By Babajide Komolafe, Economy Editor
Banks increased consumer loans to N2.45 trillion in February 2023, up by 5.6 per cent from N2.32 trillion in December 2022.
Financial industry experts attributed the development to an increase in demand occasioned by apprehension about the outcome of the 2023 general elections.
This was in sharp contrast to the decline recorded in the fourth quarter of last year, Q4 ’22 when consumer loans fell quarter-on-quarter, QoQ, by 3.5 to N2.32 trillion from N2.4 trillion in Q3’22, following the 250 basis points increase in the Monetary Policy Rate, MPR, the benchmark interest rate, during the period to 16.5 per cent from 14.5 per cent in Q3’22.
Consumer loans are money advanced by banks to individuals for household, family, or other personal expenditures.
Financial Vanguard findings from the monthly economic report of the Central Bank of Nigeria, CBN, for February 2023, showed that consumer loans rose for two consecutive months in January and February.
Consumer loans rose to N2.41 trillion in January from N2.32 trillion in December 2023, representing 3.7 per cent month-month, MoM increase. It rose further by 1.8 per cent, MoM to N2.45 trillion in February 2023.
Explaining the factor behind the upward trend, the CBN said:
“As a share of total claims on private sector, consumer credit grew marginally by 0.4 percentage point to 8.7 per cent at the end of February. This could be due to a higher precautionary demand for money by households, triggered by uncertainties surrounding the 2023 general elections.”
A breakdown of consumer credit during the period shows that personal loans stood at N1.85 trillion, accounting for 75.4 per cent, while retail loans stood at N602.35 billion, and accounted for 24.6 per cent.”
It recorded 12.5 per cent YoY increase to N2.45 trillion in one year ending February from N2.18 trillion in February 2022.
The increase was driven by an 18.8 per cent YoY increase in Personal loans and 9.6 per cent YoY increase in Retail loans during the period.
Personal Loans rose to N1.848 trillion in February 2023 from N1.686 trillion in February 2023, representing N163 billion or 9.6 per cent YoY increase.
Similarly, retail loans rose to N602.35 billion in February 2023 from N492 billion in February 2022, representing N110.35 billion or 18.8 per cent YoY increase.