By the third quarter of this year, bank’s credits to Nigeria’s economy rose from N81.7 trillion to N117.9 trillion.
The latest data from the Central Bank of Nigeria (CBN) shows double-digit growths in credits to the government and the private sector.
Banks’ credits include sovereign issuances, loans, trade credits, and other account receivables and supports provided by banks to the government and the private sector within a period.
A breakdown indicated that credits to the private sector (CPS) accounted for nearly two-thirds of the total credits to the economy, rising by 27.5 percent from N59.51 trillion by September 2023 to N75.85 trillion by September 2024.
CPS accounted for nearly three-quarters of total credits by the third quarter of last year.
However, government’s reliance on the domestic banks to bridge the budget deficit saw an increase in loans to the government by 89.8 percent from N22.14 trillion in the third quarter of last year to N42.02 trillion in the third quarter of this year.
The proportion of government financing to total financing thus increased from 27.12 percent in 2023 to 35.65 percent in 2024. The proportion of credits to private businesses dropped from 72.88 percent to 64.35 percent.
Month-on-month analysis showed a modest recovery in CPS. It rose by 1.5 percent from N74.73 trillion last August to N75.85 trillion in September.
The CPS is a global measure of the banking sector’s balance sheet resilience and contribution to the national economic agenda.
With banks posting resilient earnings and the immediate success of the ongoing banking recapitalisation, analysts believe they (banks) are in a stronger position to continue to support the national economic agenda.
A major highlight of the ongoing government’s economic renewal agenda is the push for a $1 trillion economy, a major reason for the ongoing banking recapitalisation programme.
Analysts at Cordros Capital said: “We project the CPS will maintain a double-digit expansion in 2024 full year as we believe the re-enforcement of the CBN’s limit on the loans-to-deposits macro-prudential ratio for deposit money banks (DMBs) will continue to drive the willingness of commercial banks to create risky assets.
‘’Nonetheless, we acknowledge that the increased monetary policy tightening measures may tether CPS growth.”
