Money market

CBN FX intervention boosts Access bank, GTBank, others’ liquidity ratio 

By Ayobami Adedinni

The likes of Guaranty Trust Bank Plc (GTBank) , Access Bank, Stanbic IBTC Holdings Plc and Zenith Bank Plc liquidity ratio received a boost in the half year of 2017, attributable to Central Bank of Nigeria (CBN) foreign exchange’s intervention and fixed income securities (T-Bills).

The constant foreign exchange intervention by CBN has increased foreign exchange sales and trading, which received a boost from improved market certainty and liquidity following the introduction of the Investors’ and Exporters’ foreign exchange window (IEFX).

Liquidity ratio is defined as a ratio between the liquid assets and the liabilities of a bank.

 In other words, a bank’s cash balance plus assets that it can easily converted to cash to the total liabilities owed by the bank, which is typically customers’ deposit.

The Central Bank of Nigeria mandates commercial banks to have liquidity ratio of 30 per cent and Zenith Bank, a Tier-one bank as at June 30, 2017 has 61.10 per cent in liquidity ratio while   Stanbic IBTC for the period under review has 90.40 per cent, the highest in the banking industry.

GTBank’s liquidity ratio moved from 42.2 per cent in 2016 to 48.5 per cent in half year of 2017, while Access Bank Plc’s liquidity ratio closed the period under review at 45.4 per cent as against 43.6 per cent reported in 2016 financial year.

GTBank explained that, “Liquidity Ratio at 48.5 in H1 2017 (Dec.2016: 42.2per cent) well above regulatory minimum of 30per cent inspite of pressure on customers’ deposits. Average Liquidity for the period under review stood at 45.3per cent largely aided by growth in Fixed Income Securities.”

Access Bank Plc’s liquidity ratio improved by  180basis points year-on-year to 45.4 per cent as at June 30, 2017  from 43.6 per cent in 2016, reflecting the Bank’s  improved  ability to meet short-term obligations.

Stanbic IBTC in a statement said, “The group maintained a liquidity position above minimum requirement throughout the period ended  June 30, 2017.

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