Bank loans to private sector sees N3tr increase in 5 months
By Jeph Ajobaju, Chief Copy Editor
Loans to the private sector given by banks saw an increase of N3 trillion in five months, from N35.19 trillion by December 2021 to N38.19 trillion in May 2022, according to Central Bank of Nigeria (CBN) data.
Credit to the private sector increased Year-on-Year (YoY) by N6.08 trillion from N32.12 trillion in May 2021, an 18.9 per cent growth in 12 months.
This is in line with the CBN mandate to give the real sector easy access to credit to help stabilise and grow the economy.
Innovation in technology and the surge in the number of fintech lenders have also spurred more competition in the loan market.
CBN Loan to Deposit Ratio (LDR) policy formulated to expand lending to the real sector is equally connected to the increase in bank loans.
The CBN first gave banks up till 30 September 2019 to comply with its 60 per cent directive, then raised their LDR to 65 per cent in October 2019. It later extended the deadline to 31 March 2020.
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Impact of LDR policy
Credit to the private sector increased by N3.75 trillion, from N22.95 trillion when it first opened in 2019 to N26.69 trillion when it closed, according to CBN data, as reported by Nairametrics.
It grew from N26.65 trillion in January 2020 to N30.15 trillion in December 2020, a rise of N3.5 trillion.
It rose by N4.7 trillion from N30.40 trillion in January 2021 to N35.19 trillion in December 2021.
Private sector credit reached N35.99 trillion in February 2022, March (N36.47 trillion), and April (N37.68 trillion).
Currency in circulation rose from N1.15 trillion in January 2021 to N3.33 trillion in December 2021, the highest level on record, which was the same amount in May 2022.
The CBN in its last Monetary Policy Committee (MPC) meeting raised benchmark interest rate (MPR) to 13 per cent from 11.5 per cent maintained all through 2021 to tamp down inflation.