By Ngozi Amuche
The Central Bank of Nigeria has said that banks’ credit to the domestic economy rose by 0.6 per cent to N20.97 billion at the end of April 2019.
The apex bank, in its latest economic report, attributed the development to the rise in claims on the Federal Government, while total specified liquid assets of banks stood at N13.63 billion at the review period, representing 60.3 per cent of their total current liabilities.
However, at that level, the liquidity ratio was 0. percentage point below the level at the end of the preceding month, but was 30.3 percentage points above the stipulated minimum liquidity ratio of 30 per cent.
The loans to deposit ratio, at 58.49 per cent, was 1.0 percentage point lower, compared with the level at the end of the preceding month and was lower than the maximum ratio of 80 per cent by 21.51 percentage points.
Conversely, total assets and liabilities of the banks amounted to N38.64 billion at end April 2019, showing a 0.5 per cent increase, compared with the level at the end of the preceding month.
The CBN said funds were sourced, mainly, from mobilisation of time savings and foreign currency deposits, draw down on reserves and reduction in claims on the central bank. The funds were used mainly to acquire foreign assets, reduce claims on the Federal Government and to pay off demand deposits.
During the review period, observed excess liquidity in the system, arising, mainly from matured CBN bills and fiscal injections, were consistently mopped up through Open Market Operations’auctions.
Consequently, major money market rates trended in tandem with the level of liquidity in the system. The total value of money market assets outstanding in May 2019 was N12.49 billion, showing an increase of 0.9 per cent, compared with 4.1 per cent increase in the preceding month. The development was attributed, largely, to the 16.0 per cent, 2.9 per cent and 1.2 per cent increase in Bankers Acceptances, Commercial Paper and FGN Bond outstanding, respectively.
