Friday, January 21

CRR Debits hits N10 trillion in first 9 months of 2021

The Central Bank of Nigeria currently has in its kitty a cumulative amount of N10 trillion in Cash Reserve Requirement (CRR) debits for banks in Nigeria for the first 9 months of 2021. This is according to data contained in the money and credit stats of the apex bank.

Nairametrics conducted a detailed breakdown of CRR debits from 10 of the prominent locally owned commercial banks in the country. The banks reported a CRR of N8.04 trillion in the first 9 months of 2021. The amount is 1.6% higher than the N7.9 trillion held by the central bank in the entire 2020. This is based on data pooled from the financial statements of the major banks listed on the Stock Exchange.

The banks include Access Bank, GT Bank, FBN Holdings, FCMB, UBA, and Sterling Bank. The others are Union Bank, Stanbic IBTC, Fidelity Bank, and Zenith Bank Plc.

CRR Debits during the year

Nigeria’s central bank by regulation forces banks to retain up to 30% of their deposits in cash reserve requirement, meaning that the deposits are not accessed by the banks for loans and advances. The policy which started in 2019 has drawn veiled criticisms from most of the banks who have cited a drop in their interest income as a major consequence.

During the year Nairametrics estimates about N8 trillion was held by CBN as CRR debits from the 10 banks under review out of a total deposit of N34.3 trillion. This represents an average of 23.4% compared to 25.7% a year ago and much lower than the 27.5% stipulated by the apex bank as CRR. Nairametrics estimates about N10 trillion is held by the CBN as CRR for all banks as contained in the money and credit statistics of the CBN. It was N11.1 trillion same period last year.

Despite the average being lower in the first 9 months of the year, some banks did record a higher CRR compared to others. Stanbic IBTC for example had about 44.6% of its deposits kept with the central bank as CRR.  The effect can be seen in Stanbic’s interest income over the years. From recording an interest income of N91 billion in the first 9 months of 2019, the bank’s income from interest dropped to N81.9 and N73 billion in the first 9 months of 2020 and 2021 respectively. The CRR of N488 billion is also 59% of its loan book of N827 billion.

Union Bank also reported a significantly higher CRR to deposits at 36.2% after the apex bank kept N464 billion of its deposits. Other banks under review had CRR below the regulatory limits in the first 9 months of the year as the chart above depicts. Access Bank leads with the highest CRR with N1.37 trillion and is closely followed by Zenith bank and FBNH. They are also the top 3 banks in terms of customer deposits.