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Spread between bank rates and MPR narrowed in Q2 -CBN

Naira

Spreads between bank rates and Monetary Policy Rate (MPR) on approved new loan applications narrowed for all business, in the second quarter (Q3) of 2019, except for small business, but were expected to widen for all business sizes in Q3 2019, according to a report published by the Central Bank of Nigeria (CBN).

The Credit Conditions Survey Report presents the results of the Q2 2019 survey, which was conducted from May 27 to 31, 2019. The results are based on lenders’ own responses to the survey, and do not necessarily reflect the Bank’s views on credit conditions.

The report revealed that the proportion of loan applications approved for all business sizes increased in the current quarter, and are expected to further increase in Q3 2019.

Lenders required stronger loan covenants from all firm sized businesses in the current quarter. Similarly, they reported that they would require stronger loan covenants for all firm sized businesses except for small business, which they plan to leave unchanged, in the next quarter.

For the current quarter, fees/commissions on approved new loan applications fell for all firm sized businesses except for large PNFCs, while for Q3 2019 lenders expect fees/commissions on approved new loan applications to rise for all firm sized businesses except for large public non-financial corporations (PNFCs).

On secured lending to households, lenders reported that the overall spreads on secured lending rates to households relative to MPR narrowed in Q2 2019, but were expected to widen in the next quarter. Spreads for all lending types narrowed in the current quarter, and were expressed to narrow in the next quarter,

Households demand for lending for house purchase decreased in Q2 2019 but was expected to increase in the next quarter. For the current quarter, households demand for prime lending increased, while demand for buy to let lending and demand for other lending decreased. They were all, however, expected to increase in Q3 2019.

 

Hope Moses-Ashike