Dollar shortage: Moody’s says Nigeria’s recovery may take time – Punch

Oyetunji Abioye

Although foreign currency shortages in Nigeria and other sub-Saharan African countries are easing, it will take time for the sovereigns, banks and non-financial companies to restore their financial health, Moody’s Investors Service has said.

In a report released on Monday, Moody’s noted that dollar shortages stemming from lower oil and commodity prices had hit the finances of countries in the sub-region.

The report was titled, “Foreign-currency shortages are subsiding but will take time to overcome.”

In a statement on Monday, Moody’s Vice-President and co-author of the report, Lucie Villa, was quoted as saying, “Falling oil and commodity prices over the past two years have led to foreign currency shortages in numerous sub-Saharan African countries, with oil exporters hit particularly hard.”

“The stabilisation in oil and commodity prices over recent months will help to ease the pressure, but any recovery will depend on continued higher prices and could take some time.”

According to the VP, managing foreign currency shortages will remain a key policy challenge for sub-Saharan oil exporters.

In recent quarters, dollar rationing, currency devaluation and foreign currency borrowing by governments have stemmed the fall in external reserves in Angola and Nigeria.

According to the report, in the region’s banking sector, banks in Angola, Nigeria and the Democratic Republic of the Congo remain the most affected by foreign currency shortages due to their economies’ high reliance on dollars.

It said the region’s banks’ foreign currency deposits had been depleted and they had limited capacity to source new foreign funding.

“The resultant currency devaluations have also eroded banks’ loan quality, profitability and capital”, Moody’s Senior Vice-President and co-author of the report, Constantinos Kypreos, added.

According to a statement by Moody’s, pressures appear to be receding as their central banks continue to inject more dollars into the economy on the back of higher oil prices and related revenues.

Banks in South Africa are the least affected, reflecting the system’s limited dollarisation levels and low reliance on foreign funding.

The statement read in part “Although a gradual increase in commodity prices over recent months is supporting foreign currency liquidity and helping to ease currency shortages, it is too early to conclude that pressures on banks have reversed.

“This can only happen gradually as dollars flow back into the economies and exchange rates in ‘unofficial’ markets converge with official rates. Despite these challenges, banks in sub-Saharan Africa generally maintain high capital buffers and their profitability is robust.”

Non-financial companies operating in oil exporting countries such as Nigeria and Angola have been most affected by dollar scarcity and local currency weakness, according to the report.

Moody’s expects these challenges to continue in 2017 but alleviate in 2018.

“Dollar shortages make it difficult to pay suppliers of imported goods and equipment, meet dollar debt payments or to repatriate funds outside of the respective countries”

Moody’s Vice-President and co-author of the report, Dion Bate, was quoted as saying, “The associated local currency weakness increases the cost of servicing unhedged foreign currency debt obligations, reduces repatriated profits in foreign currency and lowers operating margins, as companies are not able to pass on high import costs to the consumer.”

Naira drops to 381/dollar despite CBN’s $205m offer – Punch

Oyetunji Abioye

The naira depreciated slightly from 380 per United States dollar to 38i/dollar on the parallel market on Monday.

This came despite a $205m dollar injection into the foreign exchange market by the Central Bank of Nigeria.

In a statement on Monday, the CBN said ahead of the outcome of the Monetary Policy Committee meeting in Abuja, it had injected over $205m into the foreign exchange market.

A breakdown of the intervention indicated that the sum of $100m was released for the wholesale segment of the market for both spots and forwards.

Also, Basic Travel Allowance which comes under invisibles segment garnered $50m while the Small and Medium-scale Enterprises segment got $55m.

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, said the newly created ‘Investors and Exporters FX Window’ had so far recorded a trade volume in the sum of $1.1bn from both the CBN and autonomous windows.

This, he said, was an indication of the appreciable level of confidence in the forex management by foreign investors and autonomous suppliers of foreign exchange to the market.

The naira, which hovered around 390/dollar about two weeks ago, has continued to appreciate on the back of continued forex injection by the CBN.

Market analysts have encouraged the CBN to continue with the latest forex policy measure.

