Consumer credit outstanding declined by 17.64 per cent to N3.50 trillion in October compared with N4.25 trillion at the end of the previous month, the Central Bank of Nigeria (CBN) has said.
The apex bank, which disclosed this in its economic report for October 2024, released on Tuesday, attributed the decline in consumer credit to the drop in personal and retail loans.
According to the report, while personal loans fell to N2.41 trillion, from N3.15 trillion in the preceding month, they remained dominant, accounting for 68.95 per cent of total consumer credit, while retail loans constituted the balance.
Specifically, the report said: “Sectoral credit utilisation moderated by 5.13 per cent to N58.37 trillion compared with N58.57 trillion in the preceding month.
The Services sector maintained dominance in receipt of credit to key sectors of the economy, utilising 52.57 per cent, followed by Industry and Agriculture which accounted for 43.31 and 4.12 per cent, respectively.
“Consumer credit outstanding decline in personal and retail loans to N2.41 trillion (23.49%) and N1.09 trillion (0.91%), from N3.15 trillion and N1.10 trillion, respectively, in the preceding month.
“However, Personal loans maintained its dominance, accounting for 68.95 per cent of total consumer credit, albeit lower than the 74.14 per cent in the preceding month, while retail loans constituted the balance.”
Consumer credit refers to no-collateral, short- and intermediate-term loans, extended by banks or online lenders, to finance the purchase of commodities or services for personal consumption or to refinance debts incurred for such purposes.
Analysts attribute the downward trend in consumer credit in recent times to the monetary policy tightening measures introduced by the CBN as part of its efforts to rein in inflation.
The CBN’s inflation fight, for instance, saw it raising the benchmark interest rate-the Monetary Policy Rate (MPR) by 875 basis points to 27.5% in 2024.
Indeed, reflecting the tight monetary conditions during the period, the economic report said that “average banking system liquidity declined in October 2024, relative to the level in the preceding month driven, mainly, by withdrawals via monetary operations.”
The report further stated: “Withdrawals from the banking system via Standing Lending Facility (SLF) repayment, CRR debits, OMO sales, NTBs sales, FX-OMO swap settlement, among others moderated the level of liquidity in the banking system in the review month.
“Consequently, average net industry balance declined by 22.41 per cent to N0.11 trillion from N0.15 trillion in the preceding month.
Activities at the standing facility window increased in October 2024, relative to level in the preceding month reflecting the liquidity level in banking system.
“Total transactions at the SLF window rose to N16.94 trillion in the review period with daily average of N0.81 trillion, from N7.95 trillion, with daily average of N0.40 trillion in the preceding month.
Conversely, transactions at the Standing Deposit Facility (SDF) window declined to N3.01 trillion with daily average of N0.14 trillion relative to N4.48 trillion, with daily average of N0.22 trillion in the preceding month.” On fiscal sector developments, the report said that overall fiscal balance of the Federal
