By Cynthia Ezekwe
Banks’ consumer loans rose for two consecutive months in January and February, to N2.45 trillion in February 2023, up by 5.6 per cent from N2.32 trillion in December 2022, the Central Bank of Nigeria (CBN) economic report for the month of July 2022 has revealed.
Consumer loans are money advanced by banks to individuals for household, family, or other personal expenditures.
Financial industry experts attributed the development to an increase in demand occasioned by apprehension about the outcome of the 2023 general elections.
This was in sharp contrast to the decline recorded in the fourth quarter of last year, when consumer loans fell quarter-on-quarter (QoQ) by 3.5 per cent to N2.32 trillion from N2.4 trillion it recorded in the third quarter of 2022, following the 250 basis points increase in the monetary policy rate (MPR).
According to the report, consumer loans rose to N2.41 trillion in January from N2.32 trillion in December 2022, representing 3.7 per cent month-on-month (MoM) increase. It rose further by 1.8 per cent, MoM to N2.45 trillion in February 2023.
“As a share of total claims on the private sector, consumer credit grew marginally by 0.4 percentage point to 8.7 per cent at the end of February. This could be due to a higher precautionary demand for money by households, triggered by uncertainties surrounding the 2023 general elections,’’ CBN noted.
The apex bank also pointed out that a breakdown of consumer credit during the period shows that personal loans stood at N1.85 trillion, accounting for 75.4 per cent, while retail loans stood at N602.35 billion, and accounted for 24.6 per cent.
It recorded a 12.5 per cent YoY increase to N2.45 trillion in one year, ending February from N2.18 trillion in February 2022.
CBN noted that the increase was driven by an 18.8 per cent YoY increase in personal loans and 9.6 per cent YoY increase in retail loans during the period.
Personal loans rose to N1.848 trillion in February 2023 from N1.686 trillion in February 2023, representing a 9.6 per cent YoY increase to N163 billion, while retail loans rose to N602.35 billion in February 2023 from N492 billion in February 2022, representing N110.35 billion or 18.8 per cent YoY increase.