The Central Bank of Nigeria (CBN), says deposit money banks (DMBs) the volume of lending to the private sector grew by 38. 5 percent year-on-year to N73.12 trillion in June up from N52.81 trillion in June 2023.
However, analysis of the country credit to the private sector (CPS) on a month-on-month basis declined by 1.6 percent in June when compared with N74.31 trillion reported in the month of May.
Meanwhile financial analyst has attributed the increase in CPS in the yearly bases to the twine factor of the boost effect in risk asset creation by deposit money banks’ (DMBs) during the review period in line with the CBN’s 50.0 percent Loan-to-Deposit Ratio (LDR) limit; and the impact of the naira depreciation on foreign denominated assets.
Similarly, the decline in the month-on-month basis, is said to have been due to the highlighting impact of CBN’s hawkish stance in this year to curb the rising inflation.
The CBN report also shows that broad money supply grew by 56.1 percent y-o-y to N101.35 trillion during the period under review, in line with increases recorded across quasi-money (+61.9 percent y-o-y) and narrow money supply grew by 50.2 percent y-o-y).
Meanwhile, financial analyst at Cowry Assets Management Limited are of the view that the re-enforcement of the CBN’s limit on DMB’s loans-to-deposits macro-prudential ratio could continue to drive the willingness of commercial banks to create risky assets.
“However, we believe that the apex bank’s intensified monetary policy tightening measures will tether the magnitude of growth,” they pointed out.