Pressure on banks over consumer loans money market

Pressure on banks over consumer loans money market

CBN releases framework for financing of mass metering
CBN

By Elizabeth Adegbesan

A Central Bank of Nigeria, CBN, Survey Report has shown that banks experienced higher loan default rates on credit cards and overdrafts/ personal lending to household in the third quarter of the year (Q3’20).

The survey also noted that lenders expect to tighten the conditions for which loans are given to borrowers (loan covenant)   in the next quarter (Q4’20).

The Survey Report titled :”Credit Condition Survey Report for Q3’20″ stated:”Lenders experienced higher default rates on credit card and overdrafts/personal lending to households in Q3’20 but expect lower default rates in Q4’20.

“Losses given default on total unsecured loans to households and overdraft/personal loans to households both declined in Q3 2020.

READ ALSO: Banks to tighten criteria on corporate loans—CBN

“Similarly, default on total unsecured loans to households was expected to worsen further while default on overdraft/personal loans to households would improve in Q4’20.

“Lenders required stronger loan covenants from all firm sizes in Q3’20, a stronger loan covenant is expected in Q4’20.”

According to the report, “the overall availability of credit to the corporate sector increased in Q3’20 and is expected to increase in Q4’20. This was driven by changing sector-specific risks, changing economic conditions, changing appetite for risk, market share objectives and changing liquidity conditions. “

On credit availability, the report noted: ”Availability of credit increased for all business sizes in Q3’20, while the same trend is expected in Q4’20.

Vanguard

The post Pressure on banks over consumer loans money market appeared first on Vanguard News.


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