Nigerian banks lend N19.54trn to real economy, says CBN

By Charles Abuede

The total gross credit to the real sector by the banking industry stood at N19.54 trillion as at November 13, 2020, increasing by N290.13 billion when compared with N19.33 trillion as at the end of August 2020.  This was revealed at the just concluded CBN monetary policy committee (MPC) meeting.

Godwin Emefiele, the Central Bank Governor, made this known while reading out the MPC communiqué from the just-concluded meeting where he said the aggregate domestic credit grew by 7.61 per cent in October 2020 from 7.35 per cent recorded in the month of September and attributed the growth to the bank’s supported interventions in various sectors of the economy and its Loan-to-Deposit Ratio policy.

The CBN further revealed that the total gross credit increased by N3.97 trillion when compared with the N15.56 trillion at the start of the loan to deposit (LDR) ratio policy in May 2019. Meanwhile, these loans were granted majorly to the manufacturing (N738 billion), General Commerce (N874 billion), Agric and Forestry (N301 billion), Construction (N291 billion), ICT (N231 billion) sectors.

In a related development sprouting from the monetary authority, there was a 3.53 per cent marginal increase in the broad money supply in October 2020 from 3.20 per cent recorded in September 2020 which reflects an increase in the net foreign assets (NFA). Also, there was a moderate contraction in the net domestic assets (NDA) to -2.19 per cent from -5.05 per cent in the previous period.

Further, as of October 2020, there was an improvement from 76.43 per cent to 86.23 per cent in the total loans granted to over one million customers by deposit money banks at a considerable rate of interest below 20 per cent.

While the MPC noted the significant improvement in the indicators of banks financial soundness, the deposit money banks showed capital adequacy ratio (CAR) of 15.5 per cent, Liquidity Ratio (LR) of 35.6 per cent, while the non-performing loans ratio stands above the prudential benchmark of 5 per cent to reach 5.73 per cent as of October 2020.

Meanwhile, there was an improvement recorded by other financial institutions financial soundness indicators in which total assets rose 16.94 per cent or N582 billion year on year to N4.02 trillion as at the close of September 2020. In the same way, aggregate credit grew by N217 billion, or 12.27 per cent year-on-year to N1.99 trillion as at end of the third quarter and the CAR for the subsector also exceeded the minimum prudential ratio of 10 per cent.