The Central Bank of Nigeria (CBN) has said, bank credit to the private sector rose to N36.37 trillion as of March 2022, representing N1.18 trillion net new loans to the real sector in the first quarter of the year.
The banking sector has been encouraged by the CBN to continue to inject funds into the real sector of the economy in order to promote growth and ensure recovery from the recession witnessed during the covid-19 lockdown in 2020.
The monetary policy committee of the Central Bank during the 284th MPC meeting held in March 2022 noted that the impact that increased bank credit has had on the economy, with Nigeria’s economy recording a 3.4% real growth in 2021, a significant uptick compared to the 1.92% contraction recorded in the previous year.
To ensure economic growth, the committee adopted a dovish monetary approach by keeping the interest rate low. In spite of the increased credit, the loans-to-deposit ratio of deposit money banks fell from 59.12% in December 2021 to 58.81% in March 2022.
Nigeria’s credit to the private sector increased by 3.3% from N35.19 trillion recorded as of December 2021, to stand at N36.37 trillion. This brings bank loans to the private sector to its highest level on record.
Similarly, credit to the government also increased by N2.99 trillion in the review period to stand at N16.32 trillion as of March 2022, while currency in circulation declined slightly by N79.56 billion in Q1 2022.