The Central Bank of Nigeria (CBN) has disclosed that banks credit to private sector dropped by 0.15 per cent to N291.trillion in June from N29.22trillion in May 2020.
Credit to private sector continued to increase as banks’ lending to the real sector amid the directive of CBN on 65 per cent Loan to Deposit Ratio (LDR).
The reported figure in June implicated 9.85 per cent Year-on-Year increase in credit to private sector reported by the apex bank.
It was gathered that credit to private sector opened 2020 at N26.6trillion and closed February N26.57trillion. It increase significantly to N28.3trillion in March and appreciated further to N28.78trillion in April.
The Governor CBN, Godwin Emefiele in his personal statement during the June Monetary Policy Meeting said, “CBN’s LDR initiative to address the conundrum as the total gross credit increased by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020.
“These credits were largely recorded in manufacturing, consumer, general commerce, and information and communication and agriculture, which are productive sectors of the economy.”
Deputy Governor, Corporate Services, CBN, Mr. Edward Adamu in his statement said, “It is gratifying to note that the economy has received and continues to receive substantially higher amounts of credit compared with periods of similar crisis in the past.
“Between June 2019 and June 2020, the total rose by N3.46 trillion (about 22 per cent), of which new credit in June 2020 alone accounted for N773 billion, up from N412.7 billion in May 2020.
“The number of new credits (recipients) similarly rose by about 42,000 to 93,578 from 51,700 in May. The huge output in the economy was underpinned by improved resilience of the banking system.”
In addition, a member of the MPC, Prof. Mike Idiahi Obadan a Professor, University of Benin in his personal statement said, “Under the circumstances, the financial system has maintained a sound and stable position, following effective interventions by the CBN..
“Net aggregate domestic credit grew by 5.16 per cent in June 2020, compared to the previous month. Stimulated by the policy on LDR, the past year has seen total gross credit increase from N15.56 trillion at the end of May 2019 to N18.90 trillion at the end of June 2020. This has been driven especially by manufacturing, consumer credit, general commerce, information and communication, and agriculture.”