Banking credit to private sector rises 1.7% to N34.5 trillion in October – CBN




In spite of the snag in the economy, occasioned by persistent insecurity, among others, recent money and credit statistics released by the Central Bank of Nigeria (CBN) showed a 1.7 per cent month-on-month ( m/m) increase in credit to the private sector, reaching a high of N34.5 trillion as of October from N33.9 trillion in September 2021.


Yearly, private sector credit was also up by 18.6 per cent year-on-year (y/y) from N29.1 trillion in October 2020. Meanwhile, credit to the government declined by 1.0 per cent m/m to N12.9tn in October from N13.0tn in September 2021.


The real sector has largely benefitted from the CBN’s sustained monetary stimulus evidenced by the fact that the economy has returned to growth and the government’s fiscal position has increased through improved CIT (+20.1 per cent y/y in a nine month period of 2021) and VAT collections (+40.2 per cent y/y in the first nine period  of 2021) arising from recovery in economic activities.

According to statistics compiled by Proshare, the expansion in private sector credit reflects the CBN’s continued efforts to revive the ailing economy. The CBN has been relatively successful at supporting output recovery. One, thus far in 2021, the apex bank has maintained the benchmark Monetary Policy Rate (MPR) at 11.5 per cent, avoiding any further tightening that could stifle credit growth While a huge proportion of the credit was towards sectors such as agriculture, oil & gas, and manufacturing sectors, the Non-Performing Loan (NPL) ratio of Deposit Money Banks (DMBs) have remained moderate as CBN allowed banks to restructure loans to the strained sectors.


Increasing oil prices have also been supportive as many of the restructured loans to the oil and gas sector have been reported to be meeting the new terms. That said, lower yields on investment securities have forced many banks to increase lending to the real sector of the economy. In the 9 months of 2021, based on released numbers, Zenith Bank recorded a net loan growth of 8.7 per cent relative to December 2020. Also, Access (+16.4%), UBA (+12.4 per cent), GTCO (+4.5 per cent), Stanbic (+31.5 per cent), and Sterling (+13.4 per cent) recorded a net loan growth when compared to December 2020. The sustained credit to the economy has been a valuable stimulus tool. However, the age long structural bottlenecks that have affected growth remain a problem.