••Apex Bank Highlights Growth in Corporate Lending Despite Rising Non-Performing Loans
In a recent credit conditions survey, the Central Bank of Nigeria (CBN) announced that approximately 91% of corporate loans issued by banks are currently performing. However, the report also revealed that around 9% of these loans are classified as non-performing, which exceeds the CBN’s regulatory threshold of 5%.
The survey, released over the weekend, indicates that corporate loan defaults rose to 9% in the fourth quarter of 2024, up from 6.2% in the third quarter and 4.5% in the first quarter of the same year. This upward trend in non-performing loans has raised concerns among financial analysts and industry stakeholders.
The CBN attributed the demand for corporate credit to several factors, including commercial real estate investments, balance sheet restructuring, inventory financing, capital investments, and mergers and acquisitions. The report noted a notable increase in credit availability for corporate borrowers, contrasting with a decline in secured lending to households.
“The demand for credit across all lending types increased in the fourth quarter of last year,” the CBN stated. Factors influencing this increase in corporate lending demand included inventory finance, while secured and unsecured household loans saw growth primarily due to consumer loans and credit card lending.
Despite the overall increase in credit demand, the CBN reported a decrease in mortgage and re-mortgage requests from households. Additionally, the overall lending rates for both secured and unsecured loans to households widened relative to the Monetary Policy Rate (MPR).
The CBN’s Credit Conditions Survey (CCS) collects data on lending practices to households, private non-financial corporations, small businesses, and other financial corporations. The survey is based on responses from lenders, with each lender assigned a score reflecting their assessment of credit conditions. The results are aggregated to provide insights into the lending landscape in Nigeria.
