Bank loans and support for the private sector have risen by about N30 trillion in a sustained effort that has seen the banking sector emerging as the backbone of the country’s economic renewal.
Latest data from the Central Bank of Nigeria (CBN) indicate that credit to the private sector (CPS) rose by 65.9 per cent, or N29.52 trillion, to N74.31 trillion in May 2024 compared with N44.79 trillion recorded in the same period of 2023.
The growth in lending and support to the private sector underlined the resilient balance sheet of banks and banks’ response to the apex bank’s push for increased lending to bolster economic activities.
Experts agree that the increase in private sector credit implies a major boost for the economy as there is a link between credit to the private sector and economic growth. Several studies have continuously found that increased lending by banks directly leads to an increase in Gross Domestic Product (GDP).
The balance sheet strength of banks also determines the flow of credits, with the continuing increase in lending amidst macroeconomic headwinds underpinning Nigerian banks’ resilience and stability. Banks with strong balance sheets were better able to maintain lending during crises, according to research by the International Monetary Fund.
CBN governor, Dr. Olayemi Cardoso, said the ongoing recapitalisation would strengthen banks further to drive the $1 trillion national economic target and support stable growth in the economy. Additional capital would enhance Nigeria’s banks’ capability to support massive economic growth and play competitively globally.
SOURCE:https://leadership.ng/banks-bolster-economic-growth-as-private-sector-credit-soars-by-n30trn/