Bank loaned N1.16tr to customers in six months, says CBN

Collins Nweze

COMMERCIAL banks gave loans worth N1.16 trillion to customers in the last six months, Central Bank of Nigeria (CBN) Governor Godwin Emefiele has said.

Speaking on Friday at the opening of the 2019 Bankers’ Committee Retreat held in Ogere, Ogun State, the bank chief said the loans covered periods from May to October 2019 .

He said the increase in loans to private sector followed CBN’s directive on the new Loan to Deposit Ratio (LDR) policy that required banks to lend at least 65 per cent of their deposits to the private sector or be sanctioned.

Emefiele, who spoke on the theme: “Delivering Inclusive Growth: Leveraging Digital Finance,” said the topic comes at a critical time in our nation’s history, when efforts are being made by the monetary and fiscal authorities to structurally rebalance and diversify the Nigerian economy.

This, he said, can be achieved by leveraging digital finance tools in supporting growth across key sectors of our economy including agriculture, manufacturing and the creative industries. He said banking sector stability has also risen, with Capital Adequacy Ratio (CAR) up from 10.2 per cent in December 2017 to 15.5 per cent in September 2019.

“The percentage of non-performing loans in the banking sector has declined from its high of 14.7 per cent in January 2017 to under seven per cent as at October 2019. Credit conditions in the banking system have improved supported by our new policy measures announced in June 2019 which requires banks to maintain a minimum 65 percent loan to deposit ratio.

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“In addition, banks are now able to recover delinquent loans from a customer’s accounts in other banks. As a result, gross credit increased by N1.16 trillion between May and October 2019,” Emefiele said.

He said headline inflation declined from its high of 18.7 per cent to 11.08 per cent in August 2019.

“We recently noticed an uptick in headline inflation which stood at 11.61 per cent in October 2019 partly driven by cost-push factors such as the recent border closure. We believe this effect will be temporary, as efforts are currently being made to induce greater production of staple food items. However, core inflation as at October 2019 is now under 9 per cent,” he said.

According to Emefiele, the Nigerian financial system is in a much stronger position following the crisis, as capital buffers and liquidity in the banking system have continued to improve.

Emefiele said the impact of a tighter monetary policy regime, attractive yields in the money market, and our efforts at supporting domestic productivity in the agriculture and manufacturing sectors; along with improvements in oil production, have supported continued foreign exchange inflows into the Nigerian market.

“In the Investors’ & Exporters’ Forex window over $60 billion worth of transaction have taken place since the inception of the window in April 2017, and our foreign exchange reserves are at $39 billion, relative to its low point of $23 billion in October 2016. Today, our current stock of external reserves is able to finance nine months of current import commitments,” he said.