Written by Sarah NEGEDU

Banks’ credit hits N20.93tn in February

Total banks’ credit to the Nigerian economy increased by 1.3percent in three months, to hit N20.93trillion at the end of February 2019 compared with its level at the end of December 2018.

The banks’ total assets and liabilities however increased by 3.2percent during the period, to hit N38.40trillion, which is above the level recorded at the end of December 2018.

The Central Bank of Nigeria, CBN, reports that the funds were largely sourced from foreign liabilities; draw down on reserves and acquisition of credit from the CBN.

The funds were used, mainly, for payment of demand deposits, and settlement of claims on the CBN and the Federal Government.

Figures from the CBN’s first quarter report of 2019 shows that total specified liquid assets of the banks was N13.266trillion at end -March 2019, representing 59.5 percent of the total current liabilities.

At that level, the liquidity ratio was 2.2 percentage points below the level at end - December 2018, but 29 .50 percentage points above the stipulated minimum ratio of 30.0 percent.

The loans- to-deposit ratio, at 60 .04 percent, was 0.13 percentage point and 19. 96 percentage points lower than the level at end -December 2018 and the prescribed maximum of 80.0 percent, respectively.

On its monetary and credit developments report, the CBN said it loosened its monetary policy stance in the first quarter of 2019, as the Monetary Policy Rate was adjusted downward by 50 basis points to 13.50 percent from 14.00 percent.

The key monetary aggregate trended upward at end February 2019.

Over the level at end - December 2018, broad money supply (M3) grew by 4.3 percent to N34.798trillion at end - February 2019, compared with the growth of 16.4percent and 3.4 percent at end -December 2018 and the corresponding period of 2018, respectively.

The development reflected the respective growth of 10.7 percent and 1.0 percent in domestic credit (net) and other assets (net) of the banking system, which more than offset the 7.5 percent decline in net foreign assets.

Narrow money supply (M 1) fell by 6.2 percent to N11, 028.86 in February 2019, but contrasted with the growth of 5.2 percent at end -December 2018.

Relative to the level at the end of the corresponding period of 2018, narrow money supply (M 1), declined by 2. 9percent.

The fall reflected the 3.8 percent and 6.6 percent decline in currency outside banks and demand deposits, respectively.

Quasi -money grew by 1 .2 per cent at end - February 2019, compared with the growth of 18 .1 percent and 2. 5percent at end - December 2018 and the corresponding period of 2018, respectively.

The development was attributed to the rise in time and savings deposits of banks.

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