The weekly economic and market report of Cordros Securities has shown that Nigerian banks credit to the private sector rose to N74.31 trillion in May 2024, compared to N44.79 trillion in the same period in 2023.
It shows that the banks generated approximately N30 trillion in new loans and support for the private sector over the one-year period.
The firm said the data was from the Central Bank of Nigeria (CBN) and it also showed that credit to the private sector (CPS) increased by 65.9%, or N29.52 trillion.
Credit to Private Sector includes loans, trade credits, and other receivables and support provided by banks to the private sector over a period
Analysts at Cordros Securities attributed the increase in CPS in the review period to efforts by deposit Money Banks’ (DMBs) to boost risk asset creation in line with the CBN’s 50.0 per cent Loan-to-Deposit (LDR) and the impact of the naira depreciation on foreign denominated assets.
According to the report on a month-on-month basis, the CPS increased by 1.9% in May (April: +2.4% m/m to NGN72.92 trillion).
In addition, the currency in circulation increased by 56.9% y/y to N3.97 trillion (May 2023: NGN2.53 trillion) while the broad money supply (M3) grew by 78.2% y/y to N99.24 trillion, mirroring the increases observed in M2 (+78.2% y/y) and narrow money (+48.5% y/y).
The analysts noted that over the short to medium term, they think the re-enforcement of the CBN’s limit on the loans-to-deposits macro-prudential ratio for deposit money banks will continue to drive the willingness of commercial banks to create risky assets.
