June 2022: Microfinance banks’ loan to private sector hits N1.12trn

Loans by Microfinance banks surged to N1.12 trillion as of the end of June 2022, representing a 115.7% increase compared to N521.25 billion recorded as of the end of 2021. This means that microfinance banks issued an aggregate of N602.8 billion new loans.

This is according to data culled from the Central Bank of Nigeria (CBN). Notably, most of the loans were to the private sector of the economy at N1.11 trillion, while N7.26 billion of the loans are to other financial corporations.

Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related service. The increase in the loans by microfinance banks is in line with the CBN’s mandate to increase access to credit in the real sector.

Although the Central Bank has increased the benchmark interest twice this year to 14 per cent, in a bid to curb the rising rate of inflation in the country, which could discourage businesses from taking more loans from banks.

However, banking sector credit to the private sector hit a record high in June 2022, increasing by 1.5 per cent to stand at N39.27 trillion, from N38.68 trillion recorded in the previous month and an 11.6 per cent increase when compared to N35.19 trillion recorded as of December 2021.

On the flip side, credit to government by commercial banks, declined marginally on a month-on-month basis to N17.99 trillion, although significant increase when compared to N13.33 trillion recorded as of the beginning of the year.

Meanwhile, microfinance banks’ claims on the Central Bank fell sharply to N7.74 billion, a 67.9 per cent decrease compared to N24.09 billion recorded as of December 2021.

Net foreign assets stood at a negative of N22.96 billion as of June 2022, a marginal movement from the deficit of N22.78 billion recorded as of the reference period.

Deposits to microfinance banks excluded from broad money stood at N625.87 billion in June 2022 from N72.92 billion recorded as of December 2021.

Also, other deposits included in broad money increased from N300.06 billion recorded as of December 2021 to N353.97 billion in June of this year.

Additionally, transferable deposits and securities other than shares both of which are included in broad money as of June 2022 stood at N106.62 billion, and N988.85 million respectively.