By Akinsuroju Olubunmi
Banks’ Loans to Private Sector Hit N74tn
Nigerian banks’ loans and support for the private sector rose to about N74.31tn at the end of May 2024, according to data from the Central Bank of Nigeria (CBN). The CBN’s latest data indicated that credit to the private sector increased by 65.9 percent, or N29.52tn, compared to N44.79tn in the same period of 2023. This growth demonstrates the banking sector’s continued support for the economy.
Credit to the private sector includes loans, trade credits, and other receivables provided by banks within a period. A breakdown showed that in April, the CPS was N72.92tn, N71.21tn in March, and February recorded the highest at N80.86tn, followed by January at N76.48tn.
This latest data follows a recent report on capital importation into Nigeria, which showed that banks attracted significant capital importation. Analysts noted this as a sign of confidence in Nigerian banks, as foreign investors are becoming more active in the nation’s economy.
According to the National Bureau of Statistics, Stanbic IBTC Bank, Citibank Nigeria, and Rand Merchant Bank facilitated $1.09bn in capital importation in the fourth quarter of 2023. The report noted a 2.62 percent rise in Nigeria’s capital inflow to $1.09bn from $1,060.73m in the same period of the previous year.
The production/manufacturing sector saw the highest inflow with $450.11m, accounting for 41.35 percent of the total capital imported in Q4 2023. This was followed by the banking sector with $283.30m (26.03 percent) and financing with $135.59m (12.46 percent).
Experts at Cordros Capital expect the CBN’s loan-to-deposit ratio limit for Deposit Money Banks to continue driving commercial banks’ willingness to create risk assets. An IMF study found that banks with strong balance sheets were better able to maintain lending during financial crises, highlighting the importance of high-quality capital.
CBN Governor Dr. Olayemi Cardoso emphasized that ongoing recapitalisation will further strengthen banks, driving the $1tn economic target and supporting stable economic growth. He stated that additional capital would enhance Nigerian banks’ ability to support economic growth and compete globally.
Banks’ Loans to Private Sector Hit N74tn