The nation’s Deposit Money Banks suffered a 0.53 per cent decline in value by the end of February this year, just as the industry’s assets and liabilities settled at N32.1 trillion.
The lost value, which is about N170.2 billion, showed a sharp contrast from about N32.29 trillion in January, “according to the Central Bank of Nigeria (CBN’s) February report.
This indicates how much the ongoing recession, increasing non-performing loans and declining Capital Adequacy Ratio are impacting the net-worth of the sector.
Within the period under review, the financial institutions sourced funds mainly by drawing down their reserves with the apex bank, as well as frequent patronage of the regulator’s Standing Lending Facility.
On the other hand, funds, when sourced, were largely used not on credit extension to the real sector operators, but for the patronage of the Federal Government’s securities at higher yield.
Meanwhile, banks continued to rip off customers with low interest rate negotiations on deposits, while widening the lending rates, a situation that reduced their respective costs of capital considerably.
The development, which boosted some of their latest financial statements, was regarded as favourable rates’ negotiations with depositors.
While the depositors earn “peanuts”- an average of 4.2 per cent and 8.51 per cent for savings and term deposits respectively, the same customers pay as high as 29.3 per cent for borrowing.
Consequently, the spread between the average savings deposit and maximum lending rates, also widened by 0.27 percentage point to 24.86 percentage points at the end of February.
The one-month and 12-month maturity deposit rates fell from 8.58 per cent and 10.77 per cent in January 2017, to their respective levels of 8.24 per cent and 10.37 per cent, at end of February 2017.
However, banks’ credit to the domestic economy rose by 1.2 per cent to N21.8 trillion, against N21.54 trillion recorded at end- January 2017.
The development was attributed to the 4.8 per cent and 0.2 per cent increase in claims on the Federal Government and claims on the private sector, at the end of the review month.
Total specified liquid assets of commercial banks stood at N7.6 trillion, representing 42.2 per cent of the industry’s total current liabilities.
At that level, the liquidity ratio was 2.1 percentage points below the level at the end of the preceding month, but was 12.2 percentage points above the stipulated minimum ratio of 30.0 per cent.
The loans-to-deposit ratio, at 77.6 per cent, was 2.1 percentage points and 2.4 percentage points below the level at end-January 2017 and the maximum ratio of 80.0 per cent, respectively.