Nigeria raises interest on unpaid taxes to try to discourage evaders – Reuters

ABUJA May 22 (Reuters) – Nigeria will increase the interest rate on unpaid taxes to discourage companies and individuals from paying late and racking up a larger debt, the finance ministry said on Monday.

The ministry said the measure will take effect on July 1 and that the rate would be five percent over a central bank rate known as the Minimum Rediscount Rate, a benchmark lending rate.

“The review of the interest rates on unpaid taxes was one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimize tax evasion and deter late payments,” the finance ministry said in a statement.

Economists have long criticised the low levels of tax in Africa’s largest economy and in March the Abuja government laid out plans to increase its overall tax to GDP ratio to 15 percent by 2020 from 6 percent now.

Among plans, the OPEC member seeks to improve tax collection, targeting an annual tax revenue of 350 billion naira ($1.15 billion) a year and proposes hiking a luxury goods tax to 15 percent from 5 percent. ($1 = 305.4000 naira) (Reporting by Camillus Eboh; Writing by Paul Carsten; editing by Richard Lough)

 

Saudi Arabia, Iraq agree oil output cut needs 9-month extension – Reuters

* First visit by top Saudi oil official to Iraq in 30 years

* Saudi, Russia pushing for nine-month extension to cuts

* Goldman says stocks should normalise if cuts prolonged 

By Ahmed Rasheed and Ernest Scheyder

BAGHDAD/VIENNA, May 22 (Reuters) – OPEC heavyweights Saudi Arabia and Iraq agreed on Monday on the need to extend a global cut in oil supply by nine months in an effort to prop up crude prices, removing a potential stumbling block as producing countries prepare to meet this week.

Saudi Energy Minister Khalid al-Falih said he did not expect any opposition within the Organization of the Petroleum Exporting Countries to extending the curbs for a further nine months, speaking after he met his Iraqi counterpart in Baghdad.

OPEC meets in Vienna on Thursday to consider whether to prolong the original deal reached in December in which OPEC and 11 non-member countries, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.

The Saudi minister told a joint news conference with his Iraqi counterpart Jabar Ali al-Luaibi that Iraq had given the “green light” to a proposal for a nine-month extension that would be presented to the meeting in the Austrian capital.

He said a new agreement would be similar to the previous pact, with minor changes. He said any decision would not be finalised until OPEC meets.

Falih was paying a rare visit to Iraq in the latest effort by the top oil producer to convince its fellow OPEC member to extend supply cuts to ease a global glut.

Iraqi Oil Minister Jabar Ali al-Luaibi said he agreed with Saudi Arabia on the need for a nine-month extension.

Saudi Arabia and non-OPEC Russia have been pushing to extend the cuts from the end of June until March 2018. Iraq, OPEC’s second-largest and fastest-growing oil producer, had until Monday voiced support only for a six-month extension.

It is the first time in nearly three decades that a senior Saudi energy official has visited Baghdad.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so. Stockpiles are hovering near record highs, partly because of rising production in the United States, which is not part of the existing deal.

“I believe we have a growing consensus (on the duration of cut extension),” OPEC’s Secretary-General Mohammad Barkindo told reporters in Vienna.

Iraq and Iran were the main stumbling blocks for OPEC in reaching its last output-cutting decision in December.

OPEC’S CHALLENGE

Baghdad argued it had just started enjoying production growth after years of stagnation and Tehran said it needed to raise output after the lifting of Western sanctions.

Iraq ended up agreeing to cap output in the first half of 2017 while Iran was allowed a slight rise in production.

Nigeria and Libya were granted exemptions from cuts as their output suffered from unrest. Both have regained some volumes in recent months and are expected to add more soon, adding to OPEC’s challenge in rebalancing the market.

Goldman Sachs, one of the most active banks in commodities trading, said on Monday a nine-month extension would help rebalance inventories in 2017 and keep Brent prices near $57 per barrel.

Brent futures were trading 0.6 percent higher at $53.92 a barrel on Monday at 1638 GMT.

Goldman said OPEC should put pressure on American shale oil producers by creating a market structure known as backwardation, when the future trading price of a commodity is below the current spot market value.

By extending cuts into 2018 and promising to boost output next year, OPEC could force the oil market into backwardation that would scare away private equity and other investors who have been funding the American shale producers.

