Deposit money banks’ secured credit to households increased in the second quarter of 2018 on the back of increased liquidity position and market share objectives.
The Central Bank of Nigeria (CBN) has released the results of the Q2 2018, survey which was conducted from May 21 to 25, 2018. The results are based on lenders’ own responses to the survey, and do not necessarily reflect the CBN’s views on credit conditions.
The Q2 2018 credit condition survey for households, small businesses and corporate entities indicated an increase in availability of secured and unsecured credit to households and corporates entities. Spreads on overall secured lending to household remained unchanged in Q2 2018, while they widened for secured lending to corporates. Lenders reported that demand for total unsecured lending from households increased in the current quarter, and was expected to increase in the next quarter. Demand for corporate lending increased across all firm sizes in the review quarter.
Although lenders maintained the same credit scoring criteria in Q2 2018, the proportion of loan applications approved in the quarter increased. Lenders expect to leave unchanged the credit scoring criteria in the next quarter, yet still expect an increase in the proportion of approved households’ loan applications in Q3 2018.
Maximum Loan to Value (LTV) ratios remained unchanged in the current quarter and were expected to also increase in the next quarter. Lenders were willing to lend at low LTV ratios (75% or less) in the current and next quarters. However, they expressed willingness to lend at high LTV (more than 75%) in the current and the next quarters. The average credit quality on new secured lending improved in Q2 2018 and was expected to improve in Q3 2018.
