Banking systems credit to FG rises by 53.9%

From Ngozi Onyeakusi, Lagos

Banking system’s credit to the Federal Governmentat the end of fourth quarter of 2013 rose by 53.9 per cent to negative N1.4 trillion,in contrast to the 25.5 and 31.4 per cent decline at the end of the preceding quarter and the corresponding quarter of 2012, respectively.

The development, relative to the preceding quarter was accounted for, largely, by the increase of 29.7 per cent in Central Bank claims on the Federal Government.

Over the level at end-December 2012, , according to the apex banks economic report released at the weekend, credit (net) to the Federal Government rose by 40.1 per cent, reflecting largely the rise in banking system’s holding of Federal Government securities.

Similarly, banking system‟s credit to the private sector rose by 1.4 per cent to N16.5 trillion compared with the 3.7 and 2.7 per cent increase in the preceding quarter and the corresponding period of 2012, respectively.

The development, relative to the preceding quarter, reflected the 0.9 per cent increase in claims on the core private sector during the review quarter. Relative to the level at end-December 2012, banking system‟s credit to the private sector rose by 9.0 per cent Equally, at N15 trillion , aggregate banking system‟s credit (net) to the domestic economy, rose by 14.9 per cent at the end of the fourth quarter of 2013, in contrast to the decline of 0.5 and 1.5 per cent at the end of the preceding quarter and the corresponding quarter of 2012, respectively.

The development relative to the preceding quarter was due, largely, to the 54.0 and 1.4 per cent increase in claims on the Federal Government and the private sector, respectively. Over the level at end-December 2012, aggregate banking system‟s credit (net) to the domestic economy, rose by 18.5 per cent, reflecting largely the 40.1 and 9.0 per cent increase in claims on the private sector and the Federal Government.

However, at N8.5 trillion foreign assets (net) of the banking system fell by 4.6 per cent at the end of the review quarter, compared with the decline of 2.6 per cent at the end of the preceding quarter, but was in contrast to the 8.9 per cent increase recorded in the corresponding period of 2012.

The development, relative to the preceding quarter was attributed, to the decline in both the CBN and banks‟ holdings of foreign assets. Over the level at end-December 2012, foreign assets (net) of the banking system fell by 5.9 per cent at the end of the review quarter, compared with the decline of 1.3 per cent at the of the preceding quarter.

Other assets (net) of the banking system fell by 3.1 per cent to negative N7.8 trillion compared with the decline of 13.8 per cent at the end of the preceding quarter, but were in contrast to the 12.1 per cent increase recorded at the end of the corresponding quarter of 2012.

The decline, relative to the preceding quarter, reflected largely, the fall in unclassified assets of both the CBN and the banks during the review period. Over the level at end-December 2012, other assets (net) of the banking system fell by 26.0 per cent.