Nike Popoola has reported that the Increased liquidity in the banking sector has continued to raise the lending institutions’ capacity to increase credit to the economy,
Popoola stated that the Deposit Money Banks and merchant banks in the country borrowed N1.81tn from the Central Bank of Nigeria in the first quarter of the year.
according to data obtained from the CBN.
According to data obtained from the Central Bank of Nigeria, in April, they borrowed N274bn from the apex bank, thereby increasing the amount borrowed to N2.08tn in the first four months of the year.
According to the report by CBN, the banks continued to access the standing facilities window to square up their positions.
The trend at the CBN standing facilities window showed more frequency at the Standing Lending Facility window, as against the decreased patronage at the Standing Deposit Facility window.
CBN’s first-quarter economic figures showed that applicable rates for the SLF and SDF stood at 15.50 and 8.50 percent respectively in the month of March.
The total request for the SLF during the first quarter of 2020 was N1.81tn, made up of N1.21tn direct SLF and N597.96bn intraday lending facilities converted to the overnight repo.
Daily requests ranged from N0.72bn to N181.63bn and averaged N40.26bn in the 45 transaction days in the period.
Total interest earned at 15.50 percent was N767.13bn.
The total SDF granted during the review period was N843.09bn, with a daily average of N14.05bn in the 60 transaction days in the first quarter of 2020.
Daily requests ranged from N1.57bn to N47.90bn, according to CBN.
CBN said the cost incurred on SDF in the first quarter of 2020 stood at N460m.
In the April monthly economic report of the CBN, the trend at the CBN standing facilities window showed more frequency at the SDF window, as against the decreased patronage at the SLF window due to the excess liquidity in the banking system.
It said applicable rates for the SLF and SDF remained at 15.5 percent and 8.5 percent respectively.
The total request for the SLF granted in April was N274.65bn, made up of N163.5bn direct SLF and N111.15bn ILF converted to the overnight repo.
The daily request ranged from N1.43bn to N94.17bn and averaged N18.31bn in the 15 transaction days from April 1 to 27.
Total interest earned at 15.5 percent was N270m, according to the apex bank.
Total SDF granted during the review period was N497.67bn with a daily average of N29.27bn in the 17 transaction days from April 1 to 27.
The daily request ranged from N140m to N41.23bn, while the cost incurred on SDF in the month stood at N160m.
However, as more funds were made available to the banks, credit to the economy continued to grow.
The CBN stated in the report that credit to the private sector grew by 6.6 percent in April, compared with 5.7 percent in the month of March, driven largely by other depository corporations’ credit, reinforcing the effectiveness of the Loan-to-Deposit ratio policy of the apex bank.
It stated that sectoral credit utilization by the other sectors of the economy, at N18.53tn, rose by 0.25 percent at the end of April above its level at the end of March.
Analysis of the composition of credit indicated that the sectors with lower risk weights received most of the credit.
The industry and services sectors constituted 37.3 percent and 38.4 percent of the total allocation respectively, compared with 37.9 percent and 38.1 percent in the month of March.