THE Central Bank of Nigeria, CBN, spent N2 trillion to mop up liquidity in the banking system in 2018, up by 42 percent from N1.5 trillion in 2017.
The sharp increase was triggered by increased liquidity level in the banking system during the year. Meanwhile the Apex bank earned about N8.2 billion on lending to banks during the year, down by 79 percent from N39.3 billion in 2017.
On the other hand, it paid about N7.4 billion as interest on deposit placement by banks, up by 131 percent from N3.2 billion in 2017. The CBN disclosed these in its annual activity report for 2018 released yesterday. The report stated: “Total CBN Bills offered, subscribed and sold at the OMO auctions increased to 34,610.06 billion, 24,916.29 billion and 22,350.16 billion, compared with 13,762.94 billion, 12,344.90 billion, and 11,346.48 billion, respectively, in 2017.
“The high level of activity during the review period was attributable to the increased number of auctions to moderate the excess banking system liquidity, occasioned by the payments of statutory revenue to the three tiers of government, other fiscal disbursements and maturing CBN Bills, amongst others. Consequently, the cost of liquidity management in 2018 increased by 42.01 per cent to 2,114.04 billion, from 1,488.68 billion in 2017.”
On the CBN’s lending to banks in 2018 through it’s Standing Lending Facility (SLF) the report said: “The average daily request for SLF was 48.44 billion in 234 transaction days, out of which ILF conversion averaged 30.43 billion, amounting to 62.82 per cent of average daily requests. The average daily interest charged was 35.81 million.
In 2017, the average daily request for SLF was 216.34 billion in 246 transaction days, out of which ILF conversion was 130.63 billion or 60.38 per cent, while average daily interest income stood at 159.96 million. “The reduction in patronage at the window in 2018 reflected the higher levels of injections into the banking system.”
The above implies the CBN lent about N11.2 trillion to banks in 2018, down from N 53.1 trillion in 2017 while it earned about N8.2 billion as interest down from N39.3 billion in 2017. On the banks’ deposit placement with the CBN in 2018 through it’s Standing Deposit Facility (SDF) the report said: “Patronage at the SDF window increased to an average daily amount of 84.27 billion for the 246 transaction days in 2018, from 41.90 billion for the 230 transaction days in 2017