Banking industry’s deposit liabilities hit N9.9tn — Report

The total deposit liabilities of the 24 Deposit Money Banks as at December 31, 2009 stood at N9.99tn. The amount, when compared with the N8.7tn collected in 2008, represented an increase of N1.29tn or 14.83 per cent.

It was learnt that the figures, which were contained in the 2009 annual report and statement of accounts of the Nigeria Deposit Insurance Corporation, released in Abuja, constituted the largest component of the liabilities of the balance sheet of these banks.

The 2010 report of the corporation for that sector of the Nigerian economy has not been released as most of the banks have not filed in their annual returns.

According to the report, the innovative and aggressive deposit mobilisation techniques employed by these banks as part of efforts to shore up their balance sheets in the wake of the banking sector reforms was a major reason for the increase in deposit liabilities.

Others are increase in the number of automatic teller machines in strategic locations, the introduction of new products as well as renewed depositors’ confidence in the banking system due to the ongoing reforms by the Central Bank of Nigeria and improvement in service delivery by banks.

It said, “Bank deposit liabilities usually constitute the largest component of the liabilities of a bank’s balance sheet. A thorough analysis of the types and sizes of deposits mobilised by banking institutions plays an important role in ensuring effective asset/liability management.

“As had been the trend over the years, the total deposit liabilities of insured banks increased from N8.7tn as at December 31, 2009 to N9.9tn in 2009, representing an increase of 14.83 per cent.

“Several reasons could account for the increase deposit of insured banks. These included innovative and aggressive deposit mobilisation by insured banks, increase in the number of ATMs in strategic locations, introduction of new products as well as renewed depositors’ confidence in the banking system due to the CBN reforms measures.”

The report further stated that the persistent growth of the country’s Gross Domestic Product, which had also resulted in improvement in household, had also led to the increased bank deposits.

A further analysis of the situation in 2009 compared with the 2008 figure revealed that savings deposits increased only in absolute terms but declined as a proportion of total deposits.

For instance, while savings deposits constituted 12.59 per cent of total deposits in 2008, that category of deposits declined to 11.78 per cent of total deposits in 2009.

The report showed that the demand deposits of the 24 DMBs amounted to N5.51bn. This, it noted, represented a 55.12 per cent of banks’ total deposit liabilities as at December 31, 2009.

As against the trend of savings deposits, the demand deposit liabilities declined both in absolute terms and as a proportion of total deposits liabilities mobilised by banks during the period under review.

For instance, demand deposits declined by N1.01bn or 15.45 per cent from N6.51bn in 2008 to N5.50bn in 2009.

Furthermore, demand deposit declined as a proportion of total deposit liabilities from 60.61 per cent to 55.12 per cent.

Source : Punch