30/3/2018/CBN
Executive Summary
Supply: The availability of secured credit to households increased in Q1 2018 and was expected to increase in the next quarter. Favorable economic outlook was the major factor for the increase in the secured credit.
Lenders reported that the availability of unsecured credit to households increased in Q1 2018, and this is also expected in Q2 2018. Most lenders adduced favorable economic outlook to this increase.
The overall availability of credit to the corporate sector increased in Q1 2018 and was expected to increase in the next quarter. Favorable economic outlook was the major factor contributing to the increase.
Demand: Demand for secured lending for house purchase decreased in Q1 2018. However, more lenders expect demand for secured lending to increase in the next quarter. The proportion of loan applications approved increased despite lenders’ tightening of credit scoring criteria.
Demand for total unsecured lending from households increased in the current quarter, but was expected to decrease in the next quarter. Due to lenders stance on tightening the credit scoring criteria, the proportion of approved unsecured loan applications decreased in the current quarter, but was expected to increase in the next quarter.
Lenders reported increased demand for corporate credit across all firm sizes in Q1 2018. This is also expected across all firm sizes in the next quarter.
Defaults: Secured loan performance, as measured by default rates, worsened in the review quarter. However, lenders expect lower default rates in the next quarter.
Total unsecured loan performance to households, as measured by default rates, deteriorated in Q1 2018 but is expected to improve in the next quarter.
Corporate loan performance improved across all sizes of firms in the current quarter, except for small businesses. Lenders generally expect lower default in the current quarter.
Loan pricing: Lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR narrowed in Q1 2018, and was expected to remain narrow in the next quarter.
The spreads on overall unsecured lending narrowed in Q1 2018 and were expected to remain same in the next quarter.
Changes in spreads between bank rates and MPR on approved new loan applications to all firm sizes widened in Q1 2018. However, this is expected to widen for all firm sizes in the next quarter, except for small businesses.
