SAT, JAN 20 2024-theGBJournal|According to the Central Bank of Nigeria (CBN), credit to the private sector (CPS) declined by 6.0% m/m in November (October 2023: +6.8% m/m to NGN63.57 trillion).
On a year-on-year basis, CPS increased by 43.8% to NGN58.60 trillion (November 2022: NGN41.53 trillion).
We attribute this positive trend to the CBN’s enforcement of the 65.0% loan-to-deposit ratio and improved domestic macroeconomic conditions relative to the same period in 2022.
Simultaneously, the broad money supply increased by 39.3% y/y to NGN72.01 trillion in November (October 2022: NGN51.69 trillion), aligning with growth in both narrow money supply (+22.1% y/y) and quasi money (+49.3% y/y).
Over the short to medium term, we expect that the improvement of domestic economic activities and the re-enforcement of the CBN’s limit on the loans-to-deposits (LDR) macro-prudential ratio for deposit money banks (DMBs) will drive the willingness of commercial banks to create risky assets in the short term.
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