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Deposit money banks (DMBs) in Nigeria borrowed a total of N10.2 trillion from the Central Bank of Nigeria (CBN) through the Standing Lending Facility (SLF) window of the apex bank in the first four months of this year.
New Telegraph’s analysis of CBN’s economic report for Q1, 2019, as well as the regulator’s economic reports for the months of January, February and April 2019, also indicates that while DMBs borrowed N10.2 trillion through the SLF window, the total Standing Deposit Facility (SDF) granted them by the apex bank during the period amounted to N3.8 trillion.
SLF is a window through which banks borrow funds from CBN to enable them meet their short-term cash needs.
The Standing Deposit Facility on the other hand, provides a window for banks to place their surplus cash with CBN with interest.
For instance, giving details of transactions on SLF and SDF windows in the first quarter of 2019 in its economic report for the period, the banking watchdog said: “The banks continued to access CBN’s Standing Facilities window to square up their positions, either by borrowing from the Standing Lending Facility (SLF) window or depositing excess liquidity at the Standing Deposit Facility (SDF) window of CBN at the end of each business day.”
Specifically, it stated: “Total request for the Standing Lending Facility (SLF), inclusive of Intra-day lending facilities (ILF) that was converted to overnight repo during the review quarter, stood at N8,406.49 billion, compared with N3,677.53 billion in the preceding quarter. Daily average transaction value amounted to N137.81 billion in 61 transaction days, with total interest earned at N5.65 billion, compared with the daily average of N62.33 billion in 59 transaction days, with total interest earned of N2.54 billion at the end of the preceding quarter.
“Total standing deposit facility (SDF) granted during the review period was N2.915.91 billion, with daily average of N47.80 billion, compared with N4,406.55 billion, in the first quarter of 2019. The cost incurred on SDF in the review quarter amounted to N0.99 billion, compared with N1.59 billion in the preceding quarter.”
Also giving details of transactions on both windows in its economic report for April, CBN stated: “The total SLF granted during the review period was N1,758.34 billion, (inclusive Intra-day Lending Facility (ILF) converted to overnight repo). Daily average was N103.43 billion in the 17 transaction days in April 2019. Total interest earned was N1.15 billion. The total SDF granted during the review period was N861.91 billion with daily average of N50.70 billion in the 17 transaction days. Daily request ranged from N3.30 billion to N145.40 billion. Cost incurred on SDF in the month stood at N1.27 billion.”
This means that for the first four months of 2019, total SLF and SDF granted by CBN amounted to N10.2 trillion and N3.8 trillion respectively.
A further breakdown of the figures shows that in January, applicable rates for the SLF and SDF remained at 16.00 per cent and 9.00 per cent, respectively. Also, daily average SLF granted during the period was N161.8 billion while total interest earned by the CBN was N2.06 billion.
Similarly, daily average SDF granted was N30.99 billion while costs incurred by CBN amounted to N0.20 billion.
Furthermore, the figures show that borrowings by DMBs through the SLF window increased to N2.98 trillion in February from N2.91 trillion in the previous month.
According to the CBN economic report for February, the SLF window recorded a daily average of N175.22 billion requests in the 17 transaction days in February 2019 while total interest earned was N1,958.25 billion.
“The total SDF granted during the review period was N520.21 billion with daily average of N30.60 billion in the 17 transaction days. Daily request ranged from N1.90 billion to N99.35 billion. Cost incurred on SDF in the month stood at N0.19 billion,” the report added.
Analysts point out that the DMBs would continue to be frequent visitors at the SLF window for as long as CBN continues with its tight monetary policy stance.
For instance, in the 2017 annual activity report released by its Financial Market Department, CBN stated that DMBs visited its SLF more frequently that year compared with the previous year.
According to the report, the average daily request for SLF in that year was N216.34 billion in 246 days, out of which Intra-day Lending Facility (ILF) conversion was N130.63 billion, amounting to 60.38 per cent of the total request.
The average daily interest charged was N159.96 million. But in 2016, the average daily request for SLF was N130.47 billion in 207 days, out of which ILF conversion was N84.62 billion, while average daily interest income was N94.76 million.
