Data from the Central Bank of Nigeria (CBN) has shown a significant rise in broad money supply (M3) by 62.8 per cent year-on-year to N108.9 trillion, just as currency-in-circulation surged to N4.31 trillion.
The rise in these indicators, have equally caused a significant upbeat in Credit to Private Sector (CPS).
Cordros Securities Analysts, said: “We project the CPS will maintain a double-digit expansion in 2024 fiscal year as we believe the re-enforcement of the CBN’s limit on the loans-to-deposits macro-prudential ratio for deposit money banks (DMBs) will continue to drive the willingness of commercial banks to create risky assets. Nonetheless, we acknowledge that the increased monetary policy tightening measures may tether CPS growth.”
According to data from the CBN, CPS increased by 27.5 per cent year-on-year to N75.85 trillion in September as against N59.51 trillion recorded in the same period of last year.
“We believe the continuous increase in CPS reflects the impact of CBN’s enforcement of the 50.0 per cent loan-to-deposit ratio and the spillover effects of the naira depreciation on foreign-denominated assets of the banks.
“On a month-on-month basis, the CPS rose by 1.7 in September (August: -1.0 per cent m/m to N74.73 trillion). Similarly, Credit to the Government surged to a record high of N42.02 trillion in September, representing an 89.8 per cent year-on-year increase relative to the N22.14 trillion in September 2023, indicating increased reliance on domestic banks for deficit financing”.
