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Q2 report: CBN sells N3.75tr bills, as currency-in-circulation drops 5.6%

By on September 13, 2013

The Central Bank of Nigeria (CBN), at the weekend said it sold a total of N3.752 trillion in treasury bills at the primary market segment between April and June, down from the N4.703 trillion that was “offered, subscribed to and allotted in the preceding quarter comprising 91, 182 and 364-day bills.

According to the CBN Economic Report for the second quarter of 2013, the 91-day Nigerian Treasury Bills (NTBs) accounted for N1.005 trillion; 182-day, N1.752 trillion and 364-day, N1.0 trillion, compared with N1.084 trillion; N2.515 trillion and N1.04 trillion in the preceding quarter.

“The bid rates ranged from 8.50 to 15.02 per cent, for the 91-, 182- and 364-day tenor, while the stop rates ranged from 10.30 – 13.22 per cent,” the report added.

Also, within the period under review, currency-in-circulation and deposits at the apex bank fell by 5.6 per cent to N1.425 trillion, as against the 7.6 per cent decline at the end of March. This was linked mainly “to the 9.3 per cent decline in currency outside the banks.”

In April, currency in circulation fell by 2.5 per cent to N1.47 trillion, and by 10.7 per cent in January, when it stood at N1.457 trillion after climbing 4.2 per cent owing to the yuletide spending spree. Year-on-year, the June 2013 level however represented an increase of 6.89 per cent over the June 2012 figure of N1.363 trillion, currency in circulation. The preceding half year’s level fell by 4.8 per cent, compared with a decline of 8.5 per cent at the end of the preceding quarter.

 

Cashless policy

Although the report did not directly link the currency-in-circulation decline to the fact that the cashless policy is continuously gaining ground across the country, it is however safe to infer that much, going by the growth in the volume and value of transactions undertaken on different available electronic channels within the period. The policy was part of measures to reform the nation’s payment system and change the orientation from cash to non-cash means of payment for settlement of trades.

After about 18 months of the pilot phase in Lagos, between January 2012 and June, 2013, the cashless policy entered its second phase as implementation began in Ogun, Rivers, Anambra, Abia, Kano, as well as the Federal Capital Territory, Abuja in July.

Available data from the CBN shows that at the end of second quarter 2013, payment through electronic channels, amounted to N2.3 trillion in over five billion transactions. The payment channesl include: cheques, Point of Sales, (PoS), terminals, NIP and Automated Clearing House transactions.

Payment through cheques, the oldest means of non-cash exchange for goods and services remained dominant in the settlement of transactions by both the public and private sector. Cheques accounted for 950,000 transactions worth N600 billion or 26.08 per cent in the second quarter; coming however behind Automated Clearing House transaction value (N986 billion), as volume stood at 2.5 million within the period. There was equally a significant growth in the volume of PoS transitions at 600, 000 units worth N10 billion.

NIBSS Instant Payment, NIP also recorded one million transactions volume with N750 billion in value terms.

In all, government accounts for 54 per cent of settlement transactions volume while private payments account for 46 per cent volume, having recorded aggregate transitions volume of 2.7 billion and 2.3 billion respectively.

 

Deposits

Available data indicated that the total assets and liabilities of Nigerian banks, the CBN report said, stood at N22.539 trillion at the end of the review period, representing an increase of 1.0 per cent over the level at the end of the preceding quarter.

“The funds, which were sourced, largely, from reserves and increased mobilisation of demand deposit liabilities, were used mainly to extend credit to the private sector and acquisition of unclassified assets,” report added.

The deposits and liabilities of Nigerian banks in the 2013 second quarter also represents a N2.573 trillion or 12.88 per cent growth over the N19.966 trillion reported for the corresponding half year of 2012.

Also, the N11.966 trillion bank credit to the domestic economy, in the 2013 half year rose by 5.3 per cent above the level in the preceding quarter, owing largely to the 14.3 per cent increase in claims on the Federal Government.

