Central Bank of Nigeria (CBN) has revealed that total gross credit by the banking industry increased by N3.97 Trillion in one year.
This was disclosed in the personal statements of some of the members of the Monetary Policy Committee which was released by the CBN on Thursday.
According to the report, “the total gross credit by the banking industry stood at N19.54tn as at 13th November 2020 compared with N19.33tn at end-August 2020, an increase of N290.13bn while banks credits to the productive sectors rose by N3.97tn in 18 months after the commencement of the Loan to Deposit Ratio initiative of CBN.
CBN also disclosed that the total gross credit by the banking industry which stood at N19.54tn as of 13th November 2020, rose from N15.56tn at the commencement of the LDR policy in May 2019.
“When compared with N15.56tn at the commencement of the LDR policy in May 2019, total gross credit increased by N3.97tn.”
Part of the statements read, “The committee noted that growth in broad money supply (M3) increased marginally to 3.53 per cent in October 2020 from 3.20 per cent in September 2020, reflecting an increase in net foreign assets.
“It further noted the moderation in contraction in net domestic assets to -2.19 per cent from – 5.05 per cent in the previous period.
“Aggregate domestic credit, however, grew by 7.61 per cent in October 2020 compared with 7.35 per cent in the previous month as a result of the bank’s policy on Loan-to-Deposit Ratio, supported by the bank’s interventions in the various sectors of the economy”.
According to the bank, these loans were granted mainly to manufacturing (N738bn), general commerce (N874bn), agric and forestry (N301bn), construction (N291bn), ICT (N231bn), just to mention a few.
The committee also noted the reduction in interest rates on loans granted by Deposit Money Banks.
It stated that as of October 2020, 86.23 per cent of total loans granted to over one million customers, by DMBs were at interest rates considerably below 20 per cent.
This was an improvement from 76.43 per cent as at July 2019.
The MPC noted the improvement in financial soundness indicators of the DMBs which showed Capital Adequacy Ratio of 15.5 per cent, non-performing loans of 5.73 per cent and liquidity ratio of 35.6 per cent, as of October, 2020.
As regards non-performing loans, the MPC, however, noted that the ratio remained above the prudential benchmark of five per cent.
The committee recognised the supportive developmental roles of the CBN towards addressing some of the structural issues in the economy.
The MPC expressed optimism on the future impact of the disbursements from Agri-Business/Small and Medium Enterprise Investment Scheme (N92.9bn to 24,702 beneficiaries), Anchor Borrowers Programme by the sum of N164.91bn to 954,279 beneficiaries and COVID-19 Targeted Credit Facility to household and SMEs (N149.21bn to 316,869 beneficiaries).