Total assets and liabilities of commercial banks amounted to N41.42tn at the end of October 2019, showing 4.6 per cent increase when compared with the level at the end of the preceding month.
The Central Bank of Nigeria disclosed in its economic report for November that funds were sourced, mainly, from increase in unclassified liabilities, mobilisation of time savings and foreign currency deposits.
The funds were used mainly to acquire unclassified assets, foreign assets and to boost reserves. Commercial banks’ credit to the domestic economy rose by 0.6 per cent to N22.26bn at end-October 2019, compared with the level at the end of the preceding month. The development was attributed to the rise in its claims on the private sector.
Total specified liquid assets of banks stood at N14.27tn at end-October 2019, representing 59.3 per cent of their total current liabilities. At that level, the liquidity ratio was 0.9 percentage point lower than the level at the end of the preceding month, and was 29.30 percentage points above the stipulated minimum liquidity ratio of 30.0 per cent.
The loan-to- deposit ratio, at 61.9 per cent, was 0.3 percentage point below the level at the end of the preceding month and was lower than the maximum ratio of 80.0 per cent by 18.10 percentage points. The CBN disclosed in its third quarter report that the total assets and liabilities of commercial banks in Nigeria rose from N37.14tn at the end of November 2018 to N39.58tn as of the end of August 2019.
It stated that the total assets and liabilities of commercial banks at the end of August 2019 fell by 0.1 per cent compared to what was recorded at the end of June 2019. According to the report, funds were sourced largely from increased foreign liabilities, realisation of foreign assets and reduction of claims on the CBN.
It said the funds were used mainly to reduce unclassified liabilities, settlement of time savings and foreign currency deposits and increased claims on the private sector. At N21.81tn, banks’ credit to the domestic economy at the end of August 2019 showed an increase of 3.5 per cent, compared with what it was at the end of June 2019.
The CBN said 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.
It said the total specified liquid assets of commercial banks amounted to N13.77tn at the end of August 2019, representing 59.4 per cent 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 loans-to-deposit ratio, at 61.1 per cent, 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. According to the CBN’s report, liquidity ratio was above the prescribed minimum, while the loan to deposit ratio was below the prescribed maximum in August 2019.
The CBN also disclosed that currency-in-circulation, on month-on-month basis, grew by 2.5 per cent to N2.05tn at end-October 2019, in contrast to the decline of 0.7 per cent at the end of the preceding month.
The development, relative to the preceding month, reflected the rise in its currency outside banks component.
Relative to the levels at the end of the preceding month, deposits of banks and the Federal Government with the CBN rose, while deposits of the private sector with the CBN declined. Overall, aggregate deposit at the CBN, rose by 0.9 per cent to N13.97tn at end-October 2019.
Of the total deposits at the CBN, the shares of the Federal Government, banks and the private sector were 45.7 per cent, 38.6 per cent and 15.7 per cent, respectively. Reserve money rose by 6.4 per cent to N7.44tn at end-October 2019.
The upward movement in reserve money reflected, mainly, the 8.0 per cent increase in deposits of banks with the CBN.