Banks’ CBN borrowing notches 140% YoY
By Jeph Ajobaju, Chief Copy Editor
Borrowing by banks from the Central Bank of Nigeria (CBN) rose 140 per cent year-on-year (YoY) from N4.3 trillion in the first half of the year to June 2022 (H1 2022) to N10.35 trillion in H1 2023.
CBN data on its Standing Lending Facility (SLF) shows N4.95 trillion borrowing in the first quarter of 2023 (Q1 2023) surpassed that of H1 2022 and additional loans pushed the figure 5.05 per cent to N5.4 trillion in Q2 2023.
On the other hand, banks’ deposits in the CBN Standing Deposit Facility (SDF) reduced 2.0 per cent from N1.36 trillion in Q1 2023 to N898.25 billion in Q2 2023. However, total deposits grew 34 per cent in entire H1 2023.
The rise in bank borrowing from SLF partly reflects the continuous rise in currency outside the banking system and currency in circulation (CIC).
The CBN currency redesign measures between Q4 2022 and Q1 2023 channelled money into banks with huge rises their liquidity as CIC reduced drastically. That has reversed since the suspension of the policy in Q1 2023.
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Building adequate capital buffers
Aishah Ahmad, a member of CBN Monetary Policy Committee (MPC), explained in a personal statement in communique No. 148 of the 291st MPC meeting in May, said banking industry soundness indicators remain strong as of April 2023, per Vanguard.
She cited capital adequacy ratio at 12.8 per cent, non-performing loans ratio 4.4 per cent (from 5.3 per cent in April 2022), and liquidity ratio 45.3 per cent (above the 30.0 per cent minimum) even as credit to the real sector continued to grow.
“Stress test results showed that industry solvency and liquidity positions could withstand mild to moderate shocks in the short to medium term.
“Nonetheless, the sector must continue to build adequate capital buffers; ongoing implementation of the Basel III capital standards (which prescribes additional capital buffers) are relevant in this regard,” Ahmad stressed.
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