Credit to Private Sector Drops to N15.13bn in December 2018- Says CBN
By UMORU ABDULKADIR
The Central Bank of Nigeria (CBN) has said that the credit to private sector dropped to N15, 134.20 billion in December 2018 from N15, 340.93 billion in the half year period of the period under consideration, representing a 1.35 per cent decline by the end of December 2018.
The CBN revealed this in its Financial Stability Report for December 2018, released to the public on Thursday.
According to the report, of the total credit to the private sector at the end of December, 2018, Industry subsector accounted for the highest share, representing 41.00 per cent when compared with 38.50 per cent it achieved in the preceding half year.
The report which examines the overall performance of all sectors of the economy showed that deposit liabilities of banks (below one year) in the period constituted 88.1 per cent of the total (72.9 per cent had maturity period of below 30 days), When compared with 89.10 per cent at the end of June 2018, while medium and long-term deposits constituted 3.80 and 8.10 per cent of total deposits at 3nd of December respectively, compared with 4.00 and 7.30 per cent recorded at the of June 2018.
It noted that the number of banks and other financial institutions increased during the period under review with 299 Bureaux De Change (BDCs), 5 Microfinance Bank (MFBs) and 12 Finance Companies (FCs), bringing the total number to 4, 492 BDCs, 885 MFBs and 69 FCs at the end of December, 2018.
According to the FSR report, a routine bank examination reports depicted improvements in the composite risk ratings of the banks with the Cash Adequacy Ratio (CAR) of the banking industry increasing from 12.11 per cent to 15.21 per cent in the first half of 2018. This reflects improvement in the capital cover of banks’ exposure.
Similarly, the industry Return on Asset (ROA), Return on Equity (ROE) and interest margin recorded improvement, indicating the profitability of the Industry.
As part of efforts to boost public confidence in the payment system, the CBN, in the period being reviewed, established a new department known as ‘Payments Systems Management Department with mandate to strengthen the supervision and regulation of payment service providers as well as facilitate early emerging risks.
The Stability report further showed that the nation’s economy continued its gradual recovery as the Gross Domestic Product (GDP) rose by 2.10 in the second half 2018, noting that the achieved improvement was attributed largely to the rebound of activities in the service and agricultural sectors.
As indicated in the report, inflationary pressures pushed up marginally in the second half of 2018 with headline inflation rising to 11.44 per cent in December 2018 from 11.23 per cent at the end of June of the same year.
In line with CBN mandate of ensuring economic growth and maintaining price stability as well as in response to global and domestic developments, the bank maintained its non-expansionary monetary policy.
“Relative to the level at the end of December 2017, broad money supply M3, increased by 16.58 per cent at the end of December 2018. Net aggregate credit to the economy rose marginally by 6.42 per cent during the period in focus, reflecting the increase in both net claims on the Federal Government and credit to the private sector.”
While the nation’ external reserves depleted by US$4.57 billion in the second half of the yyear to US$42.59 billion, the naira remained relatively stable in the foreign exchange market, the report disclosed.
The report further showed that there were 5,486 Other Financial Institutions (OFIs) at end-December 2018, compared with the 5,350 institutions at end-June 2018, reflecting an increase of 136 OFIs. The change was attributed to the licensing of 317 new OFIs, reinstatement of a Primary Mortgage Bank (PMB) and revocation of the licences of 182 OFIs (154 MFBs, 22 FCs, 6 PMBs).
The report further stated total assets and net loans and advances of the sub-sector increased by 8.10 per cent and 8.93 per cent to N2,990.82 billion and N1,349.42 billion at end-December 2018, from N2,766.628 billion and N1,238.75 billion at end-June 2018, respectively. Total deposits increased by 5.09 per cent to N655.73 billion at end-December 2018 from N623.98 billion at end-June 2018, while shareholders’ funds decreased by 0.29 per cent to N538.73 billion at end-December 2018, from N540.31 billion at end-June 2018.
The increase in deposits was attributed largely to the disbursement of N50 billion Export Simulation Facility (ESF) to the Nigerian Export-Import Bank (NEXIM) by the Ministry of Finance Incorporated (MoFI), while the decrease in shareholders’ funds was due to the revocation of the operating licences of 182 OFIs.
Overall, activities in the money market during the review period reflected liquidity conditions in the banking system. Open Market Operations (OMO) and foreign exchange interventions in the market were the major liquidity management instruments. The open-buy-back (OBB) daily average rates opened at 29.69 per cent on July 2, 2018 and unsecured inter-bank call weighted daily average rate opened at 15.00 per cent on July 3, 2018. The rates peaked at 63.00 and 60.00 per cent on December 11, 2018 and thereafter moderated to 10.81 and 14.00 per cent, respectively at end-December 2018.
During the review period, the OBB rate ranged between 2.94 and 63.00 per cent, while the inter-bank call rate ranged between 2.5 and 60.00 per cent, respectively, compared with 1.85 to 131.04 per cent and 1.00 to 140.00 per cent for the OBB and inter-bank call rates in the first half of 2018. The monthly average OBB and inter-bank call rates closed at 21.64 and 22.68 per cent at end-December 2018, respectively, compared with
The capital market was not left out of the developments during the period, as the Nigerian Stock Exchange (NSE) All Share Index (ASI) closed at 31,430.50 at end-December 2018, a decrease of 17.89 per cent from the 38,278.55 recorded at end-June 2018. Market capitalisation (MC) also closed lower at N11, 720.72 billion, a decrease of 15.47 per cent from the N13, 866.42 billion recorded at the end of the preceding period. The decrease in both ASI and MC was due to foreign capital flow reversals.
Foreign portfolio investment (FPI) inflows in the second half of 2018 totaled N195.80 billion, while outflows stood at N223.59 billion, reflecting a net outflow of N27.79 billion. Inflows in the first half of 2018 amounted to N380.65 billion, while outflows stood at N419.06 billion, reflecting a net outflow of N38.41 billion. The net outflow in 2018 was attributed to capital flow reversal which was due largely to concerns over 2019 general elections and policy normalization in the US.
Overall, FPIs accounted for 51.96 per cent of total equity transactions in the review period, compared with 50.07 per cent recorded in the first half of 2018. Domestic transactions accounted for the balance of 48.04 per cent in the equity market, compared with 49.93 per cent in the first half of 2018.
The All-Share Index (ASI) opened at 38,221.71 and closed at 31,430.50, indicating a decrease of 6,791.21 points or 17.77 per cent. The MC of equities decreased by N1.86 trillion or 13.70 per cent, from N13.58 trillion at the beginning of July to N11.72 trillion at end-December 2018. In the first half of 2018, the ASI opened at 38,264.79 and closed at 38,278.55, indicating an increase of 13.76 points or 0.04 per cent. Similarly, the MC of equities increased by N0.25 trillion or 1.84 per cent, from N13.62 trillion at the beginning of January to N13.87 trillion at end-June 2018.
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