SAT JAN 04 2025-theGBJournal| Credit to the Private Sector (CPS) surged by 27.3% y/y to N75.96 trillion in November (Nov 2023: N59.69 trillion), according to latest data from the Central Bank of Nigeria (CBN).
Similarly, Credit to the Government surged to a record high of N39.62 trillion in November, representing a 54.4% y/y increase from NGN25.66 trillion in November 2023, indicating increased government borrowings from domestic banks for deficit financing.
Overall, broad money supply (M3) grew by 51.3% y/y to N108.97 trillion, following increases across quasi (+61.3% y/y) and narrow (+38.0% y/y) money supply. On a month-on-month basis, the CPS rose by 2.5% in November (October: -2.3% m/m to N74.07 trillion).
Cordros Research analysts, in a note to theG&BJournal said, the continuous increase in CPS reflects the impact of CBN’s enforcement of the 50.0% loan-to-deposit ratio and the conversion effect of currency depreciation on banks’ foreign-denominated assets.
”We expect the CPS to continue expanding in the short term as we believe the re-enforcement of the CBN’s limit on the loans-to-deposits macro-prudential ratio for deposit money banks (DMBs) will continue to drive the willingness of commercial banks to create risk assets,” Cordros said.
They also acknowledge that the increased monetary policy tightening measures may tether CPS growth.
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