The Central Bank of Nigeria (CBN) reported a 16 percent year-on-year increase in banks’ credit extension to the private sector, totaling N74.0 trillion in October 2024. FBNQuest Capital Research analysts noted a deceleration from the previous month’s 27 percent growth, with a 2 percent contraction on a month-on-month basis.
The Private Sector Credit Extension (PSCE) data from the CBN includes lending from various banking institutions, driven in part by the rise in foreign currency-denominated loans due to naira depreciation. Despite the CBN’s efforts to curb inflation through monetary tightening, inflation continued to rise to 34.60 percent in November.
While PSCE growth slowed, other monetary aggregates like M3 and M2 saw increased expansion, as did credit extension to the government. Analysts expect continued moderation in private-sector credit extension as the CBN maintains its aggressive monetary stance to address inflationary pressures.
Financial reports from banks indicate significant deposit growth in 2023, pointing to a challenging economic environment in Nigeria. Looking ahead, analysts anticipate further deceleration in PSCE growth due to the CBN’s restrictive monetary policy, which aims to balance economic stability with growth.
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