Survey Reveals Positive Outlook for Credit Conditions


Obinna Chima
The fourth quarter credit condition survey of households, small businesses and corporate entities indicated increases in the availability of both secured and unsecured credit.

According to the fourth quarter (Q4) Credit Condition Survey Report 2016, posted on the Central Bank of Nigeria’s (CBN) website yesterday, spreads on overall secured and unsecured lending to household widened in Q4, 2016 and was expected to remain widened in the next quarter.

Also, it indicated that lenders reported that household demand for house purchase lending increased in Q4, 2016 and was expected to increase in the next quarter. Demand for unsecured credit card lending increased in Q3, 2016, and was expected to increase in the next quarter, according to the survey.

In addition, demand for unsecured overdraft/personal loans from households decreased in Q4, 2016 but was expected to rise in the next quarter.

Furthermore, demand for corporate lending increased across all firm sizes in Q4, 2016 and was expected to increase further in the next quarter. However, corporate loan performance to all size businesses deteriorated in the quarter under review.

“In the current quarter relative to the previous quarter, lenders reported an increase in the availability of secured credit to households. Lenders noted that a brighter economic outlook and tight wholesale funding conditions were major factors behind the increase. The availability of secured credit was also expected to increase in the next quarter with tight wholesale funding conditions as the major contributory factor.

“Despite lenders stance on tightening the credit scoring criteria in Q4, 2016, the proportion of loan applications approved in the quarter increased. Lenders still expect the credit scoring criteria to remain tightened in the next quarter and expect the proportion of household’s loan applications approved in Q1, 2017 to further increase.