The Central Bank of Nigeria (CBN) has reported increased availability of secured loans to households increased in Q3 2018 while available unsecured loans for the quarter declined.
The apex bank reported this in its latest Credit Conditions Survey produced by the Statistics Department for September.
While attributing the major factor for the increase in secured credit during the quarter in review to market share objective, the bank projected that availability of secured loans was expected to increase in the next quarter.
According to the report, banks reported that the availability of unsecured credit was expected also to increase in Q4 with most of them adducing higher risk appetite for this increase.
The report indicated also that the overall availability of credit to the corporate sector increased in Q3 2018 and was expected to increase in the next quarter, identifying market share objectives as the major factor contributing to the increase.
A further analysis of the report’s findings showed that demand for secured lending for house purchase in the quarter in review decreased, but that more lenders expected demand for secured lending to increase in the next quarter.
The CBN stated further that the proportion of loan applications approved decreased even though lenders maintained the same credit scoring criteria.
This is even as it reported that demand for total unsecured lending from households decreased in the current quarter, but was expected to increase in the next quarter.
The apex bank noted, however, that despite lenders’ resolve to tighten the credit scoring criteria, the proportion of approved unsecured loan applications increased in Q3, and was expected to increase in the next quarter.
Also, the lenders reported increased demand for corporate credit from all firm sizes in Q3 2018. They also expect increased demand from all firm sizes in the next quarter.
On loans repayment default rates, the apex bank stated that secured loan performance, as measured by default rates, improved in the review quarter, and lenders expected lower default rates in the next quarter.
It observed further that total unsecured loan performance to households, as measured by default rates, deteriorated in Q3 2018 but was expected to improve in the next quarter.
The report also indicated that corporate loan performance improved across all sizes of firm in the current quarter, except for small businesses but that banks generally expect lower default in Q4, except for large PNFCs.
The report’s findings also showed that in terms of loan pricing, the banks reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR narrowed in Q3 2018, but was expected to remain unchanged in the next quarter.
The apex bank stated also that the overall spreads on unsecured lending in the quarter under review narrowed but were expected to remain unchanged in the next quarter.
Similarly, it reported that changes in spreads between bank rates and MPR on approved new loan applications to all firm sizes narrowed in Q3, but were expected to widen for all firm sizes in the next quarter.
