Banks available credit to the corporate sector and small businesses increased in the third quarter of 2018, according to the Central Bank of Nigeria’s (CBN)’s `credit conditions survey report.
“The overall availability of credit to the corporate sector increased in Q3 2018 and was expected to increase in Q4 2018. This was driven by changing sector-specific risks, favourable economic conditions, improved liquidity conditions, market share objectives and changing appetite for risk,” the apex bank said in the report.
Total assets and liabilities of the deposit money banks amounted to N35.98 trillion at end-July, 2018, showing a 1.0 per cent increase, above the level at end-June, 2018.
Aishah Ahmad, deputy governor, CBN, said, in her personal statement at the July Monetary Policy Committee (MPC) meeting that “Half way into the year, the path of growth and other macro-economic indices are more evident, but the effect of the emerging global and domestic economic landscape still bears uncertainty”.
However, she noted improvement in the financial condition metrics for the banking system, which she said is gratifying.
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However, the CBN said in its economic report for the month of August that Banks’ credit to the domestic economy fell marginally by 0.4 per cent to N19.04 trillion at end-July, 2018, in contrast with the level at end-June, 2018. This was attributed to the decline in claims on both the Federal Government and the private sector in the review month.
The lender of last resort also explained that the survey conducted to generate the report asked lenders to report developments in the corporate sector by large and medium-size firms and small businesses, and the data gathered was used to produce the report.
Total specified liquid assets of banks stood at N11.75 trillion at end-July, 2018, representing 77.12 per cent of their total current liabilities. At that level, the liquidity ratio was 0.99 percentage point above the level at end-June, 2018, and was 29.12 percentage points above the stipulated minimum liquidity ratio of 30.0 per cent. The loans-to-deposit ratio, at 64.30 per cent, was 0.3 percentage point below the level at the end of the preceding month, and was 15.70 percentage points below the maximum ratio of 80.0 per cent.
“Lenders expect the same trend in the next quarter. Spreads between bank rates and MPR on approved new loan applications for all business sizes narrowed in Q3 2018, but were expected to widen for all business sizes in Q4 2018,” the report said.
Meanwhile, the Monetary Policy Committee (MPC) has decided to leave its key interest rate at 14 percent to fight inflation which it said its beginning to threaten the country for the twelfth time since 2016. Seven members of the MPC voted to retain the interest rates at 14 per cent.
Before, the MPC meeting, figures from the National Bureau of Statistics (NBS) had shown that the the consumer price index, (CPI) which measures inflation increased by 11.23 percent (year-on-year) in August 2018.
The Nigeria apex bank in its current report disclosed that the proportion of loan applications approved for all business sizes increased in the current quarter, and are expected to further increase in Q4 2018.
“Lenders required stronger loan covenants from all firm sized businesses in the current and next quarters. Fees/commissions on approved new loan applications fell for all firm sized businesses,” it said.
HOPE MOSES-ASHIKE, ENDURANCE OKAFOR
