Banks’ credits to the private sector, CPS, increased by 33.6% year-on-year (YoY) to N75.5 trillion in July 2024 from N56.5 trillion in the same period of 2023, suggesting a promising economic recovery.

Also read: https://firstcentralcreditbureau.com/the-fg-has-increased-the-loan-amount-for-msmes-to-n5m-at-a-rate-of-9-interest/

In a given period, the CPS encompasses loans, trade credits, and other account receivables and supports that banks provide to private sector operators. The CPS is a global indicator of the banking sector’s contribution to national economic activities and the resilience of its balance sheet.

David Adonri, Vice Executive Chairman and Financial Analyst at High Cap Securities Limited, expressed his satisfaction with this development, stating, “This is a positive development in the economy.” The CBN has a significant role to perform in addressing the current issue of the interest rate.

“The economy is expected to experience a substantial boost as a result of the increased private sector credit, as there is a correlation between credit to the private sector and economic growth.” The primary consequence of the increased lending by banks is an increase in Gross Domestic Product (GDP).

“The trend in credit to the private sector may persist if the benchmark interest rate, the Monetary Policy Rate (MPR), is reduced.” Therefore, I would prefer that the apex bank decrease the MPR in light of the progressive decrease in inflation.

Concurrently, the credit breakdown of banks revealed that their credit increased by 2.8% to N73.2 trillion in the second quarter of the year, Q2’24, compared to N71.2 trillion in Q1’24.

The CBN’s Money and Credit report also indicated that Nigerian banks had experienced a substantial increase in deposits during the first half of the year. According to the report, the demand deposits of banks increased from N26.7 trillion at the conclusion of December 2023 to N33.0 trillion by June 2024.

Since the beginning of the year, deposits have increased steadily in banks. The total demand deposits in the first quarter of 2024, which concluded in March, increased by 8.1% to N28.9 trillion. Banks’ deposits increased by 14.3% to N33 trillion in the second quarter of 2024, which concluded in June.

In the meantime, practically all banks had experienced substantial deposit growth in the past few years, which enabled the majority of them to generate new loans and advances.