About 91 per cent of loans obtained from banks by companies are performing, the Central Bank of Nigeria (CBN) has said.
In its latest credit conditions survey released at the weekend, the CBN indicated that about nine per cent of corporate loans are non-performing, four notches above the apex bank’s regulatory guidance of five per cent.
According to the report, corporate loan default stood at nine per cent in fourth quarter 2024. It stood at 6.2 per cent in third quarter, 2.8 per cent in second quarter and 4.5 per cent in the first quarter of last year.
The CBN outlined the factors contributing to corporate credit demand to include commercial real estate, balance sheet restructuring, inventory finance, capital investments, merger and acquisition.
The apex bank said there were increased credit availability for corporate borrowers, while secured lending to households dropped.
“The demand for credit across all lending types increased in fourth quarter of last year. The factors influencing the increase for secured and unsecured household loans were consumer loans from households and credit cards lending from households respectively while inventory finance was the major factor that influenced the change in demand for corporate lending,” CBN stated.
The apex bank also noted that the demand for credit increased for all lending types during the period.
However, demand for mortgage and re-mortgage from households decreased.
“The demand for credit across all lending types increased in fourth quarter of last year when compared to the previous quarter. The overall spreads on secured and unsecured lending rates to households relative to Monetary Policy Rate (MPR) widened.
“For corporate lending, all lending type spreads on loan relative to MPR also widened, except Other Financial Corporations (OFCs) which narrowed in the current quarter,” the report stated.
The Credit Conditions Survey (CCS) reports on secured and unsecured lending to Households, Private Non-Financial Corporations (PNFCs), Small Businesses and Other Financial Corporations (OFCs). The survey was based on lenders responses, to questions from the statistics department of the CBN.
To determine the aggregate results, each lender was assigned a score based on lender’s response. Lenders who report that credit conditions have changed “a lot” are assigned twice the score of those who report that conditions have changed “a little”. These scores were then weighted by lenders credit market shares.
The results were analyzed by calculating net percentage balances, such as the difference between the weighted balances of lenders reporting that demand was higher versus those reporting that demand was lower. The net percentage balances are scaled within the range plus or minus 100.
