By Zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – Commercial banks experienced a slight uptick in their total deposits, their primary source of funds, during the first quarter of 2023, according to the latest data. Deposits increased by 1.71 percentage points, rising from NLe 16.94 billion in the fourth quarter of 2022 to NLe 18.65 billion in the first quarter of 2023.
In terms of how these banks source and allocate their funds, the Central Bank’s report highlighted several key trends. T-bill holdings by the banking sector saw a modest increase of 0.12 per cent, growing from NLe 6.49 billion in the fourth quarter of 2022 to NLe 6.61 billion in the first quarter of 2023. This growth occurred despite a slight rise in the average interest rate, which went from 27.92 per cent in the fourth quarter of 2022 to 28.28 per cent in the first quarter of 2023.
Additionally, T-bond holdings by the banking sector increased by 0.36 per cent, climbing from NLe 1.64 billion in the fourth quarter of 2022 to NLe 2.20 billion in the first quarter of 2023. Gross loans and advances also saw a marginal increase of 0.34 per cent, rising from NLe 3.14 billion in the fourth quarter of 2022 to NLe 3.48 billion in the first quarter of 2023.
The Central Bank emphasized that the banking sector continued to rely heavily on government securities as a major source of income. This reliance was primarily attributed to the high-interest rates associated with government securities, which carry a zero per cent risk rating.
During the first quarter of 2023, there was a slight decrease of 2.54 percentage points in the proportion of income derived from short-term funds, declining from 55.75 per cent in the fourth quarter of 2022 to 53.20 per cent in the first quarter of 2023. Income from advances also experienced a minor reduction, decreasing from 17.41 per cent in the fourth quarter of 2022 to 15.82 per cent in the first quarter of 2023.
Conversely, other operating income, which primarily includes earnings from commissions, fees, and profits on foreign exchange transactions, increased by 4.13 percentage points. This category of income rose from 26.85 per cent in the fourth quarter of 2022 to 30.98 per cent in the first quarter of 2023. ZIJ/18/9/2023