Nigeria: Banks to Tighten Credit Scoring Conditions

Jun 26, 2018 | This day; AllAfrica

Commercial banks are expected to tighten their credit scoring criteria next quarter but anticipate that the total loans applications to be approved in the third quarter of 2018 (Q3 2018) would increase, a survey by the Central Bank of Nigeria (CBN) has revealed.

Also, the report revealed that the proportion of approved credit card loans remained unchanged in Q2 2018 due to lenders' stance on the credit scoring criteria for granting credit card loans. The CBN stated this in its Credit Conditions Survey Report for the second quarter of 2018, that was posted on its website. Households demand for consumer loans rose in the current quarter and was expected to rise next quarter. Similarly, demand for mortgage/re-mortgaging from households fell in Q2 2018 but was expected to rise in Q3 2018. In the current quarter relative to the previous quarter, the survey stated that lenders reported an increase in the availability of secured credit to households. They also noted that improved liquidity position and market share objectives were major factors behind the increase. Availability of secured credit was expected to increase in the next quarter, with favorable economic outlook and market share objectives as the likely contributory factors. Although lenders maintained the same credit scoring criteria in the second quarter of 2018, according to the survey, the proportion of loan applications approved in the quarter increased. It revealed that the Maximum Loan to Value (LTV) ratios remained unchanged in the current quarter and were expected to also increase in the next quarter. But, lenders were willing to lend at low LTV ratios (75% or less) in the current and next quarters. "However, they expressed willingness to lend at high LTV (more than 75%) in the current and the next quarters. "The average credit quality on new secured lending improved in Q2 2018 and was expected to improve in Q3 2018," it added. Also, the report showed that demand for lending by households increased in Q2 2018 and was expected to increase in the next quarter. Read more on AllAfrica. Source: AllAfrica