Banks’ Credit Rises 33% To N35trn

Banks’ credit to the private sector of the economy rose by 33.7 percent to N35.3 trillion in November 2021 Year-on-Year.

This is an increase from N26.4 trillion in the corresponding period of 2020.

Data from the Central Bank of Nigeria show that net domestic credit also rose YoY by 36 percent to N48.3 trillion in November 2021 from N35.5 trillion in 2020, signifying an uptick in economic activities.

The CBN drive towards expanding bank credit to the economy resulted in its policy of increasing the loan to deposit ratio, LDR, to force banks to lend more to the private sector.

Total credit to the private sector since it began this policy in March 2020 has increased tremendously.

In his statement in the CBN communique 139 of the Monetary Policy Committee, MPC, meeting   held in November last year, a member of the Committee, Adenikinju Festus, said even non-bank financial institutions contributed significantly to the rise in aggregate credit to the economy. 

According to him, “the   report   on   the   Other   Financial Institutions   (OFIs)   showed   that   they   contributed significantly   to   aggregate   consumer   credit.   Other   Financial   Institutions granted   22.39 million   facilities   to   9.23   million   loan   beneficiaries   out   of   which   69.26 thousand   were   corporate   consumers.   Overall,   OFIs   contributed   an   additional N2.79   trillion or 10.62 per cent   to   banking   sector   credit   in   the   past   one   year.”

Ahmad Aishah, a member of the committee, also said that the   improvements   in   the   macroeconomy   were   propelled   by   a   resilient financial   system   which   channeled significant   credit to   support   growth enhancing   sectors   such   as   agriculture,   manufacturing   and   general   commerce, as   well   as   individuals   and   households.

She stated:”Total   credit   increased   by   N4.10   trillion (21.12 per cent) between end October 2020 and end October   2021 ,   due   largely to the increase in   the   industry   funding   base   and   the   CBN’s   Loans   to   Deposit Ratio   policy,   which   has   encouraged   banks   to   increase   lending to   the   real   sector of   the   economy.   This   credit   to   the   real   sector   has   been   critical   for   the   economic recovery.”