The Central Bank of Nigeria has said that secured loan performance, as measured by default rates by banks, worsened in the fourth quarter of 2018, but is expected to improve in 2019.
The apex bank, in its latest Credit Survey report, obtained by The Point, observed that the availability of unsecured credit provided to households rose in the current quarter and was expected to rise in the next quarter, adding that lenders reported market share objectives and higher appetite for risk as the major factors that contributed to the increase at the end of 2018.
According to the CBN, despite banks’ resolve to leave the credit scoring criteria for total unsecured loan applications unchanged in the review quarter, the proportion of approved total loan applications for households increased, while lenders expect to tighten the credits scoring criteria in the next quarter, but anticipate an increase in the total loans applications to be approved in 2019.
“Banks reported lower losses given default by households in both the current and the next quarters. Corporate loan performance as measured by the default rates improved for all sized business in the review quarter. Lenders also expect lower default rates on lending to all sized businesses in the next quarter,” the apex bank said.
The banking watchdog noted that the proportion of approved credit card loans also increased in the fourth quarter of 2018, due to lenders’ stance on the credit scoring criteria for granting credit card loans. Similarly, the proportion of approved overdraft/personal loans applications increased.
The apex bank noted, “Lenders reported that spreads on credit card lending widened in Q4 2018 but were expected to remain unchanged in the next quarter. Similarly, demand for unsecured overdraft/personal loans from households in creased in Q4 2018 and was expected to increase in Q1 2019.
“Approved overdrafts/personal loans applications also increased in the current quarter, and was expected to widen in the next quarter. Spreads on overall unsecured lending widened in the current quarter, and was expected to widen in the next quarter. “The limit on unsecured credit cards on approved new loan applications remained unchanged in the fourth quarter of 2018 and was expected to be same 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.
