.

The movement of its cash and cash equivalents shows that Zenith Bank’s core business operations fell to N685 billion from N1.16 trillion.

The bank also reported N-971 billion and N-102 billion from financing activities.

GTCO

Cash and cash equivalents reported by GTCO grew by 102.7 percent to N4.28 trillion in the nine months of 2024 from N2.11 trillion in the corresponding period of 2023.

Their total cash and investment securities comprise cash in hand of N528 billion, money market placements of N3.09 trillion, balances held with other banks totaling N969 billion, and unrestricted balances with central banks totaling N230 billion.

It generated N1.83 trillion from its core business activities during the period under review, higher than the N88 billion. Its net cash from investing activities during the period, however, was negative (N-1.14 trillion) due to the purchase of investment securities, while the net cash flow from financing activities amounted to N122 billion from proceeds from long-term borrowings.