“The binding force to sustainably slow shale growth lies on the funding side,” Damien Courvalin, a Goldman analyst, wrote in the research note to clients. (Additional reporting by OPEC team in Vienna; Writing by Isabel Coles, Dmitry Zhdannikov and Dale Hudson; Editing by David Goodman and Edmund Blair)

 

Central bank sustains supply of forex into market with $255m – Today

Ahead of the outcome of the ongoing Monetary Policy Committee meeting in Abuja, the Central Bank of Nigeria (CBN) on Monday again injected over $255 million into the foreign exchange market.

A breakdown of what market watchers termed as another massive intervention indicated that the sum of $100 million was released for the wholesale segment of the market for both spots and forwards.

Also, Basic Travel Allowance (BTA), which comes under invisibles segment, garnered $50 million while the Small and Medium Scale Enterprises (SME) segment got $55 million.

Meanwhile, the exchange rate convergence expectation of the CBN is fast being attained with the Naira exchange rate hovering between N375 and N380 to the Dollar.

The Acting Director, Corporate Communications Department at the CBN, Isaac Okorafor told reporters in Abuja that the Investors and Exporters segment of the market had so far recorded a trade volume in the sum of $1.1 billion from both the CBN and autonomous windows which according to him, was an indication of the appreciable level of confidence in the foreign exchange management by foreign investors and autonomous suppliers of foreign exchange to the market.

Nigeria central bank seeks to ease naira pressure with $100 mln auction – Reuters

By Oludare Mayowa

LAGOS May 22 (Reuters) – Nigeria’s central bank plans to sell $100 million at a special wholesale spot and forwards auction on Monday as it tries to improve dollar liquidity and ease pressure on the naira.

Africa’s largest economy, grappling with a currency crisis brought on by low oil prices which have hammered its foreign reserves and created chronic dollar shortages, has resorted to regular injections of dollars by the central bank to narrow the spread between the official and black market rates.

It has sold more than $4 billion to various sectors of the economy since the central bank started intervening on the official market in February, which currency traders say has increased liquidity in the official market and helped to ease pressure on the naira.

Traders, citing a notice from the regulator, said the currency forwards being auctioned on Monday would be settled within 60-days and backed by customer demand.

The naira was quoted at 381.91 per dollar at the investor window on Monday, according to the market regulator FMDQ OTC Securities Exchange.

It was quoted at 315 a dollar on the official interbank market by commercial lenders, while it trading at 380 a dollar on the black market.

The naira has firmed on the black market from its record low of 520 to the dollar in February, before the central bank’s intervention in the foreign exchange market. (Editing by Alexis Akwagyiram and Alexander Smith)

 

Cost of Funds Drops on Improved Naira Liquidity – Thisday

BY Obinna Chima

The overnight lending rate dropped to 26 per cent on Friday, from 65 per cent a day earlier after the Central Bank of Nigeria (CBN) refunded excess naira offered in an earlier dollar sale to commercial lenders, injecting liquidity back into the money market.

Traders said that a cash squeeze on the money markets on Thursday after lenders provided naira to participate in a central bank currency intervention had pushed the overnight rate sharply higher.

The banking system’s cash balance with the central bank stood at N24.61 billion early on Friday before the central bank refund, Reuters disclosed.

“We see rates easing further next week. We anticipate about N200 billion would be disbursed to government,” one currency trader said.

The central bank sells hard currency regularly on the interbank market to boost dollar liquidity but in turn mop-up the naira. If it does not take up all offers, the excess naira is returned to lenders.

In   the   just   concluded   week,   CBN   auctioned treasury bills via primary market, viz: 91-day bills worth  N32.436  billion, as Stop  Rate (SR),  fell  to 13.50 per cent from   13.598 per cent; 182-day   bills   worth N22.824   billion, SR   fell   to   17.149 per cent  from 17.40 per cent; and 364-day bills worth N55.683 billion as SR  fell  to  18.70 per cent  from  18.98 per cent, which  was more than offset by matured treasury bills worth N122.51  billion.

