BY Oluwatoyin Bayagbon
Global credit rating agency, Fitch, says Nigerian banks averaged a 7.5% margin on treasury bill (T-bills) yields in the first half of 2017 (1H17).
According to a statement released by the rating agency on Friday, banks have been investing heavily in T-bills since second half of 2016 (2H16), improving interest income and maintaining margins.
Fitch said T-bill yields have reduced in preceding weeks, numbering about 15.5%, compared to over 18.5% recorded mid-year.
Projections from the report show that it might suffer further declines, regardless of policies by the CBN to reduce currency volatility.
“High yields on T-Bills are part of the Nigerian authorities’ attempts to control inflation and manage demand for foreign currency,” the report read.
“By providing a remunerative, relatively low-risk, naira-denominated investment (interest payments are tax-free), they (CBN) hope to encourage naira retention and dampen demand for US dollars.”
According to CBN data, T-Bill investments increased due to fall in volumes of naira time and savings deposits held by the banking sector.
T-Bill yields still ranked higher than savings deposit rates, which are capped at 30% of the current monetary policy rate of 14%, the report said.
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