Monday, December 23, 2024
Latest:
MONEY MARKETTOP STORY

Banks stop lending, prefers CBN’s excess liquidity

editor

By Niyi Olaoye

Indications have emerged that due to uncertainties in the economic environment, most Nigerian banks are not willing to lend to each other and to the real sector of the economy, preferring to place their excess liquidity with the Central Bank of Nigeria (CBN) for interest earning purposes.

Cowry Assets Management Limited revealed that Standing deposit facility (SDF) by the close of business last week increased by 23.64 per cent to N616.13 billion,” suggestive of surplus banks’ unwillingness to lend to one another,” while standing lending facility (SLF) increased by 97.90 per cent to N102.89 billion as borrowers (deficit units) borrowed from the CBN official window.

Banks access the SLF to borrow from the Central Bank of Nigeria (CBN) while they access the SDF to place deposit with the CBN. Presently the CBN charges 15 per cent as interest rate on loans to banks through the SLF while it pays 11 per cent as interest on deposit placement through the SDF.

The CBN had stopped publishing how much banks are making by lacing their excess liquidity as deposit via its Standing Deposit Facility.

However, prior to the stoppage, it will be recalled that in January 2015, that banks earned N27.26 billion as net interest earned from placing their excess liquidity as deposit with the CBN in one year.

Investigations revealed that from October 2013 to September 2014, banks placed N81.85 trillion as deposit with the CBN through the SDF and borrowed N5.14 trillion through the SLF. Further, the CBN paid interest of N32.9 billion on the deposit through the SDF, while it earned interest of N3.68 billion on loans to banks through the SLF.

Subsequent CBN’s Economic Report omitted information on how much banks made by placing their money as deposit via the SDF. Rather, the apex bank limited its report to how much it lent to banks via the SLF and how much banks placed as deposit via the SDF.

Meanwhile, Nigeria Interbank Offered Rate (NIBOR) for overnight funds last week, one month, three months and six months increased to 4.33 per cent (from 3.27 per cent), 9.04 per cent (from 9.02 per cent), 11.87 per cent (from 11.41 per cent) and 13.25 per cent (12.79 per cent).

Similarly, yields on the Nigerian Interbank True Treasury bills moved in mixed directions as yields on the one month and six months maturities fell to 3.33 per cent (from 4.43 per cent) and 9.08 per cent (from 9.13 per cent) respectively; while yields on the three months and 12 months maturities rose to 7.42 per cent (from 7.06 per cent) and 11.83 per cent (from 11.29 per cent) respectively.

You May Also Like

Edo 2020: NSCDC deploys 13,3111 personnel, 60 sniffer dogs

editor

Customs deny reported lift of ban on importation of rice through land borders

editor

Senate President lauds military onslaught against terrorists

editor

21 thoughts on “Banks stop lending, prefers CBN’s excess liquidity”

  • Pretty section of content. I just stumbled upon your blog and in accession capital to assert that I get in fact enjoyed account your blog posts. Any way I will be subscribing to your augment and even I achievement you access consistently rapidly.

  • Muy bien explicado todo, pese a que soy relativamente nuevo en OS-X, y un completo novato en php y mysql, he conseguido poner todo en marcha, muchas gracias por el aporte, un saludo…

  • Thank you a lot for sharing this with all of us you actually realize what you’re speaking approximately! Bookmarked. Kindly also discuss with my web site =). We could have a link trade arrangement between us!

  • In my view, business247ng.com does a great job of covering issues like this. While ofttimes intentionally controversial, the information is in the main thoughtful and challenging.

  • In my view, business247ng.com does a excellent job of dealing with subjects of this type. While often deliberately contentious, the information is more often than not well-written and challenging.

  • My brother suggested I might like this website. He used to be totally right. This post actually made my day. You cann’t consider simply how so much time I had spent for this info! Thank you!

  • 9/28/2016 Love the website– very user-friendly and tons of stuff to see!

  • business247ng.com does it yet again! Very thoughtful site and a well-written article. Nice work!

  • Excellent read. I just now forwarded this on 9/30/2016 to a fellow student who has been involved in some work of their own on this topic. To say thank you, he just bought me dinner! So, I guess I should say: Thank you for the meal!

  • Quite a good read. I just forwarded this on 10/2/2016 to a fellow student who’s been involved in a little research of her own on this subject. To say thanks, she just bought me lunch! So, I should probably say: Thanks for the drink!

  • business247ng.com does it again! Quite a perceptive site and a thought-provoking article. Keep up the good work!

  • I completely agree with your take on this subject and look forward to additional posts and comments here at business247ng.com. Thanks!

  • I’m pleased by the manner in which business247ng.com handles this sort of issue. Generally on point, sometimes polemic, always thoughtful and more often than not quite thought-provoking.

  • Many thanks for the great website you’ve set up at business247ng.com. Your enthusiastic take on the subject is certainly contagious. Thanks again!

  • I’m pleased with the way that business247ng.com deals with this kind of subject. Generally to the point, sometimes contentious, consistently well-researched and more often than not quite challenging.

  • business247ng.com does it yet again! Quite a informative site and a thought-provoking article. Thanks!

  • Good, solid content. I just now passed this on 10/25/2016 to a classmate who’s been involved in a little research of her own on the topic. To show her appreciation, he just bought me lunch! So, I guess I should say: Cheers for the meal!

Comments are closed.