The Central Bank of Nigeria (CBN), in its recently released Financial Stability Report for December 2014 disclosed that total bank loans and advances to various sectors of the Nigeria’s economy grew by 13.9% to N10.042.71bn at the end of December 2013.
According to the breakdown of sectorial classification of banking sector credit, the oil and gas sector recorded the highest growth rate, with a share of 24.4%, followed by manufacturing sector (12.9%) and the general sector (11.6%). The share of the agricultural sector decreased to 3.7%, from 4% in the first half of 2013.
The continued dominance of short-term deposits constrained the ability of banks to lend long-term loans and, especially to the real sector, which typically has a preference for longer-loan maturities. Thus, the observed mismatch portends refinancing and re-pricing risks for the system, the apex bank said in the Financial Stability Report for December 2013, released last week.
The banking industry was dominated by a few banks as the average market share of assets and deposits of the six largest banks (concentration ratio–CR) stood at 650.68% and 52.23%, respectively. During the review period, the market share of the largest bank, in terms of assets and deposits of the six largest banks (concentration ratio–CR) stood at 650.68 and 52.23%, respectively.
According to the report, growth in money supply remained sluggish at the end of the second half of 2013. Relative to the level at end-June 2013, broad money supply (M) grew by 0.5% to N15,668.95bn at the end of the second half of 2013. The increase in money supply relative to the position during the preceding half year reflected, largely, the respective 14.4% and 17.3% rise in net domestic credit and other assets (net), which more than offset the 7.1% decline in net foreign assets of the banking system.
Over the level at end-December 2012, M 2 rose by1.2%, due largely, to the 18.5% increase in net domestic credit, which more than offset the respective 26% and 5.9% decline in other assets (net) and foreign assets (net) of the banking system.
Narrow money supply (M ) rose by 1.1 1 percent at end-December 2013, in contrast to the 6.5% decline at the end of the first half of 2013. The increase relative to the position in the preceding half year was attributed, largely, to the 28.3% rise in currency outside banks (COB). As a ratio of total monetary assets, COB stood at 9.2%, compared with the 7.2% recorded at the end of the preceding half year.
The report revealed that net domestic credit (NDC) to the economy grew by 7.3% to N15,040.7bn at end-December 2013, compared with N13,149.4bn at the end of June 2013. This reflected the 42.2%, 17.3% and 5.2% growth in claims on the Federal Government, and other assets (net) and claims on the private sector, respectively.