Banks’ credits to the private sector, CPS rose 33.6 % Year-on-Year, YoY, to N75.5 trillion in July 2024 from N56.5 trillion in same period of 2023, indicating a bright prospect for economic recovery.
The CPS includes loans, trade credits and other account receivables and supports provided by banks to the operators in private sector within a period. The CPS is a global measure of the banking sector’s balance sheet resilience and contribution to national economic activities.
Commenting on this development, David Adonri, Financial Analysts and Vice Executive Chairman at High Cap Securities Limited, said: “This is a good development in the economy. The issue now is on the interest rate; so the CBN has a big role to play.
“The increased private sector credit implies a major boost for the economy as there is a link between credit to the private sector and the economic growth. The increased lending by banks directly leads to increase in Gross Domestic Products (GDP).
“The trend in credit to private sector may continue if the benchmark interest rate, Monetary Policy Rate, MPR, is brought down. So I would like the apex bank to reduce the MPR now that inflation is gradually easing”.
Meanwhile, the breakdown of banks’ credit showed that in the second quarter of the year, Q2’24, the banks’ credit grew by 2.8 % to N73.2 trillion from N71.2 trillion in Q1’24.
The CBN’s Money and Credit report also showed that Nigerian banks had seen significant increase in deposits during the first half of this year. The report indicated that banks’ demand deposits rose from N26.7 trillion recorded at the end of December 2023 to N33.0 trillion by June 2024.
Banks had sustained steady growth in deposits since this year. Total demand deposits in the first quarter ended March 2024 had risen by 8.1 per cent to N28.9 trillion. In the second quarter ended June 2024, banks’ deposits increased by14.3 per cent to N33 trillion.
Meanwhile, nearly all banks had seen significant increases in deposits in recent period, providing the headroom for most banks to create new loans and advances.
Vanguard
