Nigeria’s Private Sector Receives N1.18tn New Loans in Q1 2022
The Nigerian banking sector has been encouraged by the Central Bank Of Nigeria to continue injecting funds into the real sector of the economy in order to promote growth and ensure recovery from the recession witnessed during the covid-19 lockdown in 2020.
According to data from CBN, bank credit to the Nigerian private sector rose to N36.37 trillion as of March 2022, representing N1.18 trillion net new loans to the real sector in the first quarter of the year. .
The monetary policy committee of the Central Bank during the 284th MPC meeting held in March 2022 noted that the impact that increased bank credit has had on the economy, with Nigeria’s economy recording a 3.4% real growth in 2021, a significant uptick compared to the 1.92% contraction recorded in the previous year.
To ensure economic growth, the committee adopted a dovish monetary approach by keeping the interest rate low. In spite of the increased credit, the loans-to-deposit ratio of deposit money banks fell from 59.12% in December 2021 to 58.81% in March 2022.
Nigeria’s credit to the private sector increased by 3.3% from N35.19 trillion recorded as of December 2021, to stand at N36.37 trillion. This brings bank loans to the private sector to its highest level on record.
Similarly, credit to the government also increased by N2.99 trillion in the review period to stand at N16.32 trillion as of March 2022, while currency in circulation declined slightly by N79.56 billion in Q1 2022.
This suggests how liquid the Nigerian economy has been in recent times with customer deposits also surging beyond bank credit.
The apex bank explained that the liquidity ratio remained above its prudential limit at 43.5% in February 2022, with the Capital Adequacy Ratio (CAR) moderating slightly to 14.4% in the same month.
Additionally, the ratio of non-performing loans (NPL) in Nigerian banks has decreased despite increased credit. It says, the NPL ratio dropped to 4.84% in February 2022 from 4.9% in December 2021.