Households secured credit to increase in Q4 2018
The total available credit to the corporate sector increased in Q3 2018, and it is expected to increase also in Q4 2018, and according to Central Bank of Nigeria (CBN) report the share market objectives are fingered as the major factor contributing to the increase.
The report further indicates that demand for secured lending for house purchase decreased in Q3 2018, but is also expected that more lenders expect demand for secure lending to increase in Q4 2018.
The CBN notes that the proportion of loan applications approved decreased in Q3, even though lenders maintained the same credit scoring criteria.
With the similar trends of the supply, the demand for total unsecured lending from households decreased in Q3 2018 but was previously expected to increase in Q4 2018.
Notwithstanding lenders’ resolve to stiffen the credit scoring criteria, the proportion of approved unsecured loan applications increased in the current quarter and was expected to increase in the next quarter, as lenders reported increased demand for corporate credit from all firm sizes in Q3 2018.
The report also notes that lenders expect increased demand from all firm sizes in Q4 2018.
On defaults, secured loan performance, as measured by default rates, improved in the review quarter, and lenders expect lower default rates in the next quarter.
Total unsecured loan performance to households, as measured by default rates, deteriorated in Q3 2018 but is expected to improve in Q4 2018.
Corporate loan performance improved across all sizes of the firm in the current quarter, except for small businesses. Lenders generally expect a lower default in the next quarter, except for large Public Non-Financial Corporations (PNFCs).
In loan pricing, lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to Monetary Policy Rate narrowed in Q3 2018, but was expected to remain unchanged in Q4 2018.
The overall spreads on unsecured lending narrowed in Q3 2018 but were expected to remain unchanged in Q4 2018.
Changes in spreads between bank rates and MPR on approved new loan applications to all firm sizes narrowed in Q3 2018, but the regulator said it would widen for all firm sizes in Q4 2018.