Nigerian banks report high secured loan default in Q4, says CBN
By Samuel Bankole
Nigerian banks reported high secured loan default in the fourth quarter of 2020, in a survey by the Central Bank of Nigeria (CBN) published on its website.
The secured loan performance is also expected to worsen in the first quarter of 2021 due to the downturn in the country’s economy.
The CBN report showed that the performance of total unsecured loan to households, measured by default rates,
improved in the fourth quarter of the year.
It said the unsecured loan performance “is expected to
improve further in Q1 2021.”
“Corporate loan performance rates worsened for small businesses and medium PNFCs but improved for large PNFCs and OFCS in Q4 2020.
“Lenders expect lower default rates on lending to all sized businesses in Q1 2021,” the CBN report stated.
The regulatory bank said demand for total unsecured lending from households increased in Q4 2020 and is
expected to increase in the Q1 2021.
“Lenders’ resolve to tighten the credit scoring criterion increased the proportion of approved unsecured loan applications in Q4 2020,” the report also stated.
It said request for secured lending for house purchase
decreased in Q4 2020 but lenders expect demand for such lending to increase in Q1 2021.
“The proportion of secured loan applications approved decreased as lenders tightened the credit scoring criteria.”
“Lenders experienced lower default rates on credit card and overdrafts/personal lending to households in Q4 2020 and expect lower default rates in Q1 2021.
“Losses given default on overdraft/personal loans to households and losses given on total unsecured loans to households declined in Q4 2020.
“Similarly, default on total unsecured loans to households and overdraft/personal loans to households is expected to lower in Q1 2021,” the regulatory bank said in the Credit Conditions Survey Report.