Banks under pressure over consumer loans

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A Central Bank , , Survey Report has shown that banks experienced higher loan default rates on credit cards and overdrafts/ personal lending household in third quarter year (Q3’20).

survey also noted that lenders expect tighten conditions for which loans are given borrowers (loan covenant) in the next quarter (Q4’20).

The Survey Report titled :”Credit Condition Survey Report for Q3’20″ stated:”Lenders experienced higher default rates on credit and overdrafts/personal lending households in Q3’20 but expect lower default rates in Q4’20. “Losses given default on total unsecured loans households and overdraft/personal loans households both declined in Q3 2020. “Similarly, default on total unsecured loans to households was expected to worsen while default on overdraft/personal loans to households would improve in Q4’20. “Lenders required stronger loan covenants all firm sizes in Q3’20, a stronger loan covenant is expected in Q4’20.”

According to the report, “the overall availability credit to the corporate sector increased in Q3’20 and is expected to increase in Q4’20. This was driven by changing sector-specific risks, changing economic conditions, changing appetite for risk, market share objectives and changing liquidity conditions.

“ On credit availability, the report noted: ”Availability of credit increased for all business sizes in Q3’20, while the same trend is expected in Q4’20.