Credit to the economy rose by 6.3 percent to N38 trillion in the first half of the year (H1’2020) driven by 9.85 percent upsurge in credit to federal government.

This reflects the impact of the various intervention funds introduced by Central Bank of Nigeria (CBN) to spur lending and stimulate economic growth in the face of the challenges of  Covid-19 pandemic.

Meanwhile, banks were able to grow their current account (demand) deposits by 21.7 percent or N1.84 trillion in H1’2020, defying the severe impact of Covid-19 pandemic on economic activities during the period.

CBN disclosed these in its Deposit Corporation Survey for June 2020.

Financial analysis of the report showed that Net Credit to the Domestic (NCD) economy rose by N2.23 trillion or 6.23 percent to N38.1 trillion in H1’2020 from N35.82 trillion at the end of  2019.

This growth was powered by Credit to the Private sector which rose by N2.62 trillion or 9.85 percent to N29.18 trillion at the end of 2019.

Credit to the Government however fell by N381 billion or 4.13 percent to N8.86 trillion in H1’2020 from N9.24 trillion at the end of 2019.

The report also showed  upsurge in banks’ current account (demand) deposits, which shot up by N1.84 trillion or 21.7 percent to N10.31 trillion in H1’2020 from N8.47 trillion at the end of 2019.

According to the report, Broad Money Supply (M3 money) rose by  3.54 percent to N35.35 trillion in H1 2020, resulting  from a 13.67 percent increase in Net Foreign Assets (NFA) to N7.58 trillion which was also supported by a 1.09 percent  rise in Net Domestic Assets (NDA) to N27.77 trillion.

The report also showed that the increase in NDA was chiefly driven by a 6.23 percent  jump in Net Domestic Credit (NDC) to N38.05 trillion in H1 2020.

Further breakdown of the NDC showed a 4.13 percent decline in Credit to the Government to N8.86 trillion; however, Credit to the Private sector rose by 9.85 percent to N29.18 trillion.

On the liabilities side, the 3.54 percent increase in M3 Money was driven by the 10.48 percent  increase in M2 Money to N32.17 trillion in H1 2020, but was offset by a 36.71 percent  fall in treasury bills held by money holding sector to N3.17 trillion.

The increase in M2 was propelled by a 18.14 percent  rise in Narrow Money (M1) to N12.20 trillion (of which Demand Deposits increased by 21.69 percent  to N10.31 trillion, and currency outside banks, rose by 1.92 percent  to N1.89 trillion), and accompanied by a 6.27 percent  rise in Quasi Money (near maturing short term financial instruments) to N19.97 trillion.

Reserve Money (Base Money) strongly rose by 57.97 percent  to N13.26 trillion as Bank reserves sky rocketed by 78.37 percent to N10.96 trillion, accompanied by a 2.27 percent rise in currency in circulation to N2.30 trillion.

Vanguard