The Central bank of Nigeria (CBN) has revealed that six banks accounted for 68.79% and 66.69% of total deposits and assets, compared with 63.88 and 63.79% in the second half of 2021.
This was disclosed by the Central Bank of Nigeria in its CBN’s Financial Stability Report June 2022 Edition published on Friday.
The CBN did not disclose the names of the banks in its report. However, it suggested that is consistent with the Herfindahl Hirschman Indices (HHI) of 954.53 and 933.89, for deposits and assets.
- “This was consistent with the Herfindahl Hirschman Indices (HHI) of 954.53 and 933.89, for deposits and assets, respectively, compared with 847.43 for deposits and 854.24 for assets at end-December 2021. The shares of individual banks ranged from 0.07 to 15.56 percent in deposits and 0.33 to 17.04 percent in assets
- “The total assets of OFIs, excluding BDCs, increased by 8.10 percent to N5,646.65 billion at the end-June 2022, from the level of N5,223.66 billion recorded at the end-December 2021, due largely to increase in investments, cash, and bank balances, net loans, and advances and placements.”
- Nigeria’s largest banks are represented by FUGAZ which Nairametrics coined from FirstBank, UBA, GTB, Access Bank, and Zenith Bank.
More on money supply: The CBN revealed that the broad money supply (M3) grew by 10.00% to N48,890.24 billion in end-June 2022.
- “The development reflected an increase in domestic claims (17.88 percent), arising from 31.61 and 12.44 percent growth in net claims on the central government and claims on ‘other’ sectors, respectively.
- “The increase in claims on ‘other’ sectors reflected improved credit delivery to the real economy. The growth in total monetary liabilities was due, mainly, to the rise in transferable deposits (16.61 per cent) and other deposits (8.19 per cent).”
The report added that growth in transferable deposits was due, largely, to the increase in transferable deposits of commercial and merchant banks, while the increase in other deposits was hinged on the 13.40 per cent rise in foreign currency deposits citing that Narrow money supply (M1) rose by 12.69 per cent to N20,347.59 billion at end-June 2022, compared with N18,055.86 billion at end-December 2021.
Decreased investments: CBN noted that investments increased by 21.24% to N1,231.45 billion, in end-June 2022, from N1,015.71 billion in end-December 2021, while cash and bank balance increased by 16.04 per cent to N263.82 billion, from N227.37 billion.
Net loans and advances and placements increased by 3.19% and 5.58% to N3,023.61 billion and N708.54 billion in end-June 2022, from N2,930.06 billion and N671.07 billion.
What you should know: Recall Nairametrics reported earlier that data from the CBN revealed money supply (otherwise termed M2) grew to a record high of N50.5 trillion as of October 2022.
- The amount of money supply in the country has risen by N6.1 trillion this year alone having closed at N44.4 trillion at the end of 2021.
- The increase is on track to beat the N6.6 trillion achieved in the whole of 2021.
Why this matters: An increase in the level of money supply in an economy is meant to deliver two major actions.
- It can help spur economic growth in the country as an increase in the supply of money in a depressed economy or one experiencing recession is often seen as a remedy.
- On the other hand, excessive money supply growth can trigger galloping inflation in any country forcing a reversal of strategy.
- While Nigeria has avoided a recession, the country is experiencing rising inflation which suggests that excessive money supply is a major concern that requires urgent fixing.