Nigerian banks borrowings from the CBN Standing Lending Facility (SLF) skyrocketed (YoY) by 737% to N2.3 trillion in April 2021 from N274.65 billion in April 2020.
This is according to the CBN latest Monthly Economic Report for April 2021.
As a result of this jump, CBN profits from the SLF increased by a massive 381% over the period, to N1.33 billion from N270 million in April 2020. However, during the review period, banking system liquidity fell by 67%, from N440.78 billion in April 2020 to N146 billion in April 2021.
What the report is saying
According to the reports, “Activities at the standing facility windows showed a predominance of the lending window over the deposit window with applicable rates for the SLF and SDF at 12.5% and 4.5% respectively.
“The recourse to standing facility resulted in a net lending of N2.18 trillion, due to tight liquidity in the banking system.
“Total request for the SLF in April 2021 was N2.3 trillion (made up of N1.5 trillion direct SLF and N759.06 billion intra-day lending facility converted to overnight repo).
“Daily request averaged N135.45 billion in the 17 transaction days with total interest earned at N1.33 billion.
“Total SDF granted, during the review period, was N118.94 billion with daily average of N7.00 billion in the 17 transaction days. Cost incurred on SDF in the review month stood at N0.23 billion.”
On the issue of liquidity, the report stated that: “Banking system liquidity took a downward turn and caused an upsurge in money market rates in the review month. The decline in the banking system liquidity was as a result of provisioning and settlement of foreign exchange and CBN bills purchases, as well as Cash Reserve Requirements (CRR) debits. “Nevertheless, repayment of matured securities and fiscal disbursements to the three tiers of government moderated the liquidity condition in the banking system.
“Consequently, the average net industry liquidity position in April 2021 declined by 43.3% to N146.59 billion, compared with the N258.71 billion recorded in the preceding month.”