Despite the economic hardship being experienced by the majority of Nigerians, banks’ vaults are bustling with customer deposits.
The latest report from the Central Bank of Nigeria (CBN) on the money and credit situation in the country shows that banks’ demand deposits rose by 16.5 percent to N31.08 trillion at the end of August 2024, up from N26.68 trillion recorded at the end of December 2023.
Details of the report indicate that total demand deposits in the first quarter of the year ended March 2024 stood at N28.9 trillion, reflecting an 8.1 percent increase over the N26.7 trillion recorded in December 2023. In the second quarter of the year, banks’ deposits increased by 14.3 percent to N33.0 trillion at the end of June 2024, up from N28.7 trillion in March 2024.
Additionally, the audited reports and regulatory filings by commercial banks and their holding companies on the Nigerian Exchange (NGX) show that the banking sector’s total deposits stood at about N136 trillion in the first half of 2024, representing an 18.3 percent increase over the N115 trillion recorded in the same period of 2023. The banking sector’s total deposits rose by 63 percent to about N115 trillion in the 2023 full year from N70.5 trillion in 2022. This may indicate that individuals and institutions are increasingly holding their assets in cash, largely fueled by the inflationary environment.
In another development, the CBN’s latest report shows that Nigeria’s money supply (M2) surged to a new high of N107.1 trillion in August 2024, marking a 0.75 percent month-on-month increase from N106.3 trillion in July and a 5.6 percent rise from N101.4 trillion in June, according to the latest figures from the CBN.
This sharp rise in liquidity continues to pose challenges for the CBN’s Monetary Policy Committee (MPC) as it grapples with balancing economic growth and controlling inflation. The money supply has now risen by a whopping 65 percent in recent months.
