Loans To Households Rose In Q2 – CBN Report
Loans with collateral to households rose in the second quarter according to the Central Bank of Nigeria.
The statistics department of the CBN disclosed this in its ‘Credit Conditions Survey’ report for the second quarter which was obtained on Monday.
The report said, “The availability of secured credit to households increased in Q2 2020 and is expected to increase in the Q3 2020.
“The changing appetite for risk was the major factor for the increase in supply of secured credit.”
It stated that lenders reported that the availability of unsecured credit to households increased in Q2 2020, which was expected to further increase in Q3.
Most lenders cited increased availability of funds for this increase.
The overall availability of credit to the corporate sector increased in Q2 2020 and was expected to increase in Q3 2020 due to changing sector specific risk.
It added that request for secured lending for house purchase increased in Q2 2020 but lenders expected demand for such lending to decrease in Q3 2020.
The proportion of secured loan applications approved decreased as lenders tightened the credit scoring criteria.
Demand for total unsecured lending from households increased in Q2 2020 and was expected to increase in the Q3 2020.
Lenders’ resolve to tighten the credit scoring criterion decreased the proportion of approved unsecured loan applications in Q2 2020.
The report said lenders reported increased demand for corporate credit from all firm sizes in Q2 2020 and expected demand to rise further in Q3 2020.
It added that secured loan performance, measured by default rates, improved in the review period; lenders however expected higher default rates in Q3 2020.
The performance of total unsecured loan to households, measured by default rates, improved in Q2 2020 but it was expected to deteriorate in Q3 2020.
Corporate loan performance improved across all sizes of firm except small business and medium PNFCs in Q2 2020.
Lenders expected lower default rates for all firm sizes except small business in the Q3 2020.
It added that lenders reported that the overall spread on secured lending rates on approved new loans to households relative to Monetary Policy Rate narrowed in Q2 2020 and was expected to further contract in Q3 2020.
The overall spread on unsecured lending narrowed in Q2 2020 and was expected to decline further in Q3 2020, it added.
Changes in spreads between bank lending rates and MPR on approved new loan applications narrowed for all firm sizes except for small businesses in Q2 2020 but were expected to narrow for all business sizes in Q3 2020.