Nigeria banks’ distress borrowing from CBN hits N12trn in 8 months
Nigerian banks’ borrowing from the Central Bank of Nigeria rose to N12 trillion in eight months, an indication that most of the banks are in distress situation and living on the good will of the apex bank.
The spate of intense borrowing by merchant and commercial banks from the Central Bank of Nigeria (CBN) has indicated an increasing reliance on the apex bank for liquidity.
According to data from the CBN commercial and merchant banks borrowed a total of N12.46 trillion from the apex bank between January and August this year.
The amount indicates a Year-on-Year increase of 79 per cent when compared with the N6.96 trillion recorded in the first eight months of 2022. This increased borrowing appetite which dominated the first months of the year was traced to the CBN’s new Naira note policy, a development that created a cash crunch in the economy.
Banks make use of two windows to either access funds or make deposits with the CBN.
They use the Standing Lending Facility (SLF) window to access liquidity to run their day-to-day business operations while the Standing Deposit Facility window(SDF) is used to deposit cash with the apex bank. The steady increase in banks’ borrowings from the SLF reflects the increase in currency outside banks and currency in circulation (CIC) in the economy. In the first five months of 2023, the borrowing from the CBN intensified as it recorded N7.5trillion, an increase of 276 per cent from N1.99 trillion reported in the first five months of 2022.
The figure further increased in the first six months (H1) to N10.25 trillion, representing an increase of 138 per cent Year-on-Year (YoY) from N4.3 trillion borrowed during the corresponding period of H1 2022.
A month by month breakdown of the figures borrowed from the CBN in 2023 revealed the sum of N528.16 billion was supplied to banks in January. The figure dropped to N453.7 billion in February 2023. There was a significant increase In March as the figure rose by 776.22 per cent to N3.98 trillion. In April 2023, the sum of N4.47 trillion was borrowed by banks from the CBN. For May and June 2023, the sum of N590.29 billion and N235.06 billion was recorded respectively, as the amount borrowed by the banks from the CBN while the figure stood at N908.43 billion in July and N1.3 trillion in August. The above analysis, shows the month that recorded the highest borrowing by banks was April with N4.47 trillion, seconded by March which recorded an SLF figure of N3.98 trillion.
