Demand For Credit Forced Banks To Increase Household Lending During Lockdown, Says CBN

Nigerian Deposit Money Banks intensified loan supply to households and firms in the second quarter of this year as the coronavirus pandemic led to dramatic surge in the demand for fund among Nigerian households and businesses.

The country’s largest lender, the Central Bank of Nigeria said the country witnessed an increase in the availability of both secured and unsecured loans.

The CBN revealed this in its Credit Condition Survey Report, seen by THE WHISTLER.

The survey covers secured and unsecured lending to households, lending to Public Non-Financial Corporations, small businesses and Other Financial Corporations.

The apex bank noted that the availability of funds was a major driver for the demand for credit.

For secured credits, the CBN cited “Changing appetite for risk,” as the major factor for the increase in supply of the facility.

The CBN in the report stated that banks’ credit to the Corporate sector equally increased in the second quarter, following the demand for funds to restart their businesses amidst a Covid-19 hit economy.

The apex bank had given palliatives to both households, individuals and firms, including corporate firms to mitigate the negative impact of the pandemic.

The funds were also distributed by banks as participating institutions.

The apex bank noted that the demand for credit by corporate sector is expected to increase in third quarter owing to “Changing sector specific risk.”

The request for secured lending for house purchase increased in the period under review, but the CBN expect demand for such lending to drop in the coming quarter.

“The proportion of secured loan applications approved decreased as lenders tightened the credit scoring criteria,” the apex bank said.

The demand for total unsecured lending from households increased in the second quarter, while further rise is being projected in the third quarter.