CBN says Nigerian banks invest additional N1.55 trillion in Treasury Bills in one year
From July 2021 to June 2022, Deposit Money Banks augmented their assets of Nigerian Treasury Bills by N1.55 trillion, reaching a total of N2.28 trillion.
This is mentioned in the Central Bank of Nigeria’s publication of the Financial Market Half-Year Activity Report for 2022.
As of June 2022, commercial banks possessed 50.5% of the total N4.5 trillion in Nigerian Treasury Bills, an increase from 24.4% during the same timeframe in 2021.
State-owned enterprises represented more than half of the total in the previous year.
Due to increasing fluctuations in other variable assets and motives to invest in secure government securities rather than corporate or variable debt instruments, banks are becoming more engaged with fixed securities.
Analysis of NTB structure:
Having elevated their holdings from N728.9 billion as of June 2021 to N2.28 trillion by the close of June 2022, Deposit Money Banks (DMBs) constituted 50.5% of the overall.
By the conclusion of the review period, merchant banks possessed N29.38 billion in Nigerian Treasury Bills, equating to 0.7% of the overall. However, this marked a 109.4% increase compared to the N14.03 billion tally recorded for the same period in 2021.
Conversely, mandate and internal funds accounted for 21.9% of the aggregate amount of treasury bills, with N988.26 billion as of the end of the first half of 2022, indicating a decline of N354.28 billion from the N1.57 trillion documented as of June 2021. State-owned agencies comprised 26.9% of the total treasury bills held.
Financial reports from commercial banks listed on the NGX indicated that First Bank had around N425.75 billion in eligible bills as of June 2022, while Access Bank reported approximately N203.35 billion in eligible bills, excluding pledged T-bills.
Treasury bills valued at about N568.3 billion, government bonds worth N279.49 billion, corporate bonds of N3.3 billion, and Eurobonds of N24.2 billion, all belonged to GT Bank.
The debt instrument portfolio held by the Group, as per the bank, is composed of 98.1% risk-free government securities (December 2021: 99.9%). The remaining 1.9% includes investments in corporate and state bonds.
As of June 2022, Stanbic IBTC noted that its trading assets categorized as treasury bills totaled N149.5 billion.
Zenith Bank declared N926.8 billion for Treasury bills (FVTPL) as of the same period, while N1.16 trillion was reported at amortized cost.
During the first half of 2022, there were no fresh issues of Federal Republic of Nigeria Treasury Bonds (FRNTBs). Consequently, the outstanding shares as of the end of June 2022 amounted to N75.99 billion.
As per the analysis of the outstanding, the CBN held N14.29 billion, while the Sinking Fund accounted for N61.7 billion. The CBN was responsible for N18.01 billion in the corresponding period of 2021, with N82.98 billion held in the Sinking Fund.
FGN Bonds valued at N1.13 trillion were made available for sale during the review timeframe, while public subscriptions and sales totaled N2.85 trillion and N1.81 billion, respectively.
The amount offered comprised both new and existing issues. The issue, subscription, and allotment of FGN Bonds were N900 billion, N1.72 trillion, and N1.42 billion, respectively, in the corresponding period of 2021.
As a result of the government’s initiatives to source funding for the budget deficit from the local market, there was an escalation in the amounts offered, subscribed to, and sold in the first half of 2022.
Consequently, the total value of FGN Bonds outstanding at the end of June 2022 was N15.63 trillion, an increase from N15.19 trillion at the same time the prior year, representing an escalation of N426.95 billion or 0.28%.
Commercial banks possessed N9.53 trillion, or 60.99%, of the outstanding FGN Bonds, followed by the general public, holding N5.96 trillion, or 38.16%, and merchant banks holding the remaining N132.63 billion, or 0.85%.
The CBN has consistently raised the MPR, resulting in a notable increase in the Treasury Bills rate in recent months. Remember that the Central Bank elevated the monetary policy rate to 16.5% at its latest policy meeting to combat the nation’s escalating rate of inflation?
The rate on one-year Treasury Bills issued by the CBN for November rose from 12% in September 2022 to 14.84% in November.
