Why banks’ deposits rose to N12.33trn – NDIC

By CHIMA TITUS NWOKOJI

A 13.75 per cent increase in total deposit liabilities of insured banks has been attributed to improvement in service delivery, innovative and aggressive deposit mobilization, as well as increase in the number of Automated Teller Machines (ATMs) in strategic locations. In its annual report and statement of account 2011, the Nigeria Deposit Insurance Corporation (NDIC) said total deposit liabilities of insured banks increased from N10.84 trillion as at December 2010 to N12.33 trillion as at December 2011. Other reasons that led to the increase, according to NDIC, include the introduction of new products, as well as sanitation efforts of the regulatory authorities that is bringing back lost confidence in the system.

The corporation stated that savings deposits in insured banks increased by N271.16 billion or 16.9 per cent from N1.60 trillion as at 2010 to N1.87 trillion as at December 2011.” Similarly, the Central Bank of Nigeria (CBN) in its half year report supported the NDIC’s report.

The apex bank’s report indicates that at 97.6 per cent, the short-term deposit of Deposit Money Banks (DMBs) constituted the bulk of total deposits, with those maturing less than 30 days accounting for 77.3 per cent. The medium and long-term deposits constituted the balance of 2.4 per cent. It stated that “Quasi-money grew by 5.4 per cent in the first half of 2012, compared with 9.8 per cent at end-June 2011. The development reflected the growth in savings and time deposits.

“At that level, QM contributed 2.6 percentage points to the growth in total monetary assets, compared with 5.0 percentage points at the end of the corresponding period of 2011.” Quacsi-money is described by financial experts as assets that are easily convertible into cash, such as money market accounts and bank deposits. Also known as near money, QM is a highly liquid asset that may easily be converted to cash.

The market share of the largest bank with respect to assets and deposits stood at 14.0 and 14.9 per cent, respectively, at end-June 2012, compared with 13.1 and 12.8 per cent at the end of the corresponding period of 2011 the CBN stated. Meanwhile, in the first half of 2012, prime and maximum lending rates rose to 17.02 and 23.27 per cent, respectively, from 15.77 and 22.00 per cent in the corresponding half of 2011.

The spread between DMBs average term deposit and maximum lending rates narrowed to 16.46 percentage points in the first half of 2012 from 17.60 percentage points at end-June 2011. With the year-on-year inflation rate at 12.9 per cent in June 2012, all deposit rates were negative in real terms.