Nigerian banks reportedly upped their total loans to the Nigerian economy by N3.3 trillion in June 2020. This disclosure was made via information in the monetary policy communique of the Central Bank released on Monday by the governor, Godwin Emefiele.
According to the apex bank boss, aggregate domestic credit increased by 5.6% in June 2020 compared with 7.7% growth recorded in the month of May 2020.
This resulted in a total increase in gross credit from N15.56 trillion in May to N18.9 trillion as at end of June 2020. The CBN attributes the increase to its Loan to Deposit Ratio initiative, a policy that forces banks to lend at least 65% of its deposits.
“Aggregate domestic credit (net) grew by 5.16 per cent in June 2020 compared with 7.47 per cent in May 2020. The Committee
commended the CBN Loan-to-Deposit Ratio (LDR) initiative to address the credit conundrum as the total gross credit increased
by N3.33 trillion from N15.56 trillion at end-May 2019 to N18.90 trillion at end-June 2020.”
The MPC shows most of the loans went to the manufacturing, consumer credit, general commerce, information & communication and agriculture sectors. The CBN favours credit deployment to these sectors which it considers productive. Data from the financial sector reveals most of the banking sector credit goes to the Oil and Gas sectors with the productive sectors (as defined by the CBN) falling behind.