Banking sector’s credit to private sector rose to N25.47tn in September, setting a new record for the year, a new report by the Central Bank of Nigeria has revealed.
Analysts have said the 65 per cent Loan-to-Deposit policy of the CBN has continued to increase banks’ credit to the private sector.
In a bid to drive lending to the real sectors, the CBN had directed all banks to maintain a minimum of 65 per cent LDR by the end of December 2019.
The money and credit statistics by the CBN specifically showed that banking sector’s credit to private sector rose by 2.61 per cent to N25.47tn in September from N24.8 2tn in August.
The statistics also revealed that the banking sector’s credit to the private sector was N22.9tn in January. It increased to N24.2tn in February. The figure dropped marginally to N23.99tn in March and increased by 3.72 per cent to N24.88tn in April.
According to the CBN, the credit remained flat at N24.88tn in May and dropped to N24.76tn and N24.29tn in June and July, respectively.
He said, “The growth in credit to private sector is as the result of minimum LDR policy of the CBN and the imposed levy of additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall of the target LDR.”
The report also showed that the aggregate credit to the domestic economy (net) rose by 4.8 per cent to N35.92tn at the end of September 2019, from N34.27tn reported in August, setting another record this year.
On the other hand, banking sector’s credit to government dropped by 1.13 per cent to N11.01tn in September from N11.13tn in August.
This is coming on the heels of the CBN directive to banks to reduce their exposure to the Federal Government securities.
The CBN governor, Godwin Emefiele, had restricted banks on their access to government securities.
Other assets (net) of the banking system rose by 0.27 per cent at end-September 2019 to negative N14.79tn, in contrast to the negative N14.76tn in August.
In addition, currency in circulation moved to N2tn in September from N2.02tn that the apex bank reported in August.
The CBN noted N2.24tn in February was the highest currency in circulation this year, while the figure reported in July is the lowest currency in circulation.
Our correspondent gathered that currency in circulation in 2019 has remained at an average N2tn as against N1tn for the previous year.
Also, our correspondent can report that N2.34tn in December 2018 was the highest currency in circulation while N1.82tn was the lowest currency in circulation.
Ojo said, “There are a lot of informal activities that cannot be documented when it comes to movement of currency. The main reason why currency in circulation increased this year is due to the elections.”
Frontpage September 12, 2017