The Central Bank of Nigeria (CBN) economic report, has shown that credit to the Private Sector (CPS) surged by 27.3 per cent year-on-year to N75.96 trillion in November.
The uptick in credit to key sectors of the economy has been attributed to CBN’s reduction of Loan to Deposit Ratio (LDR) from 65 per cent to 50 per cent and monitoring of banks’ compliance with the policy implementation.
Analysts at Codros Securities, said: “We believe the continuous increase in CPS reflects the impact of CBN’s enforcement of the 50 per cent loan-to-deposit ratio and the conversion effect of currency depreciation on banks’ foreign-denominated assets.
“Similarly, Credit to the Government surged to a record high of N39.62 trillion in November, representing a 54.4 per cent year-on-year increase from N25.66 trillion in November 2023, indicating increased government borrowings from domestic banks for deficit financing,” he said.
The analysts said that overall, broad money supply (M3) grew by 51.3 per cent year-on-year to N108.97 trillion, following increases across quasi (+61.3 per cent year-on-year) and narrow (+38 per cent year-on-year) money supply.
On a month-on-month basis, the CPS rose by 2.5 per cent in November
“We expect the CPS to continue expanding in the short term 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 risk assets. Nonetheless, we acknowledge that the increased monetary policy tightening measures may tether CPS growth,” the analysts said.
