• Monday, May 27, 2024
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Banking system credit (net) to domestic economy rose by 0.4%

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It has been widely reported that banks are not lending to real economy even when there is liquidity in the system, but the Economic Report for the month of August revealed a marginal growth in banks’ credit to domestic economy.

According to the report, at N15,839.4 billion, aggregate banking system credit (net) to the domestic economy rose marginally by 0.4 percent, on month-on-month basis, at end-August 2014, compared with the growth of 3.9 percent at the end of the preceding month.

The development relative to the preceding month reflected the growth of 0.8 percent in claims on the private sector, which more than offset the 4.9 percent decline in net claims on the Federal Government. Over the level at end-December 2013, net domestic credit grew by 5.3 percent.

Meanwhile, the banking system’s credit (net) to the Federal Government, on month-on-month basis, declined by 4.9 percent to negative N1,554.5 billion at end-August 2014, in contrast to the growth of 17.2 percent at the end of the preceding month.

The development relative to the preceding month was attributed to the decline in banking system’s holdings of government securities.

Over the level at end-December 2013, claims on the Federal Government (net) fell by 5.8 percent. The Federal Government, as in the preceding month, however, remained a net lender to the banking system at the end of the review month.

Banking system credit to the private sector, on month-on-month basis, grew marginally by 0.8 percent to N17,393.9 billion, compared with the growth of 1.7 percent at the end of the preceding month.

The development was attributed to the 0.9 percent and 0.7 percent increase in claims on the core private sector and state and local governments, respectively

Over the level at end-December 2013, banking system’s credit to the private sector grew by 5.4 percent, compared with the growth of 4.5 percent recorded at the end of the corresponding period of 2013.

At N7,647.7 billion, foreign assets (net) of the banking system declined by 4.8 percent at end-August 2014, in contrast to the growth of 4.4 percent and 0.9 percent at the end of the preceding month and the corresponding month of 2013, respectively.

The development relative to the preceding month was attributed to the decline of 10.3 percent and 3.5 percent in foreign asset holdings of commercial banks and the CBN, respectively.

READ ALSO: Banking system liquidity at N450.0bn exceeds regulatory benchmark in May

Over the level at end-December 2013, NFA declined by 10.2 percent, compared with the decline of 5.7 percent and 0.6 percent at the end of the preceding month and the corresponding period of 2013, respectively. The decline was attributed to the fall of 8.8 percent and 16.2 percent in the foreign asset holdings of both the commercial banks and the CBN.

Other assets (net) of the banking system, on a month-on-month basis, rose by 0.3 percent to negative N7,357.4 billion, in contrast to decline of 6.3 percent at the end of the preceding month.

Over the level at end-December 2013, other assets (net) of the banking system grew by 6.7 percent.

HOPE MOSES-ASHIKE