According to Cowry Asset Management Limited, a breakdown of the matured treasury bills showed 91-day bills  worth  N32.436 billion,  182-day  bills  worth  N34.39  billion  and 364-day  bills worth  N55.683  billion.

“However, interbank rates increased across all the tenor buckets amid sustained liquidity squeeze, in line with our expectation. This week, 282-day treasury bills worth N7 billion will mature. Hence, we expect slight improvement in financial system liquidity and resultant moderation in interbank rates,” Cowry Asset added.

Forex Market  

Last week, the naira appreciated week-on-week at the Bureau De Change (BDC) and parallel market  segments by  2.60 per cent and 2.31 per cent   to   close   at N375/$ and N381/$ respectively. Meanwhile, the Cowry Asset Management Limited disclosed in a report that weekly   movements   in   most   dated   forward contracts    at    the    interbank    OTC    segment suggested future appreciation of the naira viz-a-viz the US greenback despite decrease in the foreign exchange reserves.

The external reserves decreased week-on-week by 0.60 per cent to $30.723 billion as at Wednesday, 17 May 2017. But the one-month, three-month, six-month and 12-month forward  contracts  appreciated  week-on-week  by  0.11 per cent,  0.11 per cent,  0.11 per cent  and  0.12 per cent to  N319.69/$, N327.76/$,  N336.24/$ and  N353.70/$  respectively.

Furthermore, the spot rate appreciated by 0.05 per cent to N305.45/$ amid the $7.5 million in intervention sales by the Central Bank of Nigeria (CBN) to banks.

In  the  current  week,  we  expect  further  stability  in  the  foreign  exchange  market  with  possible  appreciation against the dollar subject to CBN’s level of intervention

 

Bond Market

In the  bond  market,  FGN  bonds  traded  at  the OTC    segment    depreciated    across    all    the  maturities  amid  sell  pressure,  in  line  with  analysts’ expectation.

In fact, the 20-year,  10.00%  FGN  JULY 2030  debt,  the  10-year 16.39 per cent FGN  JAN  2022 debt  and the  7-year  16.00%  FGN  JUN  2019 debt  depreciated  by  N0.16,  N0.46  and  N0.25 respectively;  just as their  corresponding  yields  rose  to 16.08% (from  16.04%),  16.23%  (from  16.09%) and    16.48%    (from    16.33%)    respectively.

Elsewhere,   FGN   Eurobonds   traded   on   the London   Stock   Exchange   increased   in   value across most of the maturities amid bargain hunting. The 10-year, 6.75% JAN 28, 2021 bond and the 10-year, 6.38%  JUL  12,  2023  bond  appreciated  by  $0.14 (yield  fell  to  4.908%)  and  $0.20  (yield  fell  to  5.80%) respectively.

This week, analysts anticipate resumed bargain hunting in the OTC market on the back of expected boost in financial system liquidity.

April Inflation

For three consecutive months, the Consumer Price Index (CPI), which measures inflation rate continued to decline, figures released by the National Bureau of Statistics (NBS) have indicated. The NBS said the CPI or inflation rate dropped to 17.24 per cent (year-on-year) in April, declining by 0.02 per cent from the figures recorded in March, 2017. The rate had dropped from 17.78 per cent in February to 17.26 in March, having stood at 18.72 per cent in January

“This is the third consecutive month of a decline in the headline CPI rate, exhibiting effects of some easing in already high food and non-food prices, as well as favourable base effects over 2016 prices.

“Increases were recorded in all Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline Index. The top items to have recorded the highest year- on-year increases across all the divisions were solid fuels, bread and cereals, meat, liquid fuels, clothing materials, other articles of clothing and clothing accessories, and fish,” the statistical agency said in its inflation report for April, 2017.

However, on a month-on-month basis, the headline index increased by 1.60 per cent in April 2017, a 0.12 per cent points lower than the rate recorded in March (1.72 per cent).

The NBS figures indicated that the highest price increases were recorded more in the food items segment such as coffee, tea and cocoa, potato, yam and tubers, bread and cereals, milk cheese and eggs as well and meat and fish. The data showed that the rate for food year-on-year was 18.44 per cent in March and 19.30 per cent in April.

