The Central Bank of Nigeria’s (CBN) Depository Corporations Survey (DCS), released recently, showed that credit to the private sector increased by 5.37 per cent to N24.16 trillion.The report also showed 11.42 per cent month-on-month credit to the government rose to N6.35 trillion.
The survey further revealed a surge of 3.22 percent m-o-m in Broad Money to N34.79 trillion in February 2019, from N33.72 trillion in January 2019. This according to CBN resulted from a 11.80 per cent m-o-m rise in Net Domestic Assets (NDA) to N17.77 trillion accompanied by a decrease of 4.44 per cent m-o-m in Net Foreign Assets (NFA) to N17.02 trillion.
On domestic asset creation, the increase in NDA resulted from a month-on-month rise of 6.57 per cent in Net Domestic Credit (NDC) to N30.52 trillion, but was offset by a 0.04 per cent m-o-m rise in Other Liabilities (net) to N12.74 trillion.
On the liabilities side, 3.22 per cent m-o-m rise in Broad Money Supply was driven by 18.83 per cent m-o-m increase in treasury bills held by money holding sector to N8.23 trillion but was offset by 0.98 per cent m-o-m decrease in Narrow Money to N11.03 trillion (as Demand Deposits which fell by 2.22 per cent to N9.19 trillion offset the effect of currency outside banks which rose by 5.70 per cent to N1.84 trillion and a 0.74 per cent m-o-m moderation in Quasi Money (near maturing short term financial instruments) to N15.50 trillion.Reserve Money (Base Money) decreased m-o-m by 4.30 per cent to N7.17 trillion as Bank reserves declined m-o-m by 8.47 per cent to N4.58 trillion despite a 4.75 per cent m-o-m rise in currency in circulation to N4.46 trillion.
Meanwhile, analysis of the first quarter 2019 Credit Conditions Survey released by CBN showed that availability of secured and unsecured credit to households as well as credit to corporate firms increased in Q1 2019 amid lenders’ optimism for better economy which boosted their risk appetite. This is expected to continue in Q2 2019. However, demand for secured households credit decreased in Q1 2019 as banks tightened the credit scoring creteria.
Nevertheless, lenders still reported increased demand for corporate credit from all firm sizes in the quarter under review, which was expected to continue into the next quarter, given the lower default rates printed by corporates in in the first quarter of 2019.
Financial analysts said that 5.37 per cent increase in credit to the private sector, which was fairly commendable. They however said that the higher rate of increase in credit to Government showed that despite the moderation in Monetary Policy Rate (MPR) to 13.50 per cent and the declining interest rate environment, the private sector still experienced crowding out effect as Deposit Money Banks continued to play safe despite the recorded improvement in loan performance.
