Credit To Private Sector Hits N31.8trn In April
The private sector secured improved liquidity for its operation in April 2021 following the rise in credit to N31.82 trillion from the N30.65 trillion sourced from the banking sector in January, according to last month’s Credit Statistics of the Central Bank of Nigeria (CBN).
The sector received an additional N1.17 trillion credit in April over the N30.65 trillion of January, according to CBN’s data which noted that credit to private sector in its Year-till-date and Year-on-Year performance gained 10.14per cent and 3.83per cent respectively.
The data showed that credit to the private sector in January 2021 was N30.65trillion but dropped by 0.47 per cent to N30.50trillion in February. Credit to the sector rose again between March and April, moving from N31.4 trillion to N31.82 trillion.
According to the CBN credit statistics, N30.15trillion was reported as credit to private sector in December 2020, an increase of 13.12per cent from N26.55 trillion reported in January 2020
InsideBusinessNG gathered that banks operating in the country had significantly increased impairment charges on loans amid the CBN directive to meet the 65 percent Loan-to-Deposit Ratio (LDR).
Also, growth in credit to the Government, and credit to private sector reflected impact of various measures by the Bank to promote flow of credit to drive economic activities.
Findings also show that banks were lending to real sector after the federal government ease COVID-19 lockdown and at the same time aggressively going after obligor to recovered loans.
From the statistics, the CBN disclosed that credit to the government rose by 1.4 per cent to N12.16trillion in April 2021 from N11.99trillion in March 2021.
The CBN governor, Godwin Emefiele in his personal statement at the end of second Monetary Policy Committee (MPC) of March 2021 said the members observed growth in private sector credits over various interventions amid at spurring aggregate demand, stimulating output, and de-risking the productive activities.
According to him, “Regardless of the increase in credit, the banking system remained relatively resilient with industry averages of the CAR at 15.2 per cent, NPLs ratio at 6.3 per cent, and liquidity ratio at 40.5 per cent.
“The Bank will sustain its regulatory measures to foster banking system stability. We will also continue to use all means available to us to engage and encourage banks to increase credit to the productive private sector.”
Deputy Governor, Financial System Stability, CBN, Aisha Ahmad in her personal statement said, “Credit continued an upward trajectory since the inception of the Loan to Deposit Ratio (LDR) policy. Credit to the private sector grew by 1.36 per cent to N30,558.79 billion in January 2021 from N30,149.60 billion in December 2020.
“At an annualized rate of 16.32 per cent, growth in credit to the private sector shot above the benchmark of 14.14 per cent.
“To improve prospects of continuing credit growth in the near future, commercial banks should be encouraged to show greater commitment and compliance with the LDR policy.”
Another member of the MPC, the Deputy Governor, Operations, CBN, Folashodun Shonubi said, “Growth in credit to the Government and credit to private sector reflected impact of various measures by the Bank to promote flow of credit to drive economic activities.”
He added that “I believe the Bank’s interventions through aggressive provision of credit should continue as a complement to ongoing effort by the fiscal authority to boost economic activities.
“As the Government act, more decisively to discourage bad behaviour and restore orderliness, we must collectively work to overcome the insecurity challenges.
“At the same time, we must begin to tighten to deal with the subtle monetary component of inflationary pressure and curb spiraling inflation, without suffocating economic growth.”
Another member, African Development Bank, Robert Asogwa, said, “Banking Sector credit however gathered pace in February 2021 with a total of 95,583 new credits, thus expanding the total banking sector credit by over 4.0 percent compared to the level in December 2020.
“This momentum is expected to continue in 2021, supported by strong liquidity in the domestic money market and the rise in lending to micro, small and medium enterprise (MSME) sector.
“Of the total banking sector credit to the economy, net credit to Central Government continued to grow in February resulting in a notable acceleration of broad money.”
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