Improved liquidity raises banks’ lending to households, companies –CBN

Improved liquidity position and market share objectives have enabled Nigerian banking industry to increase their lending to households, small businesses and corporate entities during the second quarter of the year, which ends on June 30, the Central Bank of Nigeria (CBN) has said.


In its Second Quarter 2018 Credit Condition Survey Report, just released yesterday, the CBN said there is an increase in availability of secured and unsecured credit to households and corporates entities in the last three months.

The report, based on banks’ own responses conducted from May 21 to 25, 2018 , shows that spreads on overall secured lending to household remained unchanged in Q2 2018, while they widened for secured lending to corporates.

“ Lenders reported that demand for total unsecured lending from households increased in the current quarter, and was expected to increase in the next quarter. Demand for corporate lending increased across all firm sizes in the review quarter,” the report states.


It added that “in the current quarter, relative to the previous quarter, lenders reported an increase in the availability of secured credit to households. They noted that improved liquidity position and market share objectives were major factors behind the increase. . Most lenders adduced higher risk appetite for this increase. The availability of secured credit was expected to increase in the next quarter, with favorable economic outlook and market share objectives as the likely contributory factors.

As for the corporate organisation, the survey states that “the overall availability of credit to the corporate sector increased in the second quarter and was expected to increase in the next quarter. Changing sector-specific risks was the major factor contributing to the increase.”

The report also shows that banks reported increased demand for corporate credit across all firm sizes in Q2 2018. “They also expect increased demand across all firm sizes in the next quarter.
On defaults, the CBN survey shows that secured loan performance, as measured by default rates, improved in the review quarter, and lenders expect lower default rates in the next quarter.

By Omodele Adigun,

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