The Central Bank of Nigeria (CBN) says loans extended by commercial and merchant banks fell to ₦52.656 trillion in June 2025, marking the lowest level in 14 months.
The figure, contained in the CBN’s latest Quarterly Statistical Bulletin, represents a sharp decline of ₦2.739 trillion from ₦55.395 trillion recorded in May 2025, translating to a 4.95 per cent month-on-month drop.
The last time total loans fell below this level was in April 2024, when they stood at ₦51.467 trillion.
On a year-on-year basis, total loans dipped marginally by ₦9 billion, or less than one per cent, compared with ₦52.665 trillion recorded in June 2024.
The CBN said the contraction reflects a cautious lending posture by banks as the sector continues to grapple with recapitalisation compliance requirements introduced by the regulator.
The apex bank has set March 30, 2026, as the deadline for deposit money banks to meet the revised minimum capital requirements.
Data from the bulletin also showed notable fluctuations in lending activity during the first quarter of 2025. In January, total loans rose to ₦54.153 trillion from ₦53.521 trillion in January 2024. In February, loans dropped to ₦53.059 trillion, down from ₦57.173 trillion in the corresponding period of 2024. By March, total loans climbed again to ₦54.136 trillion, compared with ₦49.614 trillion in March 2024.
According to the CBN, these movements underscore the sector’s balancing act between expanding credit to support economic activity and maintaining regulatory compliance amid tighter capital and risk conditions.
Commercial and merchant banks’ loans represent credit facilities extended by two major categories of lenders. Commercial banks typically provide loans to individuals and businesses for general financial needs, including personal loans, business and working-capital facilities, mortgages, and consumer credit such as car loans and credit cards.
Merchant banks, on the other hand, focus mainly on large corporations, trade, and investment-related activities. Their loan portfolios include corporate loans for large firms, trade finance to support import and export transactions, project finance for infrastructure and industrial developments, and advisory-linked financing tied to mergers, acquisitions, or corporate restructuring.
Meanwhile, data from the CBN’s latest Macroeconomic Outlook shows that the banking industry’s Non-Performing Loans (NPL) ratio climbed to an estimated seven per cent, pushing the sector above the prudential ceiling of five per cent.
The regulator attributed the rise in bad loans to the crystallisation of previously restructured facilities that could no longer qualify for regulatory forbearance after the expiration of relief windows.
The CBN said the development further reinforces the need for cautious credit expansion as banks seek to strengthen their balance sheets while complying with recapitalisation and risk-management requirements.
