AMINA HUSSAINI
Deposit money banks recorded increase in the demand for unsecured and secured loans in the second quarter of 2020, a survey by the Central Bank of Nigeria (CBN) has revealed
The CBN, in its Credit Conditions Survey for Quarter 2 which was released on Monday, said the request for secured lending for house purchase increased in Q2 but the request for secured lending is expected to fall in the third quarter of the year.
The apex bank stated that the demand for unsecured lending from households also increased in the second quarter and projected an increase in unsecured lending in the third quarter of 2020.
The CBN added, “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 drop in Q3 2020.”
It stated that the availability of credit increased for all business sizes in the second quarter of 2020, while the same trend is expected in the third quarter (Q3) 2020.
The report said, “The overall availability of credit to the corporate sector increased in Q2 2020 and is expected to increase in Q3 2020. This was driven by changing sector-specific risks, changing economic conditions, changing appetite for risk, tight wholesale funding condition and market share objectives.
“Lenders reported that the prevailing commercial property prices positively influenced credit availability for the commercial real estate sector in Q2 2020 and would continue in Q3 2020. Similarly, the prevailing commercial property prices is expected to positively influence secured lending to PNFCs in Q2 and Q3 2020.
“The spread between bank lending rates and MPR on approved new loan applications narrowed for all firm sizes except small sized businesses in Q2 2020. Similarly, spread on rates for all business sizes in Q3 2020 were expected to narrow.
“Lenders required stronger loan covenants from all firm sizes in Q2 2020, More collateral requirements were demanded from all firm sizes on approved new loan applications in Q2 2020 and lenders expect to demand higher collateral from all firm sizes in the Q3 2020,” it added.
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