Zenith Bank, 9 other banks mandatory reserve deposits with Central Banks hit N20.8trn

10 banks operating in Nigeria, Sub-Saharan Africa countries have declared N20.8 trillion mandatory reserve deposits with Central Banks in 2024, gaining 41.6per cent from N14.72 trillion declared in 2023.

The Central Bank of Nigeria (CBN) in 2024 increased Cash Reserve Ratio (CRR) at 50per cent, with the likes of Zenith Bank Plc, Guaranty Trust Holdings Company Plc (GTCO), eight others seeing their mandatory reserve deposits.

The data sourced from audited/unaudited accounts for year ended December 31, 2024 of United Bank for Africa (UBA) Plc, First Holdings Plc and Ecobank Transnational Incorporated Plc, revealed increasing deposits by these banks to central banks.

Others are:  Stanbic IBTC Holdings Plc, Wema Bank Plc, FCMB Group Plc, Sterling Financial Holdings Company Plc, and Fidelity Bank Plc.

The CRR is the minimum amount banks and merchant banks are expected to retain with the CBN from customer deposits and it carries no interest and is not available for use by the banks in their day-to-day operations.

It is one of the ways CBN regulates the country’s money supply, inflation level and liquidity in the country. The higher the rate, the lower the liquidity with the banks.

In early 2020, the apex bank’s Monetary Policy Committee (MPC) increased CRR by five per cent from 22.5 per cent to 27.5 per cent and in September 2022, it moved it to 32.5 per cent in a move to tame inflationary pressure.

The MPC at the first meeting in 2024 increased CRR to 45.00 per cent  from 32.5 per cent amid double-digit inflation rate. However, the committee at the second meeting in 2024, adjusted the CRR for Merchant Banks from 10.0 per cent to 14.0 per cent.

Currently, the CBN by regulation forces banks to retain up to 50 per cent of their deposits in CRR requirement, meaning that the deposits are not accessed by the banks for loans and advances.

Extracts from 2024 audited accounts revealed that, Zenith Bank, followed by UBA reported the highest mandatory deposits with CBN.

Zenith Bank in 2024FY declared N5.3 trillion mandatory reserve deposits with central bank, about 37 per cent increase over N3.9 trillion reported in 2023.

Furthermore, UBA announced N3.9 trillion mandatory reserve deposits with central banks in 2024, representing an increase of 47 per cent from N2.66 trillion in 2023, while First HoldCo posted N3.63 trillion mandatory reserve deposits with Central Banks in 2024, up by 72.3 per cent from N2.11 trillion in 2023.

As for GTCO, it announced N1.96 trillion mandatory deposits with CBN in 2024, a growth of 19.3 per cent from N1.65 trillion in 2023. GTCO in 2024FY results explained that the restricted deposits with central banks comprises of restricted deposits with central banks not available for use in the Group’s day-to-day  operations.

“The GTBank Nigeria had restricted balances of N1,963,565,533,000 with the Central Bank of Nigeria (CBN) as at  December 31, 2024 (December 2023: N1,646,348,063,000).

“This balance is CBN cash reserve requirement. The cash reserve ratio represents a mandatory total  Naira deposits which should be held with the Central Bank of Nigeria as a regulatory requirement.”

GTCO in its investors and analysts presentation said, “Despite the pressure from competition and the need  to cover for regulatory CRR debits, the Group  maintained an average liquidity ratio of 44.3per cent  during the period under review..”

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