Private Sector Credit Climbs by 39% to N73trn
The total credit amount to Nigeria’s private sector climbed by about 39% year on year to N73.12 trillion in June, according to the Central Bank of Nigeria (CBN) report.
A steep surge followed local deposit money banks improved appetite for loans, which raised credit level higher by 38.5% year on year from N52.81 trillion in June 2023.
“We attribute the increase in credit to private sector in the review period to deposit money banks’ (DMBs) efforts to boost risk asset creation in line with the CBN’s 50.0% Loan-to-Deposit Ratio (LDR) limit”, Cordros Capital Limited said in a commentary note.
Analysts added that the surge is also in line with the impact of the naira depreciation on foreign denominated assets.
However, on a month-on-month basis, private sector declined by 1.6% in June from N74.31 trillion in May, highlighting the impact of CBN’s hawkish stance in this year to curb the rising inflation.
CBN data showed that the broad money supply grew by 56.1% year on year to N101.35 trillion, in line with increases recorded across quasi-money and narrow money supply.
Quasi-money grew by 61.9% year on year. At the same time, narrow money supply increased by 50.2% year on year, according to CBN data.
“We think the re-enforcement of the CBN’s limit on DMB’s loans-to-deposits macro-prudential ratio could continue to drive the willingness of commercial banks to create risky assets.
“However, we believe that the apex bank’s intensified monetary policy tightening measures will tether the magnitude of growth”, analysts at Cordros Capital Limited said. #Private Sector Credit Climbs by 39% to N73trn
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