The Central Bank of Nigeria (CBN) has predicted that credit to the corporate sector in the last quarter of this year would increase, despite the drop in Q3, 2019.
This is even as it forecasts in its Credit Conditions Survey Report for Q3, 2019 that lending to households, which increased in the third quarter, would drop in the coming quarter.
According to the bank, lenders reported that the availability of unsecured credit to households increased in Q3 2019, but it is expected to decrease in Q4 2019, as most lenders adduced market share objectives for this increase.
It clarified further: “ The overall availability of credit to the corporate sector decreased in Q3 2019 but was expected to increase in the next quarter. Capital market pressure was the major factor contributing to the increase. Demand: Demand for secured lending for house purchase decreased in Q3 2019, but lenders expect demand for secured lending to increase in the next quarter.
“The proportion of loan applications approved increased even though lenders maintained the credit scoring criteria. Demand for total unsecured lending from households increased in the current quarter, and is expected to increase in the next quarter. In spite of lenders’ resolve to retain the credit scoring criterion, the proportion of approved unsecured loan applications increased in the current quarter and is expected to further increase in the next quarter. Lenders reported increased demand for corporate credit from all firm sizes in Q3 2019.
“They also expect increased demand from all firm sizes in the next quarter.
On loan defaults, the CBN reported that secured loan performance, as measured by default rates, improved in the review quarter, and lenders still expect lower default rates in the next quarter.
“Total unsecured loan performance to households, as measured by default rates, improved in Q3 2019 and is expected to further improve in the next quarter. Corporate loan performance improved across all sizes of firm in the current quarter. Lenders expect lower default rates for all firm sizes in the next quarter”, it added.