Banks Borrow N4trn From CBN Standing Lending Window In May

By Nse Anthony-Uko

(Sundiata Finance) — The Central Bank of Nigeria (CBN) has granted credits totaling N4.05 trillion to commercial banks through the Standing Lending Facilities (SLF) window in May, a decline of 24 per cent from N5.3 trillion in April.

Commercial banks use the CBN’s SLF window to support their liquidity shortfalls and meet trading obligations on short term basis.

According to CBN’s Economic report for May, standing facilities window showed more patronage at the standing lending facility (SLF) window, compared with the standing deposit facility window (SDF).

According to the report, “Total request for the standing lending facility granted during the reviewed month was N4,050.49 billion, compared with N5,338.17 billion in the preceding month.

“This was made up of N1,243.63 billion direct SLF and N2,806.86 billion intra-day lending facility (ILF) converted to overnight repo. Daily request ranged from N171.62 billion to N345.69 billion, resulting in daily average of N225.03 billion for the 18 transaction days.

“Total interest earned was N2.81 billion, compared with the total interest of N4.05 billion earned in the preceding month.

“Total standing deposit facility granted during the review period was N467.33 billion with a daily average of N29.21 billion, compared with N369.45 billion in April 2017. The cost incurred on SDF was N0.16 billion in May 2017, compared with N0.12 billion in April 2017.”

The report by CBN stated that total assets and liabilities of the commercial banks in May 2017 amounted to N32.9 trillion, showing a 0.6 per cent increase, compared with the level at end-April 2017.

It explained that these funds were sourced, mainly, from unclassified liabilities, claims on private sector and drawdown on reserves.

It further disclosed that commercial banks’ credit to the domestic economy hits N21.1 trillion, fell by 1.1 per cent, compared with the level at end-April 2017.

“The development was attributed to the fall in claims on the Federal Government and the private sector, at the end of the review month,” the report by CBN added.

The report said the external sector weakened in May 2017 due to the decline in crude oil prices from an average of $52.90 per barrel in April 2017 to $51.04 per barrel.

According to report, “Increased shale oil production in the United States and supply by non-members of the Organisation of Petroleum Exporting Countries (OPEC) both contributed to the fall in crude oil prices. Consequently, foreign exchange inflow through the CBN, at $2.26 billion, declined by 21.4 per cent below the level in the preceding month, but was 27 per cent above the level in the corresponding period of 2016. The decline relative to the level in the preceding month was driven by fall in both oil and non-oil proceeds.

“Aggregate outflow of foreign exchange through the Bank at $3.02 billion, increased by 39.6 and 78.7 per cent above $2.16 billion and $1.69 billion in the preceding month and the corresponding period of 2016, respectively.

“The development was driven by outflow through foreign exchange special payment, drawings on letters of credit, inter-bank utilization and external debt service. Overall, the net outflow through the Bank in the month of May 2017 was $0.76 billion, in contrast to a net inflow of $0.71 billion and $0.09 billion recorded in the preceding month and the corresponding period of 2016, respectively.

“Aggregate foreign exchange inflow into the economy amounted to $5.78 billion, representing 5.0 per cent decline below the level in the preceding month, but showed an increase of 30.8 per cent above the level in the corresponding period of 2016. The development relative to the preceding month reflected the fall in inflow through the Bank. Inflow through autonomous sources and the Bank were $3.52 billion and US$2.26 billion and, accounted for 60.9 per cent and 39.1 per cent of the total, respectively.

“Non-oil sector inflow, at $1.39 billion (23.1 per cent of the total), fell by 30.2 per cent, below the level in the preceding month. Autonomous inflow, rose by 9.8 per cent, above the level in April 2017. Aggregate foreign exchange outflow from the economy, at $3.18 billion, rose by 38.8 per cent and 70.4 per cent, above the levels in the preceding month and the corresponding month of 2016, respectively. Thus, foreign exchange flows through the economy, resulted in a net inflow of $2.60 billion in the review month, compared with $3.79 billion and $2.55 billion, in April 2017 and the corresponding month of 2016, respectively,” the economic report by CBN added.

 

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