The “Central Bank’s credit to the banks, rose by 1.5 per cent to N242.4 billion at the end of the review quarter, reflecting the increase in overdrafts to banks, while total specified liquid assets of the banks stood at N8,544.63 billion, representing 56.1 per cent of their total current liabilities. At that level, the liquidity ratio, fell by 31.6 percentage points below the level in the preceding quarter, but was 26.1 percentage points above the stipulated minimum ratio of 30.0 per cent. The loans-to-deposit ratio, at 43.9 per cent, was 5.6 percentage points above the level at the end of the preceding quarter, and 36.1 percentage points below the prescribed maximum ratio of 80.0 per cent,” the report added.

 

N15.69tr private sector credit

The report also put credit extended to Nigeria private sector by banks within the period to N15.692 trillion, a 2.8 per cent rise over the 2013 first quarter, an improvement over the 0.7 per cent growth at the end of the preceding quarter and 4.1 per cent climb, compared with the corresponding second quarter of last year.

 

Continuing deficit

Also, the second quarter economic report showed estimated that the Federal Government’s spending activities between April and June, 2013, resulted in N432.12 billion deficit.

The amount, which translates to 4.8 per cent of the nation’s Gross Domestic Product (GDP), was almost double the N221.77 billion or 3.1 per cent of GDP envisaged for the period in this year’s budget.

Total federally-collected revenue for the period was N2.37 trillion represented a 2.3 per cent slide from the first quarter’s figures, and 5.2 per cent drop, when compared with the corresponding period of 2012. It was equally 16.4 per cent down from the budget estimate.

Of the amount, oil revenue accounted for N1.813 trillion or 76.5 per cent, a 6.1 per cent decline from the proportionate budget estimate and 1.9 per cent from the level in the preceding quarter.

 

Dwindling oil revenue

“The development relative to the preceding quarter was attributed to the decline in all the components of oil revenue during the review quarter, except non-oil receipts (gross), which at N556.95 billion (23.5 per cent of the total), was below  the level in the preceding quarter and the proportionate budget estimate by  3.3  and 38.3  per cent, respectively.  The decline in non-oil revenue relative to the preceding quarter reflected, largely, the decline in customs and excise duties, independent revenue of the Federal Government, education tax and customs.

“As a percentage of projected second quarter 2013 nominal GDP, oil and non-oil revenue were 25.6 and 7.9 per cent, respectively,” the report added.

The report also noted that the nation’s “crude oil production, including condensates and natural gas liquids, was estimated at 1.93 million barrels per day (mbd) or 175.63 million barrels compared with 2.05mbd or (184.5 million barrels) in the preceding quarter.

The 2013 second quarter oil production level also represented a decline of 8.96 per cent from 192.92 million barrels produced in the corresponding period of 2012, at 2.12mbd.

The 2013 second quarter figures, the CBN said, “represented a decline in production of 0.12 mbd or 5.9 per cent. Consequently, crude oil export was estimated at 1.48mbd or (134.68 million barrels) in the review period, compared with 1.60mbd or 144.0 in the preceding quarter, thus representing a decline of 7.5 per cent. The development was attributed to the incessant pipeline vandalisation resulting from crude oil theft in the Niger Delta. Allocation of crude oil for domestic consumption was 0.45 mbd or 40.95 million barrels during the period under review.

“At an estimated average of US$105.24 per barrel, the price of Nigeria’s reference crude, the Bonny Light (37º API), fell by 8.8 per cent, from the level in the preceding quarter… Similarly, at US$100.90 per barrel, the average price of OPEC’s basket of eleven crude streams also declined by 7.8 and 4.9 per cent, compared with the average of US$109.48 and US$106.08 per barrel recorded in the preceding quarter and the corresponding quarter of 2012, respectively. The fall in prices was attributed to the on–going Eurozone economic turmoil and high record levels of the US oil inventories.

 

 

 

[Daily Independent]