CBN: Banks demanding more collateral for corporate loans
The Central Bank of Nigeria says commercial banks have increased the collateral requirements demanded from all business sizes on new loan applications.
In its Credit Conditions Survey report for the first quarter of 2018, CBN said banks will demand more collateral in the next quarter.
“More collateral requirements were demanded from all firm sizes on approved new loan application in Q1 2018. Similarly, lenders will demand more collateral from all firm sizes in the next quarter,” the report read.
“The overall availability of credit to the corporate sector increased in Q1 2018 and was expected to increase in Q2 2018. This was driven by brighter economic outlook, changing sector-specific risks, changing appetite for risk, tight wholesale funding conditions and market share objectives.
“Lenders reported that the prevailing commercial property prices negatively influenced credit availability of the commercial real estate sector in the current quarter.
“Demand for corporate lending from all business sizes increased in the current quarter and were also expected to increase in the next quarter. Demand for overdrafts/personal loans in Q1 2018 was higher in comparison with other loan types.
“The most significant factors that influenced demand for lending in the review quarter were the increase in inventory finance and capital investment.”
The apex bank said households demand lending for house purchase decreased in Q1 2018, but was expected to increase in the next quarter.
According to the report, banks experienced a greater level of default on personal loans, a situation it says will improve in the second quarter.