MON MAY 13 2024-theGBJournal|According to the Central Bank of Nigeria (CBN), Credit to the Private Sector (CPS) declined by 11.9% m/m to N71.21 trillion in March (February: N80.86 trillion).
We believe the figure reflects reduced private sector borrowing, highlighting the impact of CBN’s hawkish stance to curb the rising inflation and stabilise the economy.
However, on a year-on-year basis, CPS increased by 65.6% in March 2024 (March 2023: N43.01 trillion).
Overall, broad money supply increased by 69.0% y/y to N92.34 trillion (March 2023: N54.63 trillion), reflecting increases in narrow money supply (+51.8% v/y) and quasi money (+82.5% y/y).
Whilst the CBN’s re-enforcement of the loans-to-deposits (LDR) macro-prudential ratio for deposit money banks (DMBs) will continue to support commercial banks’ willingness to create risk assets in the short term, we think that the intensification of its tightening measures could tether growth of the Credit to CPS in the near term.
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