Private Sector Credit Falls N1.69trn to N76.14trn in June

Samuel Mobolaji

Credit to the private sector fell in June 2025 as banks tightened lending amid the Central Bank of Nigeria’s (CBN) restrictive monetary stance, while cash outside the formal banking system also moderated.

Latest CBN data showed that banking sector credit to the private sector declined to N76.14 trillion in June, from N77.83 trillion in May, representing a contraction of about N1.69 trillion or 2.2 per cent month-on-month. This follows a N260 billion or 0.3 per cent moderation in May when credit slipped from N78.08 trillion in April.

Despite the monthly decline, private sector credit still recorded a year-on-year increase, rising 4.0 per cent from N73.19 trillion in June 2024. Analysts at Cordros Research attributed the modest growth to the reduced impact of currency depreciation on banks’ foreign-denominated assets, supported by naira stabilisation and the CBN’s tight monetary policy.

With the Monetary Policy Rate (MPR) held at 27.5 per cent, borrowing remained costly for the real sector, as banks stayed cautious in extending credit, citing heightened risk and repayment concerns.

Credit to the government also dropped to N23.72 trillion, compared with N23.93 trillion in June 2024 and N25.07 trillion in May 2025, reflecting reduced domestic borrowing for deficit financing.

Meanwhile, currency outside banks (CoB) moderated to N4.49 trillion in June, down from N4.63 trillion in May, and though still dominating liquidity by accounting for about 90 per cent of total circulation. Currency in circulation (CIC) closed June at N5.007 trillion, slightly lower than the N5.014 trillion recorded in May.

Although CoB declined month-on-month, it remained 18.6 per cent higher year-on-year, underscoring the persistence of unbanked liquidity and its impact on monetary policy effectiveness.

Broad money supply (M3) rose 15.8 per cent year-on-year to N117.50 trillion, driven by a 20.0 per cent growth in quasi-money and 8.5 per cent in narrow money. On a month-on-month basis, CPS contracted by 2.2 per cent to N76.14 trillion in June, after a 0.3 per cent decline in May.