CBN debits Zenith, Access Bank, UBA, others N216 billion cash in one month

A report by the Monetary Policy Committee (MPC) has revealed that the Central Bank of Nigeria (CBN) debited commercial banks about N216 billion in June.

According to a member of the MPC, Adenikinju Adeola, the funds were statutory deductions for the Cash Reserve Ratio (CRR).

Adeola disclosed the information in his report at the MPC meeting.

The CRRS is a part of banks' deposits kept with CBN to maintain liquidity in the system. Adeola's report also stated that the banking system maintained positive financial health and remained strong.

The capital adequacy ratio dropped to 11.2% in June 2023 from 13.0% recorded in May 2023, but still within the requirements of between 10 and 15%.

The report also stated that the non-performing loans (NPL) ratio dropped from 4.5% in May 2023 to 4.1% in April 2023, while the liquidity ratio increased to 48.4% in June 2023 from the 44.5% recorded in May 2023.

The figure is above the minimum 30% required level by the apex bank.

He said liquidity in the economy for June came mostly from Net Cash Reserve Ratio debit of about N216 billion, Federation Allocation and Accounts Committee (FAAC) of N633.46 billion, and SWAP Transaction of N763.32 billion.

The Nation reports that Adeola explained that the monthly interest rate spread accounted for 23.15% in June 2023.

"On average, maximum lending and average savings rose between May and June 2023. The average Open Buy Back (OBB) rate month-on-month declined to 9.12 per cent in June 2023 from 12.6 per cent in May 2023," he said.

Other key developments in the financial markets listed by Adeola include:

Lower Treasury Bill rates at the primary auction.

Higher resort to Standing Facility than Standing Lending Facility.

Increased OBB transactions.

The external account recorded an overall balance of payments deficit of $1.62 billion in 2023, while the service sector deficit contracted by 3.9% to $3.01 billion.

"Service payments for the transport, insurance & Pensions, and Telecommunication sector fell in the review period. The primary income deficit narrowed by 18.7 per cent to US$2.69 billion due to a rise in the repatriation of dividends by 12.1 per cent," he said.

He also stated that as of July 20, 2023, the Gross External Reserves was $33.97 billion.

Adeola maintained that the Nigerian government retained revenue at N1,673.15 billion, lower than the pro-rata of N1,968.12 billion due to underperformance of FAAC receipts and Gross independent revenue.

Also, total expenditure by the federal government as of May 2023 stood at N4.7 trillion, 27.8% lower than the budget projection of N6.6 trillion.

The reason, the report revealed, was due to allocation for debt service, interest on Ways and Means, and capital expenditure.

He stated that the budget underperformed and negatively impacted the country's economic development.