The Central Bank of Nigeria (CBN), in its effort to understand trends and developments in credit conditions, to fulfils part of its mandate to nurture an efficient monetary and financial system towards promoting macroeconomic stability in Nigeria.
The Apex bank collects credit data through a quarterly survey of bank lenders. The survey covers secured and unsecured lending to households, lending to Public Non-Financial Corporations (PNFCs), small
businesses and Other Financial Corporations (OFCs).
The survey revealed that household demand for house purchase loans decreased in Q2 2020 but it is expected to increase in Q3 2020. For Q2 2020, households demand for all lending types increased, but in Q3 2020, only prime and other lending to households were expected to increase while buy to let lending would decrease.
On Supply of Credit, 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.
Lenders reported that the availability of unsecured credit to households increased in Q2 2020, which is 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 is expected to increase in Q3 2020, due to “Changing sector
specific risk”.
On Demand for Credit: Request for secured lending for household purchase increased in Q2 2020 but lenders expect 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 is 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.
Lenders reported increased demand for corporate credit from all firm sizes in Q2 2020 and expect demand to rise further in Q3 2020
On Defaults Rates: Secured loan performance, measured by default rates, improved in the review period, lenders however expect higher default rates in Q3 2020.
The performance of total unsecured loan to households, measured by default rates, improved in Q2 2020 but it is expected to deteriorate in Q3 2020.
Corporate loan performance improved across all sizes of firm except small business and medium in Q2 2020. Lenders expect lower default
rates for all firm sizes except small business in the Q3 2020.
On Loan pricing: Lenders reported that the overall spread on secured lending rates on approved new loans to households relative to MPR narrowed in Q2 2020 and is expected to further contract in Q3 2020.