Banks’ Credit To Private Sector Hits N37.13trn In 4 Months

Banks’ credit to the private sector has risen by N1.95 trillion between January and April this year, standing at N37.13 trillion, as credit to the government hits an all-time high of N16.56 trillion, data from the Central Bank of Nigeria (CBN) has shown.

The data showed that credit to the private sector increased by 5.53 percent or N1.95trillion Year-till-Date (YtD) growth from N35.18trillion reported in January 2022, while total net credit by the banking sector to the government rose by N2.2trillion in the first quarter ended March 2022 to N16.32trillion.

According to the data, the net credit to the government rose from N14.12trillion as of the end of January 2022 to N14.72trillion as of the end of February 2022. It also showed that the net credit to the government rose from N12.09trillion, N12.59trillion and N12.07trillion in January, February and March 2021 respectively.

Meanwhile, banking sector credit has been on the rise as the apex bank pushed to increase lending to the real sector with the move to create jobs and expand the country’s Gross Domestic Product (GDP).

The CBN revealed that credit to the private sector moved to N35.99trillion in February and increased by 1.07 per cent to N36.37trillion in March 2022.

In her personal statement at the Monetary Policy Committee meeting in March this year, the CBN deputy governor, Financial System Stability, Aisha Ahmad said: “the continued growth in credit particularly to output enhancing sectors is expected to further support economic recovery.

“However, sustained regulatory vigilance is required to mitigate any potential crystallisation of credit risk in the financial system from lingering macroeconomic risks.”

Members of the MPC had attributed the growth in private sector lending to due increased industry funding base and compliance with the 65 percent Loans to Deposit Ratio (LDR) directive.

On his part, the CBN deputy governor, Economic Policy, Mr. Kingsley Obiora, in his personal statement, stated that, the banking system maintained its resilience amid economic recovery in 2022.

According to him, the total flow of credit to the economy increased during the review period. A total of 116,443 new credits valued at N819.63 billion were granted to various sectors of the economy, from Oil and Gas, Manufacturing, Governments to General commerce.

“This was higher than 96, 583 new credits valued at N566.35billion in February 2021. Overall, the industry credit increased by 19.53 per cent to N25.25 trillion in February 2022 from N21.13 trillion in February 2021.

“The industry NPL ratio continued to trend below the prudential threshold of 5 per cent. It decreased to 4.80 per cent at the end of February 2022 compared with 6.38 per cent in February 2021. The downward trend was attributable to recoveries, restructuring of facilities and sound management practices by DMBs.”