Q1’18: Foreign investors inject $15bn via Import & Export window as loan default rises



But contrary to expectations banks have reported increased default on credit card and overdraft loans by households in Q1’2018.

This was the highlight of the Credit Condition Survey report for Q1’18 released by the apex bank last week. Many analysts had attributed loan defaults to adverse economic conditions that have made activities in the commercial sector to wane while depressing income of the consumers. However, the report stated.

“Secured loan performance, as measured by default rates, worsened in Q1 2018 but is expected to improve in Q2 2018. Similarly, loss given default worsened in the current quarter and it is expected to improve in the next quarter “Lenders experienced higher default rates on credit card and overdrafts/personal lending to households in the current quarter. They, however, expect improvement in default rates in the next quarter.

Losses given default on total unsecured loans to households improved in Q1 2018, and also expected to improve in the next quarter.

Corporate loan performance improved across all sizes of firms in the current quarter, except for small businesses. Lenders generally expect lower default in the current quarter”. Among other things, the report indicated that banks increased availability of secured loans to households, small businesses and corporates but reduced availability of unsecured loans.

It stated: “The availability of secured credit to households increased in Q1 2018 and was expected to increase in the next quarter.

Favorable economic outlook was the major factor for the increase in the secured credit. Lenders reported that the availability of unsecured credit to households increased in Q1 2018, and this is also expected in Q2 2018.

Most lenders adduced favorable economic outlook to this increase. “The overall availability of credit to the corporate sector increased in Q1 2018 and was expected to increase in the next quarter.

Favourable economic outlook was the major factor contributing to the increase. Demand for secured lending for house purchase decreased in Q1 2018. However, more lenders expect demand for secured lending to increase in the next quarter.

The proportion of loan applications approved increased despite lenders’ tightening of credit scoring criteria. “Lenders reported increased demand for corporate credit across all firm sizes in Q1 2018. This is also expected across all firm sizes in the next quarter.”

Meanwhle at the backdrop of the developments, foreign investors injected $15.1 billion into the Nigerian economy through the Investors and Exporters (I&E) window in the Q1’18.

Naija247news analysis of daily turnover (dollars traded) in the I&E window, in Q1’ 2018 showed that foreign investors injected $6.52 billion January, $4.09 billion in February and $4.49 billion in March.

Should this trend persist for the rest of the year, the window will record annual turnover of about $60 billion, 131 percent higher than the $26 billion recorded in 2017.

Turnover in the window last week rose by 12 percent to $1.22 billion from $1.09 billion the previous week.

Though the naira remained stable as N362 per dollar in the parallel market last week, it however depreciated by 20 kobo in the window as the indicative exchange rate rose to N360.20 per dollar from N360 per dollar the previous week.

Meanwhile, the CBN sustained its weekly intervention in the foreign exchange market, injecting $210 million via the interbank on Tuesday.

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