Bank borrowings from the CBN have increased 79% to N269.6 billion

Borrowings by banks from the Central Bank of Nigeria, CBN, Standing Lending Facility, SLF, increased by 79 percent year on year (YoY) to N269.6 billion at the end of September 2023 from N150 billion at the end of September 2022.

Quarter-on-quarter (QoQ) SLF details in CBN Financial data covering January to September 2023 revealed that banks borrowing from the apex bank stood at N558.5 billion at the end of the first quarter of 2023 (Q1’23) and fell sharply QoQ by 90 percent to N55.3 billion at the end of the second quarter, Q2’23, reflecting an ease in financial system liquidity during the period.

However, banks borrowing from SLF took a quantum leap of 387 percent to N269.6 billion in the third quarter, Q3’23.

Despite the development, the apex bank’s July 2023 Monetary Policy Committee, MPC, meeting communiqué 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 rise in banks’ borrowings YoY from the SLF reflects the increased borrowings from the government and private sector.

The CBN Money and Credit Statistics data for August 2023 showed that banks’ credit to the government rose month-on-month (MoM) by 0.62 percent from N32.5 trillion in August to N32.3 trillion in July.

The data also showed that banks’ credit to the private sector increased MoM by 1.1 percent to N54.7 trillion from N54.1 trillion.

This resulted in a 0.92 percent MoM uptick in net domestic credit to N87.3 trillion in August from N86.5 trillion in July.

The financial data also showed that banks’ deposits in the apex bank Standing Deposit Facility, SDF, rose YoY by 68 percent to N40.8 billion as at September ending 2023 from N12.7 billion as at end of September 2022.

QoQ analysis showed that as at Q1’23 banks’ deposits in CBN SDF stood at N11.2 billion. The figure rose by 256 percent to N39.9 billion as at Q2’23 ending and ticked up by 2.0 percent to N40.7 billion as at end of Q3’23.