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Wednesday, 25 September 2013
Bankers’ Acceptances rise to N16.01bn on banks’ 36.9% investment
The value of Bankers’ Acceptances (BAs) held by Deposit Money Banks (DMBs) increased by 58.1 percent to N16.01 billion at the end of the second quarter of 2013, compared with the increase of 5.9 percent at the end of the preceding quarter, the Central Bank of Nigeria (CBN) has said.
The development reflected the 36.9 percent increase in investments in BAs by deposit money banks.
Consequently, BAs accounted for 0.2 percent of the total value of money market assets outstanding at the end of the review quarter, same as in the preceding quarter.
The CBN’s Economic Report for the second quarter of 2013 shows that the value of Commercial Paper (CP) held by the banks rose by 51.2 percent to N15 billion at the end of the second quarter of 2013, compared with N9.92 billion at the end of the preceding quarter. The development was
due to the increase in holding of CP by the merchant banks during the review period. Thus, CP constituted 0.2 percent of the total value of money market assets outstanding, same as at the end of the preceding quarter.
During the review period, money market rates were influenced by the liquidity condition in the banking system.
Monetary Policy stance remained largely restrictive as the Monetary Policy Rate (MPR) was maintained at 12 percent.
The Liquidity Ratio (L/R), Cash Reserve Requirement (CRR) and the Net
Open Position were also retained at their previous levels of 30, 12 and 1 percent, respectively. Money market indicators were relatively stable in the review quarter.
On two occasions, the CBN offered special OMO auctions at fixed rates of 12.75 and 12.35 percent during the quarter. The bank’s discount window also remained open to authorised dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF).
Provisional data indicated that the value of money market assets outstanding for the second quarter of 2013 stood at N6,547.20 billion, showing an increase of 5.9 percent, in contrast to the decline of 0.6 percent at the end of the preceding quarter. The development was attributed, largely, to the 5.6 percent increase in FGN Bonds outstanding.
Available data from the report indicated mixed developments in banks’ deposit and lending rates during the second quarter of 2013.
The average savings deposit rate rose to 2.04 percent from 1.73 percent in the first quarter of 2013. All other rates on deposits of various maturities, however, fell from a range of 5.05 – 8.39 percent
to a range of 4.71 -7.72 percent in the second quarter of 2013.
Similarly, at 6.58 percent, the average term deposit rate fell by 0.6 percentage point below the level in the preceding quarter. The prime and maximum lending rates rose by 0.19 and 0.74 percentage points to 16.62 and 24.56 percent in the second quarter of 2013.
Consequently, the spread between the weighted average term deposit and maximum lending rates widened by 1.34 percentage point to 17.98 percent from 16.64 percent in the preceding quarter.
The margin between the average savings deposit and the maximum lending rates, also widened by 0.43 percentage point to 22.52 percent from 22.09 percent. With the headline inflation rate of 8.4 percent at end-June 2013, all rates, with the exception of lending rates, were negative in real terms.