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Banking system credit to domestic economy rise by 30%

CBN

Aggregate banking system credit to the domestic economy (net) rose by 30.3 percent in September 2019, compared with the growth of 1.9 percent in corresponding period of 2018.

Relative to the level at the end of August 2019, it grew by 24.3 percent, according to the economic report for the month of October released by the Central Bank of Nigeria (CBN).

Deposit Money Banks (DMBs) have been aggressively pushing credit to consumers in compliance with the Loan to Deposit Ratio (LDR) directives of the CBN.

The CBN had raised the LDR to 65 percent and set December 2019 as deadline for compliance by deposit money banks.

Afrinvest banking sector report showed that the total loan of the banking sector stood at N15.7 trillion in the first half of 2019, and is expected to hit N16.1 trillion by the end of the year.

Read also: Achieve 100,000mw to match size of Nigeria’s economy, Senate tells FG

Aggregate credit to the domestic economy (net), on month-on-month basis, grew by 4.8 percent to N35.91 trillion at the end of September 2019, compared with the growth of 2.5 percent and 7.0 percent at the end of the preceding month and the corresponding period of 2018, respectively.

The development was attributed to the respective increase of 10.6 percent and 2.6 percent in net claims on the Federal Government and claims on the private sector.

Net claims on the Federal Government, on month-on-month basis, grew by 10.6 percent to N10.45 trillion at end-September 2019, compared with the growth of 3.4 per cent and 54.9 per cent at the end of August 2019 and the corresponding period of 2018, respectively. The growth in net claims on the Federal Government reflected the increase in holdings of government securities by the Central Bank of Nigeria. Over the level at end-December 2018, net claims on the Federal Government rose significantly by 114.8 per cent, compared with the growth of 94.3 per cent at the end of the preceding month.

Relative to the level at end-August 2019, banking system credit to the private sector rose by 2.6 per cent at the end of September 2019, compared with the growth of 2.2 per cent apiece at the end of the preceding month and the corresponding period of 2018. The development was attributed to the 1.7 per cent and 9.0 per cent increase in claims on the core private sector and claims on the state and local government, respectively.

Over the level at the end of December 2018, banking system credit to the private sector grew by 12.1 percent, compared with the growth of 9.3 percent and 3.0 percent at the end of the preceding month and the corresponding period of 2018, respectively.