08 Jan
Banks Unsecured Loans To Increase In Q1, 2018 – CBN
The Central Bank of Nigeria (CBN) has said banks are expected to report increased availability of unsecured loans in first quarter of 2018. The CBN in its Credit Conditions survey report for the fourth quarter of 2017, disclosed that unsecured loans to households increased in fourth quarter of 2017 as banks adduced increased appetite for risk to this increase.
The survey report by CBN disclosed that banks reported higher appetite for risk and brighter economic outlook as the major factors that contributed to the increase in fourth quarter of 2017.
The National Bureau of Statistics (NBS) had announced growth in Nigeria’s Gross Domestic Product (GDP) from 0.71 per cent, reviewed for the second quarter, to 1.4 per cent as the price of oil, Nigeria’s mainstay, at the international market continued to rise, amidst the country’s stable production output helped by the sustained peace in the volatile Niger-Delta region.
According to the CBN report, “despite banks resolve to tighten the credit scoring criteria for total unsecured loan applications in the review quarter, the proportion of approved total loan applications for households increased.
“Lenders expect to still loosen the credit scoring criteria in the next quarter, but anticipated that the total loans applications to be approved in first quarter of 2018 will rather decrease.”
The report also stated further that the proportion of approved credit card loans increased in fourth quarter of 2017 despite the lenders’ stance on the credit scoring criteria for granting credit card loans. “However, the proportion of approved overdraft/personal loans applications decreased,” the report said. The survey by CBN noted that overall availability of credit to the corporate sector increased in fourth quarter of 2017 and was expected to increase in first quarter of 2018.
“This was driven by brighter economic outlook, market share objectives, favorable liquidity conditions and tight wholesale funding conditions. Lenders reported that the prevailing commercial property prices negatively influenced credit availability of the commercial real estate sector in the current quarter.
“Similarly, lenders expect the prevailing commercial property prices to negatively influence secured lending to PNFCs in the current quarter. Availability of credit increased for all businesses sizes fourth quarter of 2017. Lenders expect the same trend in the next quarter.
“Changes in spreads between bank rates and MPR on approved new loan applications to the small businesses and OFCs narrowed in fourth quarter of 2017, while that of medium and large PNFCs widened. Spreads were expected to narrow for small businesses but widen for all other business sizes in first quarter of 2018.”
On lending to corporates and small businesses, the report disclosed that, “the overall availability of credit to the corporate sector increased in fourth quarter of 2017 and was expected to increase in first quarter of 2018.
“This was driven by brighter economic outlook, market share objectives, favorable liquidity conditions and tight wholesale funding conditions. Lenders reported that the prevailing commercial property prices negatively influenced credit availability of the commercial real estate sector in the current quarter,’’ the CBN survey said.
Read More at: https://leadership.ng/2018/01/08/banks-unsecured-loans-increase-q1-cbn/
