Credit for SMEs to be tightened further
The
recent Credit Condition Survey by the Bank of Ghana shows that universal banks
in the country expect the stance on overall enterprise credit to tighten
marginally over the next two months, driven by a net tightening of the credit
stance to SMEs and large enterprises.
The
survey findings also pointed to net ease in banks’ overall credit stance to
households which reflected in both loans for house purchases and loans for
consumer credit and other lending. This was consistent with the sharp increase
in credit to households observed during the review period, reflecting banks’
improved capital positions.
Banks
project further ease in the credit stance on overall loans to households over
the next two months, driven by a net ease in the credit stance on mortgages.
The
April 2019 Credit Conditions Survey pointed to a net ease in the overall credit
stance to enterprises following net eases in banks’ credit stance on all
categories of enterprise loans.
This was corroborated by the gradual pick up in
actual credit growth recorded in April 2019. The softened credit stance on
loans during the first four months of 2019 was in line with expectations of
recovery in credit growth following the post-recapitalisation period.
In
respect of demand for credit, the survey results showed an increase in the
overall demand for enterprise credit, driven by increased demand for long term
and SME loans.
The demand for short term loans and corporate loans however
declined between February 2019 and April 2019. Banks project an increase in
overall demand for credit by enterprises over the next two months, which will
be reflected in demand for the different categories of loans except corporate
loans.
The survey findings also revealed a net
increase in the overall household demand for credit driven by a sharp increase
in the demand for mortgage loans. The demand for loans for consumer credit and
other lending however declined marginally. Over the next two months, banks
project a net increase in the overall demand for credit by households from a
net increase in the demand for mortgage loans while the net demand for consumer
credit and other lending is projected to remain broadly unchanged.
The banking sector’s one-year inflation
expectations index declined during the April 2019 survey round, indicating that
banks expect inflation to decline one year from now. Banks attributed the lower inflation
expectation to the sustained single digit inflation over the past 10 months, as
well as expectations of improved performance of the economy.
Banks’
lending rates expectations also declined during the April 2019 survey round.
Banks’ lending rates expectations are projected to decline further with the
resolution of the industry’s high NPLs and sustained macroeconomic stability
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