FG’s February Revenue

Nigeria’s gross federally-collected revenue rose by 20.4 per cent in February 2017 to N545.05 billion, as against the N433.86 billion recorded in January 2017, the CBN’s economic report for February 2017 showed. The increase relative to the preceding month level was attributed to the rise in receipts from both oil and non-oil components.

But, the revenue receipt recorded in February, fell short of the 2017 provisional monthly budget estimate of N792.71 billion by 31.2 per cent, according to the report. Gross oil receipts, at N292.82 billion or 53.7 per cent of total revenue, fell below the provisional monthly budget estimate by 0.6 per cent. But, it was 37.9 per cent higher than the receipts in January 2017. The increase in oil revenue relative to the preceding month reflected the significant rise in receipts from domestic crude oil/gas sales and PPT/Royalties. According to the report, at N252.24 billion or 46.3 per cent of the total revenue, gross non-oil revenue was below the 2017 provisional monthly budget estimate of N498.14 billion by 49.4 per cent. It, however, exceeded the receipts in January 2017 by 4.9 per cent. The poor performance relative to the provisional budget reflected the shortfall in most of the components due to the low economic activities in the country during the review period.

 

Items Valid for Forex

Following misconceptions and enquiries across the market about items valid for accessing foreign exchange from the interbank market, the CBN last week listed the eligible items that are valid.

The CBN, in a circular signed by its Director, Trade and Exchange Department, W.D. Gotring, a copy of which was posted on its website, listed 35 set of items valid for forex, and urged authorised dealers to ensure compliance. The misconception was triggered by a recent central bank circular.

According to the latest circular, the items included animal or vegetable fats and oil fractions, hydrogenated (not including palm oil/Olein and margarine,); prepared glues and adhesive based on polymers of headings 39.01 to 39.13 or on rubber; other plates, sheets, film, foil and strip of polymers of ethylene printed (only for pharmaceutical manufacturing); and bobbins, spools, cops and similar supports of paperboard …..of kind used for winding textile yarn.

Some others listed were uncoated Kraft paper and board in rolls; synthetic filament yarn, textured yarn of nylon or other polyamides measuring per single yarn more than 50 text; woven fabrics of synthetic filament yarn, including woven fabrics obtained from material…polypropylene fabrics of the type used as carpet backing; laboratory – hygienic or pharmaceutical glassware; and other articles of plastics and articles of other matter (only for pharmaceutical manufacturing).

Naira climbs to a 3-month high against dollar – Daily Post

Naira cruised strongly into the weekend, exchanging at N380/$1 in the parallel market.

This is ahead of Monday’s Central Bank of Nigeria (CBN) led Monetary Policy Committee (MPC) meeting in Abuja.

At this third meeting in 2017, experts expect the MPC committee members to keep interest rate unchanged at 14 per cent; hold on Cash Reserve Ratio at 22.5 per cent and retain of Liquidity Ratio at 30 per cent.

The meeting is also expected to help the MPC review major developments in the global and domestic space, and consider way forward for the local economy.

The local currency was exchanging at N385/$1 on Thursday and Friday.

Last week, at the official foreign exchange market, the CBN conducted its weekly Secondary Market Intervention Sales (SMIS) auction.

CBN spokesperson, Isaac Okorafor, disclosed that both the spot and forwards segments garnered $267.3 million, while the wholesale segment got $100 million.

Okorafor said the Small and Medium Enterprises, SMEs, and invisibles segments comprising basic travel allowance, tuition fee and medical got $50 million and $40 million respectively.

As a result, rates at the interbank market appreciated from N304.60/$1 at the start of the week to settle at N304.45/$1 on Friday.

CBN Signals Retention of Tight Monetary Policy, Targets Rate Convergence – Thisday

• Banking industry fines drop by 79%

Obinna Chima

with agency report   

As the Monetary Policy Committee commences its two-day meeting today, a Deputy Governor of the Central Bank of Nigeria (CBN), Dr. Joseph Nnanna has disclosed that the central bank is likely to retain its tight monetary stance on persistent dollar shortages.

The CBN has also restated its resolve to converge the multiplicity of exchange rates in the forex market.

The exchange rate of the naira against the U.S. dollar appreciated on the parallel market last week when it gained N6 to close at N380 on Friday, stronger than N386 last Monday, as the central bank sustained its dollar injection in the interbank forex market.

