Bank deposits rose by N6.95tn in one year – CBN

An emerging report by the Central Bank of Nigeria (CBN) has claimed that bank deposits rose by N6.95tn between February 2019 and February 2020.

The CBN in the report on some of the personal statements of members of the Monetary Policy Committee disclosed this on Thursday, May 13.

The report read in part: “However, there were moderate declines in returns on equity and returns on assets and a significant rise in the share of operating incomes in total interest incomes of Deposit Money Banks.

“All measures of bank size, total assets, credit and deposits significantly rose year-on-year. Over N4.56tn additional credit was created in the last one year, N300bn in the last one month and N6.95tn of additional deposits.”

The central bank, in its latest monthly economic report for January, noted that broad money supply (M3) declined in January 2021 due, largely, to the fall in net domestic assets of depository corporations, which more than offset the growth in net foreign assets.

It explained that net foreign assets of the banking system grew by 1.3 per cent to N7.22tn of the end of January 2021, compared with the growth of 20 per cent at the end December 2020.

According to the report, the net domestic assets declined by one per cent, compared with a decline of 6.7 per cent in the corresponding period of 2020.

The development was due, mainly, to the reduction in CBN claims on other financial corporations and state and local governments.

It maintained that M3 fell by 0.6 per cent at end-January 2021, compared with the decline of 2.1 per cent at end-December 2020.

The report added that the growth in narrow money (M1) was driven, wholly, by the increase in transferable deposits, reflecting economic agents’ continued confidence in the banking sector.

According to it, this development was buttressed by the decline in the ratio of currency outside depository corporations to M1.

It also noted that the growth in domestic claims reflected increased net lending to the central government and claims on the private sector, induced by the bank’s effort to enhance economic activities.

Net claims on the central government grew by 6.4 per cent at end-January 2021, in contrast to a decline of 4.5 per cent in the corresponding period of 2020.

The development reflected, largely, net claims of commercial and merchant banks and non-interest banks on account of increased government securities holdings.