Banking Credit to Private Sector Grew by 13.5% in Q2

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The Central Bank of Nigeria (CBN) has disclosed that at N21.425 trillion, banking system’s credit to the private sector grew by 13.5 per cent in the second quarter over the preceding quarter.

CBN, which made this known in its Economic Report for the Second Quarter 2016, obtained by THISDAY at the weekend, attributed the development to the growth in claims on the core private sector.

“Over the level at end December 2015, banking system’s credit to the private sector grew by 14.5 per cent, compared with the growth of 0.9 per cent and 4.3 per cent recorded at the end of the preceding quarter and the corresponding period of 2015, respectively,” it also noted in the report.

However, the CBN quarterly report showed that banking system’s credit (net) to the Federal Government fell by 23.5 per cent to N2. 893 trillion. This was in contrast to the growth of 30.7 and 26.5 per cent at the end of the preceding quarter and the corresponding quarter of 2015, respectively.

The development, the apex bank pointed out, was due to the fall in banks’ holding of government securities. “Relative to the level at end-December 2015, net claims on Federal Government rose marginally by N0.96 million (0.00003 per cent) at the end of the review period, compared with the growth of 30.7 per cent and 118.5 per cent at the end of the preceding quarter and the corresponding period of 2015, respectively.”

Taking a broader view of the monetary and credit developments, the CBN revealed that, at N24,318.14 billion, aggregate domestic credit (net) to the economy, on quarter-on-quarter basis, grew by 7.3 per cent. This compared with the growth of 4.9 per cent and 3.8 per cent at the end of the preceding quarter and the corresponding quarter of 2015, respectively.

According to the banking regulatory authority, “The development, relative to the preceding quarter was attributed to the 13.5 per cent growth in claims on the private sector. Over the level at end December 2015, net domestic credit rose by 12.5 per cent, compared with the growth of 4.9 per cent at the end of the preceding quarter. The development reflected the growth in claims on the private sector.”

Generally, the Central Bank noted in the report, “On quarter-on-quarter basis, growth in the key monetary aggregates accelerated in the second quarter of 2016,” stating that, “over the level at the end of the preceding quarter, broad money supply, (M2), grew by 5.9 per cent.”

The development, the apex bank explained, “reflected the increase in net foreign assets, domestic credit (net) and other assets (net) of the banking system, respectively. Similarly, narrow money (M1), grew by 0.9 per cent over the level at the end of the preceding quarter.”

However, noting that developments in banks’ deposit and lending rates were mixed during the second quarter of 2016, it found out that, “the spread between the weighted average term deposit and maximum lending rates widened to 21.43 percentage points at the end of the second quarter of 2016.”

Similarly, the CBN also showed in the quarterly report that, “the margin between the average savings deposit and the maximum lending rates widened to 24.10 percentage points.” “At the inter-bank funds segment, the weighted average inter-bank call rate rose by 12.55 percentage points to 15.56 per cent in the second quarter of 2016, reflecting the liquidity condition in the banking system.”

It therefore followed, according to the report that the total value of money market assets outstanding at the end of the second quarter of 2016, stood at N10. 461 trillion, showing an increase of 6.7 per cent, compared with the level at the end of the first quarter of 2016.

The apex bank noted that, “The development reflected the 8.09 and 2.73 per cent increase in FGN bonds and treasury bills, respectively. Developments on the Nigerian Stock Exchange (NSE) were mixed in the review quarter. “

Nevertheless, in his analysis of revenue receipts, the CBN , in the report, revealed that, “At N1,159.05 billion, total federally-collected revenue was 51.3 and 8.6 per cent lower than the quarterly budget estimate and the preceding quarter’s receipts, respectively.”

Explaining that, “at N537.19 billion or 46.3 per cent of the total, gross oil receipt was lower than both the provisional quarterly budget and the receipts in the preceding quarter,” it attributed the development to “the continued fall in receipts from crude oil/gas exports arising from persistent low price of crude oil and incidences of shut-ins and shut-downs at some NNPC terminals, owing to pipeline vandalism.”

But on the other hand, the CBN stated that, “Non-oil receipts, at N621.86 billion or 53.7 per cent of the total, was above the level in the preceding quarter by 3.2 per cent, but was significantly lower than the proportionate quarterly budget.”

According to the report, the Federal Government retained revenue was N677.88 billion, while total expenditure was N1.769 trillion, resulting in an estimated deficit of N1.091 trillion in the second quarter of 2016, compared with the proportionate quarterly budget deficit of N555.49 billion. “Agricultural sector activities increased due to well distributed rainfall in most parts of the country. Major activity in the South was harvesting of maize and yam, while planting and off-season harvesting dominated in the North. In the livestock sub-sector, farmers engaged in the breeding of poultry and migration of cattle from North to South in search of green pastures.”

 

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