Credit expansion reflects CBN’s economic support – CSL analysts

Analysts at CSL Research have attributed the expansion in private sector credit in recent months to the Central Bank of Nigeria (CBN)’s efforts to revive the economy.

Commenting on the recent money and credit statistics released by CBN, the analysts, in a note obtained by New Telegraph yesterday, asserted that the apex bank had “been relatively successful at supporting output recovery.”

According to them, “the recent money and credit statistics released by the Central Bank of Nigeria  (CBN) showed a 1.7 per cent m/m increase in credit to the private sector, reaching another high of N34.5 trillion as of October from N33.9 trillion in September 2021.

Yearly, private sector credit was also up by 18.6 pet cent y/y from N29.1 trillion in October 2020. “Meanwhile, credit to government declined by 1.0 per cent m/m to N12.9 trillion in October from N13.0 trillion in September 2021.

The real sector has largely benefitted from CBN’s sustained monetary stimulus evidenced by the fact that the economy has returned to growth and the government’s fiscal position has increased through improved CIT (+20.1 per cent y/y in 9M 2021) and VAT collections (+40.2 per cent y/y in 9M 2021) arising from recovery in economic activities.” They further stated that “the expansion in private sector credit reflects CBN’s continued efforts to revive the ailing economy.

The CBN has been relatively successful at supporting output recovery. One, thus far in 2021, the apex bank has maintained the benchmark Monetary Policy Rate (MPR) at 11.5 per cent, avoiding any further tightening that could stifle credit growth.”

The analysts also pointed out that while a huge proportion of the credit went to sectors such as agriculture, oil and gas, and manufacturing sectors, the “Non- Performing Loan (NPL) ratio of deposit money banks (DMBs) have remained moderate as CBN allowed banks to restructure loans to the strained sectors.”