Business
Credit To Private Sector Drops By 2.5%
The Central Bank of Nigeria (CBN) has said that the value of credit by banks to the Private sector fell by 2.5 per cent to N9.178 trillion in February 2011 from N8.948 trillion recorded in January.
The banking systems claims on the core private sector, also declined by 2.3 per cent to N8.823 trillion in February, compared to the decline of 4.6 per cent in the preceeding month.
The apex bank, which revealed this in its monthly economic report for February, posted on its website, said that the development reflected the fall in both the monetary authorities and deposit money banks’ claims on the sector.
It also showed that the banking sector’s credit (net) to the Federal Government on month on month basis, declined by 42.6 per cent to negative N1.042 trillion, in contrast to the increase of 34.8 per cent at the end of the preceding month. The development it said, reflected largely the decline in banks’ holding of federal government securities.
It further explained that provision data also indicate that growth in the major monetary aggregate was modest at the end of February 2011.
On month-on-month basis, broad money supply (m2) at N11.595 trillion, rose marginally by 0.31 per cent, compared with the increase of 0.3 per cent, at the end of the preceding month. The development was accounted for, largely by the 7.4 per cent increase in other assets (net) of the banking system. Narrow Money Supply (MI), at N5.389 trillion, however, fell by 3.2 per cent, compared with the decline of 0.1 per cent at the end of the preceding month, while quasi money rose by 3.5 per cent, compared with the increase of 0.7 per cent at the end of the preceeding month.
“Relative to the level at the end of December 2010, M2 grew by 0.6 per cent, owing largely to the increase of 11.5 per cent in other assets (net) of the banking system. The expansion in M2 translates to annualized growth rate of 4.5 per cent. On year-on-year basis, M2 growth was 7.6 per cent. At N8.136 trillion, aggregate banking system credit (net) to the domestic economy fell by 6.3 per cent on month-on-month basis, compared with a decline of 0.3 per cent at the end of the preceding month”, the report stated.
It averred that the development reflected largely, the decline of 42.6 and 2.5 per cent in claims on both the Federal Government and the private sector, respectively.
It added: “The Federal Government, however remained a net lender to the banking system at the end of the reviewed month. At N6.725 trillion, foreign assets (net) of the banking system rose above the level in the preceding month by 5.1 per cent, as against the decline of 1.6 per cent at the end of the preceding month.
Quasi-money also increased by 3.5 per cent to N6.206 trillion, compared with the increase of 0.7 per cent at the end of the preceding month.