Leadership (Abuja)

Nigeria: Banking Credit to Economy Tops N13.96 Trillion in 2012

Aggregate banking system credit to the country's domestic economy rose 4.4 per cent to N13.96 trillion at the end of the last quarter of 2012.

This is even as the amount of money in circulation rose 21 percent to N1.63 trillion during the same period last year.

The Central Bank of Nigeria (CBN) in its fourth quarterly report just released said, "at N13,957.43 billion (N13.96 trillion), aggregate banking system credit (net) to the domestic economy, rose by 4.4 per cent at the end of the fourth quarter of 2012, compared with the growth of 0.4 and 37.4 per cent at the end of the preceding quarter and the corresponding quarter of 2011, respectively".

The development relative to the preceding quarter's level, reflected, according the central bank, is largely due to the 15.1 and 2.3 per cent increase in claims on the federal government and private sector respectively.

Over the level at end-December 2011, aggregate banking system credit (net) to the domestic economy rose by 2.0 per cent, reflecting largely the 7.8 per cent increase in claims on the private sector.

A breakdown of the statistics indicates that the banking system's credit (net) to the federal government, at the end of the review quarter rose by 15.1 percent to N1.33 trillion, in contrast to a decline of 13.3 per cent in the preceding quarter. The development was accounted for, largely, by the 35.3 per cent increase in banking system's holdings of federal government securities, particularly FGN Bonds and Treasury Bills.

Over the level at end-December 2011, aggregate banking system's credit (net) to the federal government declined significantly by 167.2 per cent, reflecting largely the fall in claims on the federal government by banks. The federal government, however, remained a net lender to the banking system at the end of the review quarter.

At the end of fourth quarter 2012, banking system's credit to the private sector rose by 2.3 per cent to N15.29 trillion, compared with the increase of 1.6 and 27.7 per cent at the end of the preceding quarter and the corresponding period of 2011, respectively.

The development, relative to the preceding quarter was attributed, wholly, to the 2.0 per cent increase in claims on the core private sector. Over the level at the end of the fourth quarter of 2011, banking system's credit to the Private Sector grew by 7.8 per cent, reflecting the 6.9 percent increase in credit to the core private sector.

Analysts described the growth in banking credit to the private sector as a welcome development, saying that it will help create jobs and drive the economy.

John Okolo, an analyst in Lagos said, the economy would grow a lot faster if the federal government cut down recurrent expenditure further in favour of capital expenditure.

At N9.10 trillion, foreign assets (net) of the banking system increased by 10.1 per cent at the end of the review quarter, compared with the increase of 9.9 per cent at the end of the preceding quarter.

The development was attributed, largely, to the 16.6 per cent increase in CBN holdings of foreign assets which more than offset the 12.2 per cent decline in Deposit Money Banks (DMBs)' holdings of foreign assets during the review period.

Over the level at the end of the fourth quarter of 2011, foreign asset (net) of the banking system rose by 27.5 per cent due to the 27.5 and 25.5 percent increase in monetary authorities and DMBs' holdings of foreign assets during the review period.

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