Nigerian banks increased their total loans to the Nigerian economy by N774.28 billion in December 2020.
This is according to the information contained in the monetary policy communiqué issued by the Central Bank of Nigeria on Tuesday 26th of January, 2021.
The Central Bank of Nigeria stated that the banking sector gross credit grew from N24.25 trillion as at November 2020 to N25.02 trillion in December 2020, translating to a nominal increase of N774.28 billion or a 3.2% month-on-month growth.
The increase in gross credit is sequel to a 13.40% growth in aggregate domestic credit as at December 2020, compared with 9.48% growth recorded in the month of November 2020. The apex bank attributes this growth to its Policy on Loan-to-Deposit Ratio (LDR), complemented by its interventions in various sectors of the economy.
‘’ Aggregate domestic credit, also moved further up by 13.40 per cent in December 2020, compared with 9.48 per cent in the previous month. This was largely attributed to the Bank’s policy on Loan-to-Deposit Ratio (LDR), complemented by its interventions in various sectors of the economy. Consequently, banking sector gross credit as at end-December 2020 stood at N25.02 trillion compared with N24.25 trillion at the end of November 2020, representing an increase of N774.28 billion.’’
Other key highlights are
- Broad money supply (M3) increased by 10.97% in December 2020, compared to a 5.02% rise in November 2020.
- Net Domestic Assets (NDA) rose by 4.96% from -0.45% in the previous period.
What this means
The increase in the gross credit is in line with CBN expansionary monetary policy, aimed at reviving the economy and offsetting the pandemic-induced stagflation. This is evident in a number of schemes initiated by the apex bank to boost the availability of credit to households and consumer spending, e.g. TCF for households and small businesses, AGSMEIS, etc.
Consequently, a recent survey by CBN revealed that the supply of credit to households will increase in Q1 2021, indicating optimism of further growth in the availability of loans and other secured credit to households in the aforementioned period.
In case you missed it: Nairametrics reported that CBN in its first MPC meeting for 2021 agreed to retain MPR at 11.5%, with other parameters held constant.
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