Between July 2021 and June 2022, Deposit Money Banks increased their holdings of Nigerian Treasury Bills by N1.55 trillion, to a total of N2.28 trillion.
This is stated in the Central Bank of Nigeria’s release of the Financial Market Half-Year Activity Report for 2022.
As of June 2022, commercial banks held 50.5% of the total N4.5 trillion in Nigerian Treasury Bills, up from 24.4% during the same period in 2021.
Parastatals accounted for more than half of the total in the previous year.
Due to rising volatility in other variable assets and incentives to invest in risk-free government securities rather than corporate or variable debt securities, banks are becoming more exposed to fixed securities.
Breakdown of NTB structure:
After increasing their holdings from N728.9 billion as of June 2021 to N2.28 trillion at the end of June 2022, Deposit Money Banks (DMBs) made up 50.5% of the total.
At the end of the review period, merchant banks held N29.38 billion worth of Nigerian Treasury Bills, or 0.7% of the total. However, it increased by 109.4% when compared to the N14.03 billion figure reported for the same period in 2021.
In contrast, mandate and internal funds accounted for 21.9% of the total amount of treasury bills held, with N988.26 billion as of the end of the first half of 2022, representing a decrease of N354.28 billion from the N1.57 trillion recorded as of June 2021. Parastatals made up 26.9% of the total amount of treasury bills held.
Financial statements of commercial banks listed on the NGX revealed that First Bank had approximately N425.75 billion in eligible bills as of June 2022, while Access Bank had approximately N203.35 billion in eligible bills, excluding pledged T-bills.
Treasury bills worth about N568.3 billion, FG bonds worth N279.49 billion, corporate bonds worth N3.3 billion, and Eurobonds worth N24.2 billion, all belonged to GT Bank.
The portfolio of debt instruments held by the Group, according to the bank, is made up of 98.1% risk-free government securities (December 2021: 99.9%). The 1.9% outstanding is comprised of investments in corporate and state government bonds.
As of June 2022, Stanbic IBTC reported that its trading assets designated as treasury bills totaled N149.5 billion.
Zenith Bank reported N926.8 billion for Treasury bills (FVTPL) as of the same period, while N1.16 trillion was reported at amortised cost.
In the first half of 2022, there were no new Federal Republic of Nigeria Treasury Bonds (FRNTBs) issues. As a result, the number of shares still outstanding as of the end of June 2022 was N75.99 billion.
According to a breakdown of the outstanding, the CBN held N14.29 billion, while the Sinking Fund held N61.7 billion. The CBN was responsible for N18.01 billion in the corresponding period of 2021, while N82.98 billion was kept in the Sinking Fund.
FGN Bonds worth N1.13 trillion were offered for sale during the review period, while public subscription and sale totaled N2.85 trillion and N1.81 billion, respectively.
The amount offered included both fresh and old 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.
Due to the government’s efforts to raise money for the budget deficit from the domestic market, there was an increase in the amounts offered, subscribed to, and sold in the first half of 2022.
As a result, the total value of FGN Bonds outstanding at the end of June 2022 was N15.63 trillion, up from N15.19 trillion at the same time the previous year, representing an increase of N426.95 billion or 0.28%.
Commercial banks held N9.53 trillion, or 60.99%, of the outstanding FGN Bonds, followed by the general public, who held N5.96 trillion, or 38.16%, and merchant banks, who held the remaining N132.63 billion, or 0.85%.
The CBN has repeatedly raised the MPR, which has led to a significant rise in the rate on Treasury Bills in recent months. Remember that the Central Bank raised the monetary policy rate to 16.5% at its most recent policy meeting in an effort to curb the nation’s rising rate of inflation?
The rate on one-year Treasury Bills issued by the CBN for November increased from 12% in September 2022 to 14.84% in November.