However, in other segments of the market – banks and Travelex – the naira traded at N362 to the dollar.

But Nnanna told Bloomberg at the weekend that the aim of the new forex window for investors was to “achieve the convergence” between the different exchange rates.

The currency trades at N382 to the dollar on the new window for investors, 18 per cent weaker than the interbank forex rate.

“If we achieve convergence, I don’t think the window will be necessary anymore because you’ll have one exchange rate for the economy,” Nnanna said.

One advantage of the foreign exchange shortages is that they have forced Nigerians to buy more local products, including food such as rice, Nnanna said.

“The craze for imported goods has declined,” he said. “Our consumption pattern is changing. We are producing what we used to import before.”

The central bank will boost lending to agricultural businesses through its intervention funds, he said.

“We won’t lose sight of our developmental function, in the sense that if there’s a sector where we need to intervene, we will do so,” Nnanna said.

“We are more bullish with the agriculture sector.”

Also, CBN spokesman, Isaac Okorafor in a statement yesterday reiterated the CBN’s commitment to ensure that there is enough forex supply to genuine customers to achieve the rate convergence.

CBN Governor, Mr. Godwin Emefiele had at the end of the MPC meeting last March stressed that one of the objectives of the central bank was the rate convergence in the various segments of the market.

Instructively, Nigeria’s external reserves shed $183 million to $30.724 billion as of May 17, compared with the $30.911 billion on May 11.

As the MPC meeting commences today, watchers are expectant to see the decisions the committee would take.

According to Nnanna, this is not the time to ease policy.

Inflation slowed for a third month in April, but at 17.24 per cent remains almost double the upper limit of the central bank’s 6-9 per cent target.

“We are battling with liquidity as it were, so a tight monetary policy will remain for now,” he said.

Nnanna said he would probably replace Sarah Alade as Deputy Governor in Charge of Economic Policy at the central bank, a role that’s key to wooing back foreign investors and helping the nation alleviate its dollar-squeeze.

Alade retired in March and was the best known of Nigeria’s four deputy governors among global bond and stock investors, often accompanying Emefiele on roadshows.

Nnanna is currently in charge of financial system stability and has overseen the economic policy brief since Alade’s departure.

“It appears that I will take on that responsibility permanently” once the presidency picks a new deputy governor, Nnanna said.

“It would mean working hand in hand with the governor to engage both foreign investors and domestic investors. I’ve been meeting with domestic investors already,” he said.

Meanwhile, the fines imposed on commercial banks for contravening CBN and the Securities and Exchange Commission (SEC) regulations dropped significantly in 2016, compared to the previous year.

According to the 2016 audited results of 14 banks listed on the Nigerian Stock Exchange (NSE) assessed by THISDAY, the combined fines paid by the banks dropped by 79 per cent to N955 million last year, compared with N4.541 billion that they had to part with as penalties in 2015.

The offences and fines imposed by the CBN and SEC were listed in the 2016 annual reports of the banks.

Some of the contraventions included late rendition of daily returns; illegal international money transfer services; failure to file Suspicious Transaction Reports (STRs) in respect of accounts linked to Bank Verification Numbers; unlawful disclosure of customers’ information to third parties; and non-refund of customers’ funds short-changed by ATM non-dispensing/partial dispensing errors.

Others included commencing branch operations without the CBN’s approval; penalties for forex-related issues; late publication of accounts; failure to classify customers’ risk categories and lack of due diligence; and contravention of anti-money laundering rules.

For instance, FBN Holdings Plc which was penalised N1.001 billion in 2015, was only fined N102 million in 2016. Also, the penalty Zenith Bank paid in 2016 was put at N16 million, as against N60 million recorded the previous year.

United Bank for Africa (UBA) Plc also paid N246 million as penalty in 2016, as against N2.969 billion in 2015. First City Monument Bank took some corrective measures as its penalty dropped to N88.8 million, from N180.1 million in the previous year, just as Sterling Bank’s fine dropped to N14.371 million in 2016, from N100 million in the prior year.

