Commercial Bank Deposits Crash by N1.029trillion in One Year

A report by the Central Bank of Nigeria, CBN, has revealed that deposits taken by banks plunged by N1.029 trillion between April 2015 and April 2016.

A report presented by CBN Deputy Governor (Economic Policy) Sarah Alade to last week’s Bankers’ Committee meeting in Abuja attributed the reduction in deposits to the Treasury Single Account (TSA).

Alade said the poor loan servicing resulted in the increase of non- performing loans (NPLs) to a ratio of 10.1 per cent over and above the CBN prudential limit of five per cent as at end April.

The CBN Deputy Governor also told members of the Committee that total deposits in the banks declined by N1.029 trillion from April 2015 to April 2016.

She said: ”The decrease in deposits were largely due to the introduction of the Treasury Single Account in the system.”

According to Alade, “the sudden rise in NPLs was attributed to the outcome of the risk assets examination of Deposit Money Banks (DMBs) conducted in December 2015 and the sustained low price of crude oil, supply constraints at the FOREX market as well as other macroeconomic conditions impacted negatively on the quality of bank loans.”

Her report to the Committee noted that the development had led to a decline in banks’ total assets; the volume of credits granted by them and even the degree of deposits generated by them, which in turn ultimately led to a drop in banks earnings as well as income from interest and non-interest investments.