Banks grow credit to economy by 0.65% to N38.29 trln in H1 2020 ~Report
By Samuel Bankole
Total credit to the economy grew 0.65 percent to N38.29 trillion in June 2020 from N38.04 trillion in the first quarter of the year, according to a report by the Ministry of Finance and Budget.
The growth in credit to the economy was attributed to the expansion of credit to the private sector of the economy by commercial lenders during the period.
The period coincided with the time government imposed a lockdown on businesses and human movement in a bid to contain the spread of the Coronavirus pandemic across the country.
According to the report, credit to the private sector grew by 3.95 percent to N29.43 trillion at the end of the second quarter from N28.31 trillion in the first quarter of the year.
“Net Credit to Government on the other hand decreased by 8.94 percent (₦869.60 billion) from ₦9,732.00 billion in March 2020 to ₦8,862.41 billion in June 2020,” the report on the performance of the 2020 budget stated.
The Central Bank of Nigeria (CBN) has been promoting credit expansion to the economy through the instrument of Loan-Deposit-Ratio (LDR) which stipulates that banks should expand their credit portfolio to 65 percent of their LDR.
Last month, the regulatory bank slashed its benchmark interest rate by 100 basis points to 11.5 percent in as part of measures to boost credit to the economy and stimulate overall growth toward economic recovery.
Credit to the public sector continued to decline due to the low yields regime prevalent due to downward movement in interest yields on the government’s debt instrument, according to analysts.