Demand for corporate credit increased in Q3 2018 – CBN

The Central Bank of Nigeria (CBN) says there was an increase in the demand for corporate credit from all business sizes in the third quarter of 2018.

The CBN disclosed this in its third quarter 2018 credit condition survey report posted on its website during the weekend.

The report stated that, “Demand for corporate lending from all business sizes increased in the current quarter, and was expected to increase for all business sizes in the next quarter.”

It added that the demand for lending from medium Public Non-Financial Corporations (PNFCs) in review quarter was higher in comparison with other loan types.

The CBN said the demand for lending in the review quarter was attributable to the increase in inventory finance and capital investment, adding that the factors were expected to remain the main drivers in the successive quarter.

“Corporate loan performance as measured by the default rates improved for all sized business in the review quarter, except for small businesses. Lenders also expect lower default rates on lending to all sized businesses in the next quarter, except for large PNFCs,” it added.

The report also noted that the overall availability of credit to the corporate sector increased in Q3 2018 and was expected to increase in Q4 2018.

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According to the apex bank, the increase was driven by changing sector-specific risks, favourable economic conditions, improved liquidity conditions, market share objectives and changing appetite for risk.

“Lenders reported that the prevailing commercial property prices negatively influenced credit availability of the commercial real estate sector in the current quarter.

“However, lenders expect the prevailing commercial property prices to positively influence secured lending to PNFCs in the current quarter,” CBN stated.

It said the availability of credit increased for all business sizes in Q3 2018 and lenders expect the same trend in the next quarter.

“Spreads between bank rates and MPR on approved new loan applications for all business sizes narrowed in Q3 2018, but were expected to widen for all business sizes in Q4 2018.

“The proportion of loan applications approved for all business sizes increased in the current quarter, and are expected to further increase in Q4 2018. Lenders required stronger loan covenants from all firm sized businesses in the current and next quarters,” the report added.

 

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