The services, industry and agricultural sectors accounted for the largest share of banks’ credit in Nigeria in May, according to the Economic Survey by the Central Bank of Nigeria (CBN).
Services account for the largest share, with 53.1 percent of the total.
Commercial banks lent a total of N30.18 trillion, with the services sector receiving N16.012 trillion. It was followed by industry (N12.380 trillion) and agriculture (N1.788 trillion), which accounted for 41.0 percent and 5.9 percent, respectively.
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The services sector includes a wide range of smaller sectors such as finance, insurance, capital market and trade/general commerce.
Ayo Teriba, chief executive officer at Economic Associates, said the services sector remains the largest because it encompasses other sectors.
“Services are rendered to everybody regardless of the sector they are operating; when loans are given to farmers, it will be put under services and tagged as insurance or transport,” he said.
Credit to the agricultural sector saw a 4.8 percent decrease to N1.78 trillion in May from N1.88 trillion in April.
According to the National Bureau of Statistics (NBS), the agriculture sector recorded a growth rate of 1.50 percent in the second quarter of 2023, compared to 1.20 percent in the same quarter of 2022.
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On a quarterly basis, the sector’s growth rate increased to 1.50 percent in the second quarter of 2023 from -0.90 percent in the first quarter.
Meanwhile, the oil and gas sector (downstream, natural gas and crude oil refining) saw a 1.3 percent increase in bank credit to N4.852 trillion from N4.808 trillion in April.
The oil sector contributed 5.34 percent to the total real GDP in Q2 2023, down from 6.33 percent in the same period of last year and 6.21 percent in the preceding quarter.
Data from the NBS and the CBN show that the ratio of banks’ non-performing loans dropped to 4.4 percent at the end of May 2023 from 15.01 percent in 2017.
According to the statistics office, the performance of the GDP in the second quarter of 2023 was driven mainly by the services sector, which recorded a growth of 4.42 percent and contributed 58.42 percent to the aggregate GDP.
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In a report previously done by BusinessDay, total loans to customers from seven commercial banks in Nigeria rose to N22.9 trillion in the first half of 2023, the highest in at least six years, an analysis of data from their financial statements showed.
Their combined customer loans rose by 44.3 percent from N15.9 trillion in the first half of 2022.
The banks are Guaranty Trust Holding Company, Fidelity Bank, Stanbic IBTC Bank, FCMB Group, United Bank for Africa, Zenith Bank and FBN Holdings.
Further analysis shows that the banks had an average Loan-to-Deposit Ratio of 50.8 percent. This means that for every N100 deposited, they lent N51.
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