Deposit Money Banks’ (DMBs) credit to the corporate sector rose in the first quarter of 2018, the Central Bank of Nigeria (CBN) has said. The apex bank stated this in its 2018 Q1 Credit Condition Survey (CCS) report posted on its website yesterday. According to the CBN, “the overall availability of credit to the corporate sector increased in Q1 2018 and was expected to increase in Q2 2018.
This was driven by brighter economic outlook, changing sector-specific risks, changing appetite for risk, tight wholesale funding conditions and market share objectives. Lenders reported that the prevailing commercial property prices negatively influenced credit availability of the commercial real estate sector in the current quarter.”
Indeed, the regulator stated that the Q1 2018 overall credit condition survey for households, small businesses and corporate entities indicated an increase in availability of secured credit to households and corporates, but a decrease in the availability of unsecured credit.
It also stated that: “Spreads on overall secured and corporate lending to household narrowed in Q1 2018. Lenders reported that demand for total unsecured lending from households decreased in the current quarter, but was expected to increase in the next quarter. Demand for corporate lending increased across all firm sizes in the review quarter.”
Specifically, the CBN stated that changes in spreads between bank rates and Monetary Policy Rate (MPR) on approved new loan applications for all business sizes widened in Q1 2018, and were expected to widen for all business sizes except for small businesses in Q2 2018.
“The most significant factors that influenced demand for lending in the review quarter were the increase in inventory finance and capital investment, and they were expected to remain the main drivers in the next quarter,” the CBN said. However, the CBN stated that the proportion of approved credit card loans decreased in Q1 2018 due to lenders’ stance on the credit scoring criteria for granting credit card loans, adding that the proportion of approved overdraft/personal loans applications also decreased.
Furthermore, it said in the report that the limit on unsecured credit cards on approved new loan applications decreased in Q1 2018 but was expected to increase in the next quarter. “The minimum proportion of credit card balances to be paid on approved new loan applications increased in the review quarter, and was expected to further increase in the next quarter,” the Apex Bank added.
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