By Ken Afor
At the end of September 2023, bank borrowings from the Central Bank of Nigeria (CBN) Standing Lending Facility (SLF) increased year over year (YoY) by 79% to N269.6 billion from N150 billion at the end of September 2022.
Bank borrowing from the apex bank stood at N558.5 billion at the end of the first quarter of 2023 (Q1’23), but fell sharply QoQ by 90% to N55.3 billion at the end of the second quarter, Q2’23, reflecting an improvement in financial system liquidity during the period.
These quarter-on-quarter (QoQ) details of SLF were found in the CBN Financial data covering January to September 2023.
However, banks’ borrowing from SLF increased by a quantum leap of 387 percent to N269.6 billion in the third quarter of 23.
Despite the change, the apex bank’s Monetary Policy Committee, MPC, meeting communiqué in July 2023 stated: “In the banking system, Financial Soundness Indicators (FSIs) remained stable and strong.
“The Capital Adequacy Ratio (CAR) stood at 11.2 per cent, Non-Performing Loans (NPLs) ratio of 4.1 per cent and Liquidity Ratio (LR) of 48.4 per cent, as at end June 2023.”
The increase in banks’ SLF borrowings YoY is due to increased borrowing from both the public and private sectors.
The credit that banks extended to the government increased month over month (MoM) by 0.62 percent from N32.5 trillion in August to N32.3 trillion in July, according to the CBN Money and Credit Statistics data for August 2023.
Additionally, the data revealed that bank credit to the private sector increased MoM by 11% to N54.7 trillion from N54.1 trillion.
As a result, the MoM increase in net domestic credit from N86.5 trillion in July to N87.3 trillion in August was 0 point 92 percent.
The financial data also revealed that bank deposits in the apex bank’s Standing Deposit Facility, or SDF, increased YoY by 68 percent to N40.8 billion as of September ending 2023 from N12.7 billion as of September 2022’s end.
Bank deposits in the CBN SDF were N11 points 2 billion as of Q1’23, according to a QoQ analysis. The amount increased by 256 percent to N39.9 billion as of Q2’23’s end and by 21% to N40.7 billion as of Q3 2023 end.
