· Cash are warehoused due to uncertainties – BCAN
By Elizabeth Adegbesan
Customer deposits in 10 leading banks stood at N28.7 trillion as at nine months ended September 2021.
This represents a 12.6 per cent rise when compared with N25.4 trillion deposits recorded in the corresponding period of 2020.
The banks are Guaranty Trust Bank (GTB), United Bank for Africa, UBA, Access Bank, Zenith Bank, Fidelity Bank, Union Bank, Stabic IBTC, Unity Bank, Wema Bank and Sterling Bank.
Vanguard MoneyDigest findings from the filings by the banks in the Nigerian Exchange Limited, NGX, indicates that the cumulative deposits comprise N12.7 trillion current account deposits which rose by 13 per cent from N11.22 trillion in corresponding period of 2020; N8.1 trillion savings account deposits, up by 37 percent from N5.9 trillion in 2020; and N6.7 trillion term deposits, rising by 20.6 per cent from N5.58 trillion in 2020.
Also included is about N1.5 trillion domiciliary account deposits which rose by 15 per cent from N1.33 trillion in 2020; and N251.47 billion other deposits, up by 82 per cent from N138.16 billion in 2020.
The bank with the highest growth in customer deposits was Stanbic IBTC which recorded 45 per cent rise in deposit to N1.09 trillion in 2021 from N751.8 billion in 2020.
Conversely, the bank with least growth in customer deposits was GTB whose deposit grew by 5.7 per cent to N3.7 trillion in 2021 from N3.5 trillion in 2020.
Why deposit is growing
In its ‘Access to Financial Services in Nigeria 2020 Survey’, Enhancing Financial Innovation and Access (EFInA), a financial services advocacy group, noted that banks’ deposit growth was driven by use of digital financial services, savings, remittances, and agents by 106 million Nigerians.
EFInA, however, concluded that at the current rate of progress, the National Financial Inclusion Strategy targets for 2020 will not be met until around 2030.
Commenting on the development, the President, Bank Customers Association of Nigeria, BCAN, Dr. Uju Ogubunka attributed the growth in customer deposits to lack of investment in the economy due to uncertainties in the economic environment.
He stated: “The factors responsible for growth in customer deposits in banks are the uncertainties in the economy, especially inflation rate and insecurity.
“There has been lots of inflows in the economy. Most of the times these inflows are warehoused in the banks and people are not using it.
“The foreign currency conversion rate is also making people to warehouse remittances. They decide to keep their money in the banking system and that warrants increase in customer deposits.
“The Central Bank of Nigeria, CBN, has been pumping
money into the economy to support various government programs. That is aiding
significant increase in the level of deposits in banks.”
He, however, noted that a decline in deposits would occur when people starts making commitments and investing especially in this festive season.
“The development will abate when people starts making commitments and investing. If we are able to achieve a downward trend in inflation, conversion rate will be in favour of the Naira. ‘‘When this happens, more level of confidence will be in the economy.
if the state of insecurity in the system is addressed, people will have
confidence to invest in the economy.
“I am not envisaging a growth in deposits if these things happen.
“Also, this festive season will lead to more money going out of the banks into the economy. Most of what goes out of the banking system may not come back to the banking system. If the people these buyers are making payments to are taking it back to the bank, there might be a significant rise in customer deposits.”
According to the World Bank, Nigeria had experienced a moderate rebound in remittance flows this year, in part due to the increasing influence of policies intended to channel inflows through the banking system.