Five Take Outs From The Q3 Credit Conditions Survey Report


The Central Bank of Nigeria, CBN has released the Q3 2016 Credit Conditions Survey Report. The report shows that Nigeria’s credit and loan market is in its all time low.

While banks are struggling to bring back loans from the private sector, unsecured lending is also increasing according to the survey.

Here are the most important insights and learnings from the survey:

  • The availability of secured credit to households increased in Q3, 2016 but was expected to decrease in the next quarter. Changing economic outlook remained a major factor behind the increase.
  • Lenders reported that the availability of unsecured credit to households increased in Q3, 2016 and it was expected to increase further in Q4, 2016. Lenders reported that changing appetite for risk contributed to the change in credit availability in Q3, 2016.
  • The overall availability of credit to the corporate sector increased in Q3 2016 and was expected to increase further in Q4, 2016. The major factors contributing to increased credit availability were changing economic outlook, changing liquidity conditions and changing sector-specific risk.
  • On the demand side, demand for secured lending for house purchase increased in Q3, 2016, and was expected to increase further in Q4, 2016. Due to lenders stance in tightening the credit scoring criteria in the current quarter, the proportion of loan applications approved in Q3, 2016 decreased.
  • Secured loan performance, as measured by default rates deteriorated 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 worsened in Q3 2016 but was expected to improve in the next quarter. Corporate loan performance worsened across all firm sized business in the current quarter as default rates and losses given default on lending to small, medium and large PNFCs worsened in the current quarter, and were expected to worsen further in the next quarter.

One of the fact unearthed by the Credit Conditions Survey Report is the rise in unsecured lending. In the unsecured lending market, there are new small and communities banks who are now offering loans to people. However, most unsecured lending are used towards consumption.

Unsecured financial technology providers are also on the rise. Paylater, Social Lender and SnapCredit are just a few of unsecured lenders who are now using digital media to provide loans to people.

Last week, Tunde Kehinde, the founder of ACE Logistics announced in New York that he will be starting Nigeria’s first online-only bank called Lidya bank.

In short, It is not clear whether the Credit Conditions Survey Report surveyed Fintech startups who are also gaining market share in micro-lending.

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