Banks’ Secured Credit to Household Rose in Q1 — CBN

• Banks’ Secured Credit to Household Rose in Q1 — CBN

The availability of secured credit to households increased in the first quarter of 2019 and was expected to increase in the next quarter, according to the Q1 2019 Credit Conditions Survey Report by the statistics department of the Central Bank of Nigeria.

According to the survey, improving economic outlook was the major factor for the increase in secured credit.

Lenders reported that the availability of unsecured credit to households increased in Q1 2019, but it was expected to contract in Q2 2019.

Most lenders adduced higher appetite for risk for this increase, according to the survey.

The overall availability of credit to the corporate sector increased in Q1 2019 and was expected to increase in the next quarter.

Demand for secured lending for house purchase decreased in Q1 2019, but more lenders expected demand for secured lending to increase in the next quarter.

The survey said the proportion of loan applications approved increased even though lenders tightened the credit scoring criteria.

Demand for total unsecured lending from households increased in Q1 2019, and was expected to increase in the next quarter.

Despite lenders’ resolve to leave the credit scoring criteria unchanged, the proportion of approved unsecured loan applications decreased in the current quarter but was expected to increase in the next quarter.

Lenders reported increased demand for corporate credit from all firm sizes in Q1 2019.

They also expect increased demand from all firm sizes in the next quarter.

According to the survey, 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, deteriorated in Q1 2019 but was expected to improve in the next quarter.

Corporate loan performance improved across all sizes of firms in the current quarter.

Lenders generally expected lower default rates for all firm sizes in the next quarter.

It stated that lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR remained unchanged in Q1 2019, and was expected to narrow in the next quarter.

“The overall spreads on unsecured lending widened in Q1 2019 but were expected to remain unchanged in the next quarter,” it stated.