“The higher patronage at the window in 2017 reflected the effect of the tight monetary policy stance,” the report stated. (New Telegraph)
New Telegraph’s analysis of CBN’s economic report for Q1, 2019, as well as the regulator’s economic reports for the months of January, February and April 2019, also indicates that while DMBs borrowed N10.2 trillion through the SLF window, the total Standing Deposit Facility (SDF) granted them by the apex bank during the period amounted to N3.8 trillion.
SLF is a window through which banks borrow funds from CBN to enable them meet their short-term cash needs.
The Standing Deposit Facility on the other hand, provides a window for banks to place their surplus cash with CBN with interest.
For instance, giving details of transactions on SLF and SDF windows in the first quarter of 2019 in its economic report for the period, the banking watchdog said: “The banks continued to access CBN’s Standing Facilities window to square up their positions, either by borrowing from the Standing Lending Facility (SLF) window or depositing excess liquidity at the Standing Deposit Facility (SDF) window of CBN at the end of each business day.”
Specifically, it stated: “Total request for the Standing Lending Facility (SLF), inclusive of Intra-day lending facilities (ILF) that was converted to overnight repo during the review quarter, stood at N8,406.49 billion, compared with N3,677.53 billion in the preceding quarter. Daily average transaction value amounted to N137.81 billion in 61 transaction days, with total interest earned at N5.65 billion, compared with the daily average of N62.33 billion in 59 transaction days, with total interest earned of N2.54 billion at the end of the preceding quarter.
“Total standing deposit facility (SDF) granted during the review period was N2.915.91 billion, with daily average of N47.80 billion, compared with N4,406.55 billion, in the first quarter of 2019. The cost incurred on SDF in the review quarter amounted to N0.99 billion, compared with N1.59 billion in the preceding quarter.”
Also giving details of transactions on both windows in its economic report for April, CBN stated: “The total SLF granted during the review period was N1,758.34 billion, (inclusive Intra-day Lending Facility (ILF) converted to overnight repo). Daily average was N103.43 billion in the 17 transaction days in April 2019. Total interest earned was N1.15 billion. The total SDF granted during the review period was N861.91 billion with daily average of N50.70 billion in the 17 transaction days. Daily request ranged from N3.30 billion to N145.40 billion. Cost incurred on SDF in the month stood at N1.27 billion.”
This means that for the first four months of 2019, total SLF and SDF granted by CBN amounted to N10.2 trillion and N3.8 trillion respectively.
A further breakdown of the figures shows that in January, applicable rates for the SLF and SDF remained at 16.00 per cent and 9.00 per cent, respectively. Also, daily average SLF granted during the period was N161.8 billion while total interest earned by the CBN was N2.06 billion.
Similarly, daily average SDF granted was N30.99 billion while costs incurred by CBN amounted to N0.20 billion.
Furthermore, the figures show that borrowings by DMBs through the SLF window increased to N2.98 trillion in February from N2.91 trillion in the previous month.
According to the CBN economic report for February, the SLF window recorded a daily average of N175.22 billion requests in the 17 transaction days in February 2019 while total interest earned was N1,958.25 billion.
“The total SDF granted during the review period was N520.21 billion with daily average of N30.60 billion in the 17 transaction days. Daily request ranged from N1.90 billion to N99.35 billion. Cost incurred on SDF in the month stood at N0.19 billion,” the report added.
Analysts point out that the DMBs would continue to be frequent visitors at the SLF window for as long as CBN continues with its tight monetary policy stance.
For instance, in the 2017 annual activity report released by its Financial Market Department, CBN stated that DMBs visited its SLF more frequently that year compared with the previous year.
According to the report, the average daily request for SLF in that year was N216.34 billion in 246 days, out of which Intra-day Lending Facility (ILF) conversion was N130.63 billion, amounting to 60.38 per cent of the total request.
The average daily interest charged was N159.96 million. But in 2016, the average daily request for SLF was N130.47 billion in 207 days, out of which ILF conversion was N84.62 billion, while average daily interest income was N94.76 million.
“The higher patronage at the window in 2017 reflected the effect of the tight monetary policy stance,” the report stated. (New Telegraph)
