Banks’ credit to private sector hits N19.54trn in November
Nigerian banks’ gross credit to players in the private sector has increased to N19.54 trillion as at November 13, 2020, Ahmad Aishah, a member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has disclosed.
She made this known in her personal statement contained in the just released communiqué for the committee’s last meeting held in November.
Specifically, she noted that gross credit grew by N290.13 billion between end-August 2020 and November 13, 2020.
Similarly, total gross credit growth of N3.976 trillion was recorded from N15.568 trillion at end-May 2019 to N19.544 trillion as at November 13, 2020
Despite multi-directional headwinds confronting the Nigeria economy, Ahmad observed that the financial system has retained its operational and financial resilience, sustaining critical support to the economy through the crisis.
According to her, credit growth remained on an upward trajectory with robust soundness indicators and sustained decline in average lending rates.
She further said that much of this credit was channeled to manufacturing, consumer, general commerce and agriculture – all key employment generating sectors.
She said: “This was broadly driven by effective implementation of the Loan to Deposit Ratio (LDR), Interventions and other complementary policies to ramp up credit to the economy.
“The gradual decline reported in lending rates is a positive development that improves access to credit for more households and businesses with a view to stimulating economic activity, creating jobs and driving a more sustainable and inclusive growth.
“As at October 2020, 86.23 per cent of total loans granted to over one million customers, by Deposit Money Banks (DMBs) were at interest rates considerably below 20 per cent; an improvement from 76.43 per cent as at July 2019.
“This low interest rate environment was also reflected in the Open Buy Back rate which stood at 1.88 per cent at end-October 2020, an indication of a highly liquid banking system.
“Under this scenario, the Bank must maintain vigilance to ensure optimal liquidity levels to support price stability and sustainable economic growth.”
Aisha, the CBN deputy governor, Financial Systems Stability Directorate Industry, further noted that financial soundness indicators strengthened with non-performing loans ratio declining to 5.7 per cent at end-October 2020, from 6.1 per cent (end-August 2020), while capital adequacy improved to 15.5 per cent from 15.3 per cent over the same period.
“Profitability performance also remained satisfactory buoyed by improvement in non-interest income.
“Financial sustainability of banks will be paramount as moratoriums on restructured loans lapse in the near term to strengthen absorptive capacity for any potential losses and maintain lending support to the real economy,” she had recommended.