CBN Governor, Sanusi Lamido Sanusi
Banking sector credit to the private sector increased slightly to N14.885 trillion in August, reflecting a year-on-year slowdown of 36.9 per cent, data obtained from the Central Bank of Nigeria’s (CBN’s) website has shown.
But THISDAY checks at the weekend showed that the amount represented a marginal increase by 4.9 per cent in the first eight months of the year.
Credit to private stood at N14.845 trillion in July and had reflected a year-on-year increase of 49.2 per cent.
The CBN’s economic indicator also showed that broad money (M2), which generally is made up of demand deposits at commercial banks and monies held in easily accessible accounts, stood at N13.769 trillion as at August.
Commenting on the development, sub-Saharan African Economist, Renaissance Capital (RenCap), Yvonne Mhango, in report at the weekend anticipated that year-on-year credit growth would decline further to between 15 and 16 per cent at the end of 2012.
“Expect less volatility in 2013, as the Asset Management Corporation of Nigeria’s (AMCON’s) distortionary effect fades. If we assume 2013’s credit will grow at the same rate as has in year-to-date (in month-on-month terms, on average), then we should expect early to mid-20s year-on-year credit growth.
“The near term risk of a slowdown in year-on-year credit growth and stronger Gross Domestic Product growth increases the small risk of a rate cut in the short term,” she stated.
RenCap had in a recent report argued that stabilising naira might support lending, saying that the CBN’s tight monetary policy stance will tighten liquidity and support credit growth.
“The naira was also supported by higher capital inflows and a recovery in oil prices, which we expect to remain firm. The exchange rate assumption for the 2013 budget (N160/$1, which is also our year end 2012 projection) indicates a stable naira in 2013. We think the CBN’s preference is for a stable and strong naira, partly to give investors a real return.
“Increased confidence in the naira will improve capital inflows, which we believe is the MPC’s intention, and bring down yields, thus encouraging lending. We believe the drop in yields since August is a significant step towards strengthening credit,” it added.