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Bank lending rates top 21.26% in August 2013 – CBN

By BusinessNews Staff on October 20, 2013

The Central bank of Nigeria, on Friday, released its economic report for the month of August. The report indicated that key monetary aggregate decelerated at the end of August 2013.

Also, on a month-on-month basis, broad money (M2) fell by 1.3%, which the CBN sees as a development which reflected largely in a decline of 4.6% in the domestic credit (net) of the banking sector, which more than offset the 0.9 and 4.5% growth in foreign assets (net) and other assets (net) of the banking system, respectively. Similarly, narrow money (M1) fell by 3.9%, compared with the decline of 6.0 and 2.5% at the end of the preceding month and the corresponding period of 2012, respectively. The development was attributed, wholly, to the 4.9 per cent decline in its demand deposit component. Over the level at end of December 2012, M2 and M1 contracted by 5.6 and 15.5%, respectively. Reserve money (RM) rose by 9.1% above its level in the preceding month.

Banks’ deposit and lending rates generally trended upward during the review month. The spread between the weighted average term deposit and maximum lending rates widened by 0.39 percentage point to 17.28% in August 2013.

Similarly, the margin between the average savings deposit and maximum lending rates widened by 0.66 percentage point to 21.26% at the end of the review month. The weighted average inter-bank call rate rose to 15.13% from 10.61% in the preceding month, reflecting the liquidity condition in the interbank funds market. Provisional data indicated that the value of money market assets outstanding at end-August 2013 was N6,556.26 billion, indicating a decline of 0.1%, in contrast to the increase of 0.3% at the end of the preceding month.

The development was attributed, largely, to the 4.4 and 9.4% decrease in Bankers’ Acceptances and Commercial Paper, respectively. Activities on the Nigerian
Stock Exchange (NSE) were bearish as the major indicators trended downward during the review month. Total federally-collected revenue (gross) in August 2013 was estimated at N760.29 billion. This was lower than both the monthly budget estimate and the receipt in the preceding month by 19.5 and 27.6%, respectively. At N457.23 billion, oil receipts (gross), which constituted 60.1% of the total revenue, was below the monthly budget estimate and the level in the preceding month by 29.1 and 29.2 %, respectively. The fall in oil receipts, relative to the budget estimate, was attributed, largely, to the shortfall in receipts from crude oil exports and other oil revenue in the review period.

Non-oil receipts (gross), at N303.06 billion (39.9% of the total), exceeded the provisional monthly budget estimate by 0.9%, but was lower than the level in the preceding month by 25.1%. The rise in receipts relative to the monthly budget estimate reflected, largely, the increased receipts from Corporate and Education Taxes. Federal Government estimated retained revenue wasN261.88 billion, while total estimated expenditure was N362.16 billion. Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N100.28 billion, compared with the provisional monthly budget deficit of N73.92 billion.

Agricultural activities in August 2013 were boosted by stable and well distributed rainfall. Activities in the sector were dominated by harvesting of maize, yam and vegetables. In the livestock sub-sector, most poultry farmers intensified clearing and disinfesting of broiler houses and surroundings to minimise the incidence of diseases associated with wet season. The farmers also re-stocked broilers to target end of year festivities. Crude oil production was estimated at 1.88 million barrels per day (mbd) or 58.28 million barrels during the month. The end-period inflation rate on a year-on-year basis, was 8.2%, 0.5 percentage point below the level in the preceding month. The inflation rate on a 12-month moving average basis was 9.8%, compared with the preceding month’s level of 10.0 per cent.

Foreign exchange inflow and outflow through the CBN in August 2013 were US$3.40 billion and US$3.47 billion, respectively, and resulted in a net outflow of US$0.07 billion. Foreign exchange sales by the CBN to the authorized dealers amounted to US$2.93 billion, showing a decline of 26.4% below the level in the preceding month.

Relative to the level in the previous month, the average Naira exchange rate vis-à-vis the US dollar depreciated marginally to N157.31/US$ and N162.28/US$ at the wDAS and bureau-de-change segments of the market, respectively, from N157.32/US$ and N162.43/US$ in the preceding month. It, however, depreciated at the interbank segment of the market fromN1161.12/US$ to N161.15/US$ in August 2013. Non-oil export receipts decreased by 77.0 per cent below the level in the preceding month. The development was attributed largely to the fall in receipts from the industrial, manufactured, agricultural products and food products sectors.

World crude oil output in August 2013 was estimated at an average of 90.04 million barrels per day (mbd), while demand was estimated at 90.18 million barrels per day (mbd), compared with 89.95 and 89.64 (mbd) supplied and demanded, respectively, in the preceding month.

The rise in demand was attributed to increased transportation and industrial fuel usage by the non-OECD countries.

Other major international economic developments and meetings of importance to the domestic economy during the review period included: the meetings of the African
Caucus comprising African Governors of the International Monetary Fund and World Bank held in Khartoum, Sudan from August 21 – 22, 2013. Furthermore, the 7 Annual Micro Small and Medium Enterprises (MSMEs) Conference of the Central Bank of Nigeria (CBN), adjoined with the D-8 Workshop on Microfinance for SMEs was held in Abuja, Nigeria from August 15 -16, 2013. The theme of the Conference was ‘Strategies for Sustainable MSMEs Financing’. During the Conference, the Governor of the Central Bank of Nigeria launched a N220 billion MSMEs Microfinance development fund in the country.

[Nigerian Telegraph]

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