CBN Publishes Q1 2019 Credit Conditions Survey Report

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Thursday, April 11, 2019 1:32PM / CBN


Supply

The availability of secured credit to households increased in Q1 2019 and was expected to increase in the next quarter. 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 is expected to contract in Q2 2019. Most lenders adduced higher appetite for risk for this increase.

The overall availability of credit to the corporate sector increased in Q1 2019 and was expected to increase in the next quarter. Market share objectives was the major factor contributing to the increase.


Demand

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


Defaults

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 is expected to improve in the next quarter.

Corporate loan performance improved across all sizes of firm in the current quarter. Lenders generally expect lower default rates for all firm sizes in the next quarter.


Loan pricing

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.

Changes in spreads between bank rates and MPR on approved new loan applications narrowed for all business sizes in Q1 2019, but was expected to widen for all firm sizes in the next quarter.

 

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