Household loans increased in second-quarter –CBN

Secured loans to households increased in the second quarter of this
year, the Central Bank of Nigeria (CBN) said in its ‘Credit Conditions
Survey’ report posted on its website on Monday.

The document noted that the availability of secured credit to
households climbed in Q2 2020 and is expected to rise further in Q3
2020.

“The changing appetite for risk was the major factor for the increase
in supply of secured credit,” the report said.

It added that lenders reported that the availability of unsecured
credit to households grew in Q2 2020, which was projected rise again
in Q3 2020.

The general availability of credit to the corporate sector jumped in
Q2 2020 and was anticipated to rise also in Q3 2020 owing to shifting
sector specific risk.

The request for secured lending for house purchase, the report said,
increased in Q2 2020 but lenders expected demand for such lending to
fall in Q3 2020.

The share of secured loan applications approved dropped as lenders
tightened the credit scoring criteria.

Demand for total unsecured lending from households grew in Q2 2020 and
is projected to increase in Q3 2020.

Lenders’ decision to tighten the credit scoring criterion reduced the
share of approved unsecured loan applications in Q2 2020.

The report noted that lenders reported higher demand for corporate
credit from all firm sizes in Q2 2020 and expected demand to further
increase in Q3 2020.

Secured loan performance as measured by default rates improved during
the period even though lenders anticipated higher default rates in Q3
2020.

Similarly, the performance of total unsecured loan to households as
measured by default rates improved in Q2 but was expected to worsen
this quarter.

According to the report, lenders reported the general spread on
secured lending rates on approved loans to households compared to
Monetary Policy Rate tapered in Q2 2020 and was expected to shrink
further in Q3 2020.