SAT SEPT 28 2024-theGBJournal| Credit to the Private Sector (CPS) increased by 31.2% y/y to N74.73 trillion in August (August 2023: N56.95 trillion), according to latest data from the Central Bank of Nigeria (CBN).
The increase reflects the willingness of commercial banks to create risky assets over the short to medium term.
Cordros Research analysts suggest the sustained CPS growth can also be attributed to CBN’s enforcement of the 50.0% loan-to-deposit ratio and the effect of currency depreciation on naira-denominated assets, but warns that the apex bank’s intensified monetary policy tightening measures will tether the magnitude of growth.
On a month-on-month basis, the CPS declined slightly by 1.0% in August (July: +3.2% m/m to N75.51 trillion), reflecting reduced private sector borrowing due to CBN’s tighter monetary policy measures to curb the rising inflation and stabilise the economy.
Overall, the currency in circulation increased by 55.8% y/y to N4.14 trillion (August 2023: N2.66 trillion) while the broad money supply grew by 61.9% y/y to N107.19 trillion, following increases across quasi-money (75.3% y/y) and narrow money (43.0% y/y) supply.
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