Banks’ lending to Nigerian economy drops by N368bn
By Laz IBEABUCHI
LAGOS– BANK’s lending to the Nigerian economy depreciated by 2.7 per cent in the second quarter of 2012.
This was in contrast to an improvement of 8.3 per cent recorded in the first quarter of 2012.
According to the Economic Report for the Second Quarter of 2012, released by the Central Bank of Nigeria, the total amount lent by banks dipped by N368 billion from N13.68 trillion recorded at the end of the first quarter of 2012 to N13.313 trillion at the end of the second quarter.
The decline, according to the report, is as a result of a significant decline in bank’s lending to the Federal Government, a development which dampened the
effect of an increase recorded in lending to the private sector.
At the end of the second quarter, the report disclosed that banking system’s claims on the Federal Government declined by 213.2 per cent to negative N1.381 trillion, compared to a decline of 11.3 per cent in the preceding quarter.
The CBN blamed the decline in banks’ claims on the federal government to the banks’ decision to reduce their holdings in government securities, especially Treasury Bills and bonds, noting, however, that the Federal Government, however, remained a net lender to the banking system at the end of the review quarter.
However, the CBN disclosed that banking system’s credit to private sector rose b4.1 per cent to N14.694 trillion, in contrast to the decline of 0.4 per cent at the end of the first quarter of 2012.
The CBN attributed the increase in credit to the private sector on a 3.9 per cent appreciation in claims to the core private sector.
Furthermore, the CBN, in the report, stated that net foreign assets of the banking system appreciated by 3.0 per cent at the end of the second quarter, compared with an increase of 2.4 at the end of the first quarter, attributing this to the increase in CBN’s holdings.
Continuing, the report stated, “At the end of the review quarter, other assets (net) of the banking system declined by 4.7 per cent to negative N 7.355 trillion, compared with the decline of 2.6 and 10.4 per cent at the end of the preceding quarter and the corresponding quarter of 2011, respectively. The development reflected, largely, the fall in unclassified assets of the CBN.”
The report further disclosed that currency in circulation stood at N1.364 trillion, dropping by 4.8 per cent, compared with a decline of 8.5 per cent at the end of the first quarter, due to a 12.6 per cent reduction in currency outside the banking system in the second quarter.
The report said, “Total deposits at the CBN amounted to N6.469 trillion, indicating an increase of 15.7 per cent, in contrast to a decline of 7.1 per cent at the end of the preceding quarter.
“The development reflected largely the 20.9 per cent increase in Federal Government deposits. Of this total, the shares of the Federal Government, banks and ‘others’ were N4.714 trillion (72.9 per cent), N1.149 trillion (17.8 per cent) and N607.30 billion (9.3 per cent), respectively.
“In line with the trends in DMBs’ deposits with the CBN, the Reserve Money (RM), increased by 0.2 per cent to N2.513 trillion, from N2.507 trillion at the end of the preceding quarter.