Banks in Nigeria Dole Out N3 Trillion Loans to The Private Sector in 6 Months
- Nigerian banks increased lending to the private sector to the tune of N3 trillion in six months in 2022
- According to the Central Bank of Nigeria, credit to the private sector rose by N6.08 trillion from N32.12 trillion reported in May 2021
- Experts say the fintech boom would have spurred the banks to buckle up as they were inching to their space rapidly
Banks’ lending to the private sector went up to its highest in May 2022, increasing to N38.19 trillion from N35.19 trillion recorded as of December 2021, which is an N3 trillion boost in six months, data from the Central Bank of Nigeria (CBN) says.
The statistics states that credit to the private sector year-on-year has swelled by N6.08 trillion from N32.12 trillion reported by the apex bank in May 2021. This is an increase of 18.9 per cent in 12 months.
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The surge in bank credit is in tandem with the CBN’s directive to grant the real sector easy access to credit so as to ensure economic stability.
Fintech lending pushing banks’ credit lending
In addition, the boom in fintech in the lending space has given rise to competition.
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The CBN’s Loan to Deposit Ratio (LDR) policy put in place to expand the lending space may be connected to the growth in banks’ lending, according to a Nairametrics report.
The CBN, after its deadline of September 30, 2019, to the banks to comply with its directives, increased its Loan to Deposit Ratio to 65 per cent in October 2019.
However, the bank shifted the deadline for the LDR by 65 per cent to March 31, 2020.
Banks see an increase in LDR
At the inception of the LDR in 2019, credit to the private sector shot up by N3.75 trillion when it closed. From N26.65 trillion in January 2020 to N30 trillion in December 2020, credit to the private sector hit N3.5 trillion in 2020.
Also, in 2021, credit to the private sector increased by N4.7 trillion in 2021 to stand at N35.19 trillion from N30.40 trillion, according to the CBN in January 2021.
The data indicates that the private sector credit reached about N35.99 trillion in February and is forecasted to reach N37.68 trillion, passing the N37 trillion mark.
Currency in circulation in Nigeria increased from N1.15 trillion in 2021 to N3.33 trillion as of December 2021 which is a record level, maintaining the same amount in May 2022 to stand at N3.33 trillion.
Experts praise CBN but said banks can do better
Victor Monday, a financial analyst praised the apex bank’s directives, saying that it also needs to keep tasking the banks to abide by its directive so as to ensure that the economy does not stagnate.
He said:
“The private sector is the oil that keeps the economy rolling and they are the highest employers of labour and cutting off access from them is like cutting off oxygen from a man struggling to survive.
Monday, who spoke with Legit.ng stated that the FinTech are squeezing into the credit space are pushing the banks to serious competition.
“What you can now see is that banks are now sitting up from their docile stance. They are being challenged by these smaller firms who are increasingly encroaching into their space and giving them the fight of their lives,” Monday said.
CBN releases N129bn into Nigeria economy in October as currency in circulation rises to N2.97 trillion
Legit.ng reported that according to Central Bank of Nigeria figures, the amount of cash in the economy climbed by N129 billion in October to a total of N2.97 trillion.
The data titled Currency in Circulation(CIC) shows that as of September 2021 the total money in the economy stood at N2.84 trillion.
This is an increase when compared to N2.78tn in August and N2.81tn in July.
Source: Legit.ng
