According to the Central Bank of Nigeria, total banking assets increased by N6.97 trillion between April 2020 and April 2021.
Despite the COVID-19 pandemic, assets increased from N46.2 trillion to N53.17 trillion between April 2020 and April 2021, according to information acquired from the CBN’s Monetary Policy Committee report on Wednesday.
“The financial system continued to record strong growth, with total asset increasing by N6.97 trillion from N46.2 trillion to N53.17 trillion between April 2020 and April 2021, owing primarily to an increase in credit,” according to the report.
“Total credit increased by N2.84 trillion (15.26 percent) between April 2020 and April 2021, owing largely to the CBN’s Loan to Deposit Ratio policy and increased credit demand by businesses and households as economic activity picked up following the lifting of COVID-19 restrictions,” says the report.
Financial market conditions were poor during the review period, according to the CBN, with a negative stock market, sluggish liquidity in the money market, and lingering exchange market pressure.
The weighted average inter-bank call and open buy-back rates increased from 1.8 percent and 1.5 percent in March 2021 to 15.3 percent and 14.6 percent in April, according to the report.
“In contrast, the annualised growth rate of broad money supply was below the 10.8% recorded in December 2020, at 3.5 percent, and reflected the 10.2% annualised growth in net domestic asset below the 15.9% at the end of 2020,” it stated.
“The 32.0 percent annualized expansion of private sector credit in the review month steered monetary conditions, surpassing the 15.2 percent recorded in 2020.”
The CBN stated that the observed credit growth demonstrated the bank’s LDR policy and targeted actions’ sustained effectiveness.
It also emphasized the importance of maintaining credit flows to the private sector, particularly at this critical time when the economy’s productive machinery is under strain.
The CBN emphasized the importance of increased credit flows to strategic high-impact private sector enterprises, as well as effective collaboration among all stakeholders, in order to improve economic fundamentals.
It also stated that it would continue to fine-tune liquidity conditions in order to reduce speculative activity that destabilize money and currency markets.
Through its interventions in crucial private sector initiatives and MSMEs, the CBN said it will amplify existing efforts to diversify the economy, boost domestic production, and boost aggregate demand.