Banks’ average daily deposit with CBN drops to N48.32bn

The Central Bank of Nigeria (CBN) says the average daily deposit amount of N84.27 billion in 246 transaction days in 2018 dropped to N48.32 billion in 251 transaction days in 2019.

This was contained in the bank’s 2019 Annual Activity Report released by the Financial Markets Department, CBN, and posted on its website on Friday, November 6.

The report read in part: “Patronage at the SDF window decreased to an average daily amount of N48.32 billion in 251 transaction days in 2019, from N84.27 billion in 246 transaction days in 2018.

Similarly, the average daily interest payments on the deposits decreased to N17.22 million from N30.51 million in 2018.

The reduction in volume of transactions for the year was due to the change in remunerable SDF from N7.50 billion to N2.00 billion per day per participant.

In order to ensure compliance with the Bank’s directive that DMBs should maintain minimum LDR of 60 and 65 per cent at end-September and end-December 2019, respectively, a number of some market participants rediscounted their bills with the CBN.

OMO Bills worth N140.55 billion with outstanding days to maturity of 1 to 352 days were rediscounted at rates that ranged from 13.50 per cent to 14.38 per cent, thus total interest earned was N6.98 billion in 2019.

At the inter-bank funds market, the value of transactions increased by 34.70 per cent to N45,426.06 billion in 2019 from N33,724.98 billion in 2018, due to improved confidence among banks.

A breakdown of the transactions showed that Open Buy Back (OBB) accounted for 98.72 per cent, while the unsecured segment accounted for the balance of 1.28 per cent, compared with 98.34 per cent and 1.66 per cent, respectively, in 2018.

At the OBB segment, transactions increased by 35.21 per cent from N33,166.53 billion in 2018 to N44,843.91 billion in 2019 (Table 2.6).

Similarly, tenored-call transactions increased from N2.00 billion in 2018 to N72.61 billion in 2019.

Conversely, transactions at the inter-bank market showed a decrease in call placements by 8.43 per cent from N556.45 billion in 2018 to N509.54 billion, in 2019.

Interest rates at all segments of the market mirrored the level of liquidity in the banking system and market response to the Bank’s policy direction.

The fiscal operations of the Federal Government, effect of CRR maintenance, LDR and SDF policy, settlement for foreign exchange interventions, maturity of OMO Bills, as well as liquidity withdrawals through OMO auctions were the factors that influenced net liquidity and interest rate movement in the banking system.

The average monthly inter-bank call rates ranged from 3.64 to 16.71 per cent in 2019, compared with 3.10 to 25.43 per cent in 2018, respectively, while average monthly OBB rates ranged from 3.18 to 18.29 per cent in the same period, compared with 2.88 to 21.64 per cent in 2018.

The closer range recorded in 2019 was attributable to better pricing in the inter-bank money market.

The average monthly rate at the overnight segment was 12.14 per cent in January, decreased to 7.31 per cent in May and closed at 3.64 per cent in December 2019.

Correspondingly, the OBB rate was 17.54 per cent in January, decreased to 8.25 per cent in May and closed at 3.18 per cent in December 2019.

The declining average monthly rate in the review period was due to banks’ increasing willingness to engage in inter-bank transactions.

The Nigerian Interbank Offered Rate (NIBOR) for call and 30-day tenors averaged 11.43 and 12.34 per cent in 2019, compared with 13.90 and 13.75 per cent in 2018, respectively.