Credit to corporate sector to increase in Q2′ 2017- CBN

Following an improved credit facility to the corporate sector in first quarter of 2017 (Q1 2017), The Central Bank of Nigeria (CBN) has anticipated improved performance in second quarter (Q2) of this year.
The CBN’s Credit Conditions Survey Report for first quarter of 2017, said major factors will contribute to increased credit availability in Q2 2017.
The report disclosed that lenders reported increased demand for corporate credit across all firm sizes in Q1, 2017 except from the FinancialCorporations (OFCs).
According to the CBN’s report, lenders expected increase in demand across all firm sizes by the next quarter.
“Following the widen spreads between bank rates on all firms’ size businesses (except the small businesses) and Monetary Policy Rate (MPR), the proportion of loan applications approved for medium and large businesses decreased in Q1, 2017,” the report by CBN said.
The Credit Conditions report by CBN disclosed that secured loan performance, as measured by default rates improved in the review quarter and lenders are to expect lower default rates in the next quarter.
“Lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR widened in Q1 2017, and was expected to remain widened in Q2, 2017.
“Lenders reported that spreads on credit card lending widened in Q1, 2017 and were expected to widen further in the next quarter. Similarly, spreads on overdrafts/personal loans widened in the current quarter and were expected to also widen in the next quarter.
“Changes in spreads between bank rates and MPR on approved new loan applications to the medium & largeprivate non-financial corporations(PNFCs) and other OFCs widen in Q1, 2017. Similarly, spreads on loans to all size businesses, were expected to widen further in the next quarter.”
The report by CBN revealed that the first quarter credit conditions of households, small businesses and corporate entities indicated increases in the availability of both secured and unsecured credit.
The report stated that, “Spreads on overall secured and unsecured lending to household widened in Q1, 2017 and was expected to remain widened in the next quarter. Lenders reported that household demand for house purchase lending decreased in Q1, 2017 but was expected to increase in the next quarter.
“Demand for unsecured credit card lending decreased in Q1, 2017 but was expected to increase in the next quarter. Demand for unsecured overdraft/personal loans from households increased in Q1, 2017 and is expected to further rise in the next quarter.”
The report further added that demand for corporate lending increased across all firm sizes in Q1, 2017 except for the OFCs, and was expected to increase further in the next quarter.
“Corporate loan performance to all size businesses improved in the quarter under review,” the report added.