Banking HallBy Babajide Komolafe
The upward trend in consumer loans continued in October last year, rising 37% year-on-year to N2 trillion on the back of improved credit valuation and the diversification of products offered by banks and other lenders. The volume of consumer loans was N1.47 trillion in October 2020.
Financial Vanguard findings from data from the Central Bank of Nigeria, CBN, Monthly Economic Report for October 2021, showed consumer loan growth was driven by a 52% year-on-year increase in loans staff, which reached 1 N57. trillion in October 2021.
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Consequently, the share of personal loans in the total basket of consumer loans increased from 70.4% in October 2020 to 78% in October 2021.
However, consumer lending, on a monthly basis, MoM, only increased by 3.4% to 2 trillion naira in October 2021 from 1.94 trillion naira in September 2021.
According to CBN data, the continued increase in consumer loans, especially the increase in personal loans, is due to the improvement in credit scoring and the diversity of products offered by banks.
The CBN said: “Consumer credit outstanding has increased, due to the strong increase in personal loans resulting from better credit scoring and a diversified product offering.
“Total consumer credit extended by Other Depository Companies (ODCs) increased by 3.4% to N2,009.88 billion at the end of October 2021 from N1,942.87 billion at the end of September. 2021.
“The ratio of consumer credit to total private sector credit in October 2021 was 8.7%, the same share as the previous month.
“A disaggregation of consumer loans revealed that personal loans maintained their dominance, accounting for 78.0%, rising 2.3 percentage points, above the previous month’s level, while retail loans accounted for the balance of 22.0%”.
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