The Central Bank of Nigeria’s (CBN) most recent monthly economic report shows that deposit money banks (DMB) total credit extension to the economy increased to NGN38.3bn in Jul ’23 from NGN37.5bn in the previous month. On a y/y basis, their credit lending to the economy grew markedly by 39% y/y. The modest credit growth q/q can be attributed to banks’ tighter risk management framework due to the high-interest rate environment.
According to the report, DMBs’ credit growth to the services, industry, and agriculture sectors saw a slight m/m increase.
Specifically, credit extension to the services sector was up by 3% m/m to NGN19.9bn. Consequently, its share of the total credit increased to 52.0% from 51.6% the previous month.
With respect to the three economic classifications, the services sector has continued to outperform all other sectors for the past ten quarters. Additionally, the sector has been the primary driver of expansion in Nigeria’s economic activity.
The sector’s consistent robust growth has been supported by strong performances in sectors such as financial and insurance, information and communications, and trade.
The industry sector was the second-largest recipient of DMBs credit extension. It grew by a flattish (+1% m/m). However, its contribution to the total share of credit reduced to 43.5% from 43.2%.
Although DMBs credit growth to the agriculture sector increased by a paltry 1% m/m, its share of contribution to total credit declined to 4.8% from 4.9%.
The report also shows that banks’ loans to consumers decreased by -3% m/m to NGN2.6bn. Consequently, its share of the total credit allocation was reduced to 6.7% from 7% the previous month.
Underscoring the decline in consumer loans is the weaker demand for household credit caused by the elevated interest rate environment.