7.8m banks’ customers borrowed N45.6trln in 3 years

7.8m banks’ customers borrowed N45.6trln in 3 years

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The Nigerian Deposit Money Banks (DMBs) totalling 7.8 million borrowed the sum of N45.6 trillion in three years.

A breakdown of the latest report of the National Bureau of Statistics (NBS) revealed that 3.03 million customers borrowed N13.4 trillion in 2015, 2.5 million borrowed N16.3 trillion in 2016 while 2.3 million customers borrowed a total of N15.9 trillion from banks in 2017.

Further breakdown of the NBS report shows that 8,186 customers of the banks borrowed above N1 billion, which amounted to N35.7 trillion in three years.

The report shows that in 2015, 2.9 million bank customers borrowed up to N1.0 million totalling N252 billion, 2.3 million borrowed N226 billion in 2016 while 2.2 million customers also borrowed the same amount, which stood at N122 billion in 2017.

During the period under review, a total of 12,356 customers borrowed above N50 million to N100 million, which amounted to N854.94 billion in three years.

In terms of credit to private sector, the total value of credit allocated by the banks stood at N15.21trillion as at first quarter (Q1) of 2019. This represents 0.52 percent compared with N15.13 trillion in the fourth quarter (Q4) of 2018.

The selected banking sector data for Q1 2019 by the NBS show that Oil and Gas and manufacturing sectors got credit allocation of N3.49 trillion and N2.23 trillion to record the highest credit allocation as at the period under review.

“The issue of enhancing credits to the private sector businesses is critical to our recovery process and effective collaboration of all stakeholders is, therefore, needed in this direction”, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) said in his personal statement in March Monetary Policy Committee (MPC) meeting.

According to him, both the broad and narrow money aggregates, M2 and M1 performed below their benchmark in February 2019. M2 contracted by 1.98 per cent over the preceding December 2018, about 14.47 percentage points below the 2019 growth bench mark of 12.99 per cent.

Similarly, M1 declined by 6.16 per cent compared with the provisional growth bench mark of 17.08 per cent. Credit to private sector grew by 6.41 per cent in February, compared to the provisional bench mark of 9.41 per cent. Similarly, aggregate credit to the domestic economy grew by 10.64 per cent as against its provisional bench mark of 11.82 per cent.

“It is my candid opinion that the current performance of monetary aggregates have been unsatisfactory and that, in particular, we need to channel more credits to private sector businesses in order to provide the much needed impetus to growth”, Emefiele added.

Following banks’ continued patronage to the Federal Government securities, the MPC has frowned at that and has directed the management of the CBN to put in place policies or regulations that would restrict the banks from unlimited access to government securities.

The CBN says it will address banks’ appetite for investing ‘only’ in FG securities.  While details are not yet finalised, policies are under consideration that may limit the quantum of investment in government securities.

It is hoped that through ‘further discussions’ banks might increase their appetite for consumer credit extension, Razia Khan, managing director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank, London, said.

 

HOPE MOSES-ASHIKE



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