Nearly three-quarters of bank loans in Nigeria are directed toward the private sector, reinforcing banks' pivotal role in driving economic development.
According to data from the Central Bank of Nigeria (CBN), banks' credit to the private sector (CPS) stood at N73.66 trillion as of February 2025, compared to N26.5 trillion allocated to the public sector.
While CPS saw a 3.4% increase from N71.21 trillion in February 2024, the growth pace has slowed due to the stabilizing naira, which has reduced the impact of currency depreciation on banks' foreign-denominated assets.
Conversely, government borrowing from banks surged by 35.2%, rising from N19.59 trillion in February 2024 to N26.5 trillion in February 2025, reflecting increased deficit financing.
Monetary Policy Impact on Credit Growth
On a month-on-month basis, private sector loans declined by 1.7%, dropping from N74.91 trillion in January 2025. Analysts attribute this to the CBN's tight monetary policies aimed at curbing inflation.
Broad money supply (M3) grew by 19.5% year-on-year to N110.31 trillion, driven by increases in both quasi money (+21.5% y/y) and narrow money (+15.6% y/y).
Analysts from Cordros Securities predict that the Monetary Policy Committee (MPC) may shift towards easing measures in May, potentially supporting credit growth. However, the recovery is expected to remain slow compared to previous years due to the fading effect of currency depreciation.
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Fixed Income Market Trends
Meanwhile, Nigeria's Treasury bills market was bearish last week, as investors sold off bills in anticipation of higher stop rates at the primary market auction. This led to an 85-basis-point increase in the average yield, now at 21.7%.
At the NTB auction, the CBN offered N700 billion in Treasury bills:
91-day bills: N80 billion
182-day bills: N120 billion
364-day bills: N500 billion
On the other hand, the FGN bond market experienced a bullish trend, with the average yield declining by 3bps to 18.7%, following increased demand from investors who missed out on the primary auction.
Across the yield curve:
Short-term bond yields fell (-34bps), driven by demand for March-2027 (-43bps).
Mid- and long-term bond yields rose (+8bps and +20bps) due to selloffs of April-2032 (+15bps) and March-2035 (+48bps).
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