Banks‘ credit to economy hits N21.12bn amid non-performing loans

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Banks‘ credit to economy hits N21.12bn amid non-performing loans

Non-performing loans have increased as commercial banks continue to increase credit in the economy due to the loan-to-deposit policy of the Central Bank of Nigeria (CBN).

The policy has been forcing banks to increase loan approval.

In an updated communique of the Monetary Policy Committee (MPC) of the CBN, obtained, it was stated that non-performing loans have deteriorated between December 2020 and February this year.

In the MPC statement, it was disclosed that the financial industry’s non-performing loans rose to 6.30 percent in February 2021 from 6.10 percent in December 2020.

During this period, gross credit increased by N5.55 billion between May 2019 and February 2021, while credit to the economy grew from N20.48 billion in December 2020 to N21.12 billion at the end of February 2021.

The Deputy Governor of CBN, Aishah Ahmed, attributed the surge in bank credits from banks to the success of the Loan-to-Deposit Ratio policy which also helped to moderate loan price.

Despite the deteriorating state of the non-performing loans, Ahmed said the financial sector is in a healthy position and continues to be resilient supporting the economic recovery, whilst sustaining sound financial soundness indicators.

 

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