Credit to the Private sector in Nigeria in the second half of 2014 rose by 16.6 per cent to N12.6 trillion from N10.830 trillion as at June 2014 the CBN has reported. The apex bank in its Financial Stability report said that “the upward trend in the amount of credit extended to the private sector continued during the second half of 2014”.
According to the CBN “Available data indicated that total credit to the various sectors of the economy grew significantly by 16.62 per cent to N12.62999 trillion, compared with 7.86 and 13.88 per cent growth recorded in the preceding half year and the corresponding period of 2013, respectively. The oil and gas sector continued to attract the highest share of total credit as it accounted for 25.70 per cent, compared with 24.33 per cent in the first half of 2014.”
The oil and Gas attracted a total credit facility of N2.635 trillion in the first half of 2014 and this rose to N3.246trillion as at December 2014. The manufacturing sector accounted for 13.15 per cent of the total credit, the same level as in the preceding half year. In the first half of the year under review, the sector was advanced a total sum of N1.424 trillion which rose to N1.661 trillion as at December 2014. Available data with the CBN indicated that Agriculture, forestry and fishing category accounted for 3.96 per cent of the total credit to the private sector with a total credit facility of N415.88 billion in the first half of 2014 and close the year with a total credit from the banking system amounting to N500.26 billion, indicating a 0.12 percentage point increase over the 3.84 per cent recorded in the preceding half year.
Loans and advances to General household consumer goods/hospital amounted to N1.232 trillion as at December 2014 a 9.75 percentage of the total loans and advances granted to the private sector by banks.
According to CBN data, Information and Communication attracted a total credit of N894.7 billion while General Commerce had credit facilities of N1.093 trillion from the financial system. The public sector on the hand had credit facilities of N795.4 billion and Real Estate had credit facilities of N588.06 billion. Credit to the other sectors showed that Construction had N593.65 billion, Finance and Insurance N494.66 billion, Transportation and Storage N363.17 billion, Capital Market N228.46 billion while the Power sector secured N493.52 billion credit facility. Others are Professional, Scientific and Technical activities N154.52 billion; Education N88.46 billion; Administrative and Support Services activities N72.36 billion and Human Health and Social Work Activities N44.59 billion; Mining and Quarrying N17.27 billion and Arts and Entertainment Recreation 12..6 billion.
The CBN said that the structure of bank credits in the second half of 2014 indicated the continued dominance of loans and advances of short-term maturities, although with a slight improvement over the position in the preceding half year. It said that credits maturing within one year accounted for 49.59 per cent, compared with 56.6 per cent at the end of the first half of 2014. The medium-term one to three years and long-term , three years and above, maturities stood at 19.50 and 30.91 per cent, compared with 16.80 and 26.60 per cent, respectively, at the end of the first half of 2013.
The increase in the proportion of credits with both medium- and long-term maturities the apex bank said may be attributed to the effects of various policies of the CBN to de-risk the real sector and encourage banks to grant loans of medium to long-term maturities.
“Similarly, deposits of less than one-year maturity constituted 96.31 per cent of which 73.69 per cent had maturity of less than 30 days, compared with 95.60 per cent at end-June 2014. Further analysis it said “showed that the medium and long-term deposits constituted 2.69 and 1.00 per cent, compared with 3.40 and 1.00 per cent at end-June 2014, respectively.
Notwithstanding the slight improvement in the proportion of credits with medium- and long-term maturities during the second half of 2014, the dominance of short-term maturities in deposits of banks continued to be a major constraint to their capacity to grant long-term credit.
“There is also the challenge that this development might result in liquidity and re-pricing risks. However, continuous implementation of the various policies by the Bank to de-risk and encourage lending to the real sector, as well as the curtailment of inflationary pressures to ensure sustained general price stability is expected to further improve medium to long-term lending”.
