Customer Deposits Rise By N21trn To N136trn In 3 Months

Nigerian banks added about N21 trillion in new deposits in the first quarter of this year to push the sector’s total deposits to about N136 trillion, thus, surpassing its 2023 business year performance.

Audited reports and regulatory filings by commercial banks and their holding companies showed that individuals and institutions are increasingly entrusting their funds into the safekeeping and management of Nigerian banks.

At the latest audit, total deposits in the banking sector had risen by 63 per cent from about N70.5 trillion in 2022 to about N115 trillion in 2023.

By the first quarter ended March 31, 2024, total deposits had risen from N115 trillion in December 2023 to about N136 trillion in March 2024, representing an increase of 18.3 per cent. Annualised, the first quarter performance indicated that banks might surpass their 2023 performance this year, underlining the resilience and growth that have characterised the Nigerian banking sector.

The Nigerian banking sector runs a uniform business year, which easily provides a bird’s eye view of the industry performance. Banks use the Gregorian calendar as their business year, thus the business year ends at December 31.

While few major banks traditionally audit their half-year results, which usually end by June 30, banks generally do not audit first quarter results. Banks’ operational results however go through multi-layered external regulatory reviews including by the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), Nigerian Exchange (NGX) and other relevant agencies.

The data showed that banks generally have seen sustained growths in deposits, despite the macroeconomic headwinds including key changes in fiscal and monetary directions.

For example, Zenith Bank’s total deposit, which had risen by 69 per cent from N8.98 trillion in 2022 to N15.17 trillion in 2023, closed March 2024 at N16.78 trillion. FCMB Group has grown deposit steadily from N2.07 trillion in 2022 to N3.4 trillion in 2023 and N3.7 trillion in the first quarter 2024.

Premium Trust Bank, a national commercial bank which commenced operations in April 2022, grew its deposit base by 382 per cent from N55 billion in December 2022 to N265 billion in December 2023. It closed the first quarter 2024 at N309 billion.

Also, Fidelity Bank’s deposits had risen steadily from N2.58 trillion in 2022 to N4.02 trillion in 2023 and closed in the first quarter 2024 at N4.71 trillion. United Bank for Africa (UBA)’s deposits have grown from N10.86 trillion in 2022 to N14.9 trillion in 2023 and closed March 2024 at N18.4 trillion. Access Holdings had seen a quantum jump from N11.3 trillion in 2022 to N19.8 trillion in 2023 and N24.7 trillion in March 2024.

Sterling Holding Financial Company crossed the N2 trillion mark to N2.15 trillion in first quarter 2024, from N1.4 trillion and N1.8 trillion in 2022 and 2023 respectively. Guaranty Trust Holding Company (GTCO) has doubled its deposits since 2022, rising from N4.6 trillion in 2022 to N7.55 trillion and N9.2 trillion in 2023 and first quarter 2024 respectively.

A general review of the deposits by Banks showed considerable cost management, with banks recording substantial increases in low-cost deposits.

Deposit is a key ratio to measure public confidence and popular participation in a financial services sector. It is the basic building block for a banking sector’s funding and liquidity. Deposit size, growth and structure are key analytical instruments for banks’ examiners and analysts.

The Federal Reserve Board (FRB) described deposits as “the primary funding source for most banks and, as a result, have a significant effect on a bank’s liquidity. Banks use deposits in a variety of ways, primarily to fund loans and investments”.

FRB noted that part of a bank’s management responsibility is to “implement programmes to retain and prudently expand the bank’s deposit base”.

The deposit growth underlines the dynamism and effectiveness of banks’ management as well as growing contributions of banks to the Nigerian economy.

There is a correlational relationship between deposit and loans and expenses, and as such, national economic growth. A report by the Central Bank of Nigeria (CBN) had shown that Nigerian banks’ loans and support for the private sector had increased by about N30 trillion over a one-year period.