Under the Standing Lending Facility (SLF) and Repo lending, the Central Bank of Nigeria‘s (CBN) borrowing from deposit banks increased year over year (YoY) by 12% to N2.02 trillion in September 2022.
The Standing Financing Facility (SLF) and Repo lending are two short-term lending options offered to banks by the CBN.Infomation Guide Nigeria
While the CBN lends money to banks via the SLF at an interest rate that is 100 basis points (bpts) above the Monetary Policy Rate (MPR), it also lends money via repurchase (Repo) agreements, which entail the purchase of banks’ securities with the intent to resell at a specific date and typically for a higher price.
On the other hand, the CBN offers its Standing Deposit Facility (SDF), through which banks can deposit funds, and pays an interest rate that is 700 basis points less than the MPR.
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According to data from the CBN Financial Statistics for September 2022, banks’ borrowing under repo agreements increased by 13% YoY in September 2022 compared to September 2021, to N1.19 trillion from N1.05 trillion.
In a similar vein, bank borrowing under the SLF of the CBN increased YoY by 10% to N836.48 billion in September 2022 from N756.37 billion in September 2021.
As a result, banks’ borrowing through the SLF and Repo from the apex bank increased by 63% YoY to N2.02 trillion in September 2022 from N1.8 trillion in September 2021.
Further study of the data revealed that bank deposits in the SDF of the CBN also increased YoY by 23.5 percent, from N210.6 billion in September 2021 to N260.2 billion in September 2022.
The banking industry underperforms all other sectors year to date (ytd), with the exception of industrial, according to Cowry Assets Management Limited analysts’ Macroeconomic outlook for the second half of 2022.
Group Managing Director, Cowry Asset Management Group, Mr. Johnson Chukwu said: “The industry lags behind every other sector bar Industrial in the ytd performance.Jamb Result
“The NGX Banking Index dropped from 406.1 index points to 378.2 index points, depreciating by -6.86 percent. Given adverse operating conditions currently observed, there will be a higher proportion of Non-performing Loans (NPLs) in the banking sector.”
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