The Central Bank of Nigeria (CBN) loaned N11.57 trillion to Deposit Money Banks (DMBs) in the first half of this year, the apex bank’s financial markets report has shown.
A breakdown of the report showed that banks borrowed N95.63 billion in each of the 121 trading days within the coverage period ended June.
The loans, which came as Standing Lending Facility (SLF), including the Intra-day Lending Facilities (ILF), were accessed by the banks to enable them either meet their short-term liquidity needs, or place their surpluses.
The SLF is an overnight CBN credit available on banking days between 2pm and 3.30pm, with settlement done on same day value.
Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets. The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit. The rates for SDF and SLF remained at nine and 16 per cent, respectively.
According to the report, CBN standing facilities were available at the discount window for banks to meet up with their liquidity obligations by either borrowing from the standing lending facilities (SLF) or depositing excess funds at the standing deposit facilities (SDF) windows at the end of each business day.
The trend showed more recourse to the SLF in the first half, when compared to the corresponding period of last year. The remunerable limit for daily deposits per institution at the SDF remained at N7.50 billion.
The applicable rates, which were anchored to the Monetary Policy Rate (MPR), for the SLF and SDF, also remained 16.00 and nine per cent, from January to March 25, 2019, respectively; and 15.50 and 8.50 per cent from March 26 to June 2019.
In the first half of 2018, the applicable rates for SLF and SDF were 16.00 and nine per cent per cent respectively.
Continuing, the report said: “The average daily volume of SLF was N95.63 billion in 121 transaction days, of which Intraday Liquidity Facility (ILF) conversion constituted N35.50 billion or 37.12 per cent of the total request. As a result, the average daily interest income amounted to N66.87 million”.
In the first half of 2018, the average daily volume of SLF was N57.36 billion in 123 transaction days, of which ILF conversion constituted N45.54 billion or 79.39 per cent of the total request.
Consequently, the average daily interest income was N44.40 million. The higher patronage at the window in 2019 reflected the impact of the prevailing liquidity conditions in the banking system.
The report said patronage at the SDF window reflected an average daily amount of N67.64 billion for the 121 business days in the first half of 2019, representing a decrease from N88.30 billion for the 121 transaction days out of 123 business days in the corresponding period of 2018.
The average daily interest payments on the deposits decreased to N22.48 million in the review period, from N30.43 million in the corresponding period of 2018.
The reduced transactions, as reflected in the period under review, was traced to the tight liquidity conditions in the banking system.