Similarly, Jaiz Bank was penalised N0.1 million in 2016, lower than the N12.358 million it paid in 2015, Union Bank of Nigeria Plc also paid N48 million in 2016, down from the N67 million paid the previous year, while penalties paid by Stanbic IBTC Holdings were reduced to N70 million in 2016, from N100 million the previous year.

Commenting on the sharp drop in fines and penalties, the chief executive of Financial Derivatives Company Limited, Mr. Bismarck Rewane said the banks were more compliant in 2016 so as not to strain their profitability.

Rewane, who spoke to THISDAY, said the regulations might also have been fewer last year.

“The banks are becoming more complaint. It also shows that the level of scrutiny might have increased. In 2017, we could also notice that the penalties might reduce because the regulations are being relaxed.

“So what we saw last year was that the banks were careful in managing their risks because their profitability was under pressure,” he added.

Moody’s Investors Service recently maintained its stable outlook on the Nigerian banking system, reflecting the rating agency’s view that acute foreign currency shortages in the country will gradually ease.

CBN makes N3.3 billion from banks’ borrowing – Guardian

• Guarantees N527.6m for farmers in agric scheme

For frequent borrowing from the Central Bank of Nigeria (CBN) by commercial banks, the regulator recorded N3.29 billion as interest income in February 2017.

Although some of the lenders kept their excess cash at CBN’s Standing Deposit Facility (SDF) within the period under review, others, including merchant banks continued to access the Standing Lending Facility (SLF).

By the subsisting decision of the Monetary Policy Committee, applicable rates for SLF and SDF remained at 16 per cent and nine per cent, respectively.

The huge patronage by banks was to make up their positions, either borrowing from the CBN or depositing excess reserves at the end of each business day, especially for some that were hit hard by persistent liquidity mop up, payment for dollar, treasury bills and bonds’ auctions.

An analysis of the apex bank’s February Economic Report, showed that the there was more patronage of the SLF facility than the SDF window, an indication that the banks were cash-trapped.

Total request for SLF, including Intra­day Lending Facility (ILF) that were converted to Overnight instrument, made up of N696.31 billion direct SLF and N3.57 trillion ILF, amounted to N4.26 trillion, with a daily average of N224.57 billion.

Therefore, CBN earned N3.29 billion in interest income, representing an increase when compared with SLF of N3.38 trillion and interest income of N2.7 billion in January 2017.

Total SDF granted during the review period was N742.62 billion, with a daily average of N39.1 billion, compared with N1.85 trillion in January 2017.

On the other hand, the interest payment to banks on SDF in February 2017 was N218.39 million, compared with N633.32 billion in January 2017.

Similarly, the persistent liquidity mop up exercise by the apex bank resulted to increased lending rates among banks.

During the period, at the inter­bank call segment, the weighted average rate, which stood at 8.15 per cent in the preceding month, rose significantly by 19.31 percentage points to 27.46 per cent.

Also, the weighted average rate at the Open Buy Back (OBB) segment increased from 8.69 per cent in the preceding month to 23.60 per cent.

Meanwhile, a total of N527.6 million was guaranteed to 3,324 farmers by CBN under its Agricultural Credit Guarantee Scheme (ACGS) in February 2017.

This amount represented 12.6 and 14.3 per cent decline below the levels in the preceding month and the corresponding period of 2016, respectively.

A sub-sectoral analysis showed that food crops got the largest share of N330.3 million (62.6 per cent) guaranteed to 2,309 beneficiaries.

The mixed crops sub-sector received N25.7 million (4.9 per cent) guaranteed to 164 beneficiaries; livestock, N72 million (13.7 per cent) guaranteed to 314 beneficiaries; and cash crops, N52 million (9.9 per cent) guaranteed to 270 beneficiaries.

The fisheries sub-sector had N24.5 million (4.6 per cent) guaranteed to 89 farmers, while others got N23.1 million (4.4 per cent) guaranteed to 178 beneficiaries.

Further analysis showed that 23 states, including the Federal Capital Territory benefited from the scheme in the review month with the highest sum of N119.4 million (22.6 per cent) guaranteed to Anambra State.

However, Kogi State received the lowest guaranteed sum of N600,000, representing 0.1105 per cent.