“The overall availability of credit to the corporate sector increased in Q3 2018 and was expected to increase in the next quarter,” the report noted, with market share objectives also being fingered as the major factor contributing to the increase.
On demand, the report indicated that demand for secured lending for house purchase decreased in Q3 2018, but more lenders expect demand for secured lending to increase in the next quarter.
It noted that the proportion of loan applications approved decreased even though lenders maintained the same credit scoring criteria.
Following a similar pattern as the supply, the demand for total unsecured lending from households decreased in the current quarter but was expected to increase in the next quarter.
Despite lenders’ resolve to tighten the credit scoring criteria, the proportion of approved unsecured loan applications increased in the current quarter and was expected to increase in the next quarter, as lenders reported increased demand for corporate credit from all firm sizes in Q3 2018.
The report noted that lenders also expect increased demand from all firm sizes in the next quarter.
On defaults, secured loan performance, as measured by default rates, improved in the review quarter, and lenders expect lower default rates in the next quarter.
“Total unsecured loan performance to households, as measured by default rates, deteriorated in Q3 2018 but is expected to improve in the next quarter.
Corporate loan performance improved across all sizes of the firm in the current quarter, except for small businesses. Lenders generally expect a lower default in the next quarter, except for large PNFCs.”
In loan pricing, lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR narrowed in Q3 2018, but was expected to remain unchanged in the next quarter.
The overall spreads on unsecured lending narrowed in Q3 2018 but were expected to remain unchanged in the next quarter.
Changes in spreads between bank rates and MPR on approved new loan applications to all firm sizes narrowed in Q3 2018 but the regulator said it would widen for all firm sizes in the next quarter.