Nigerian banks recorded an increase in loan defaults by households and businesses in the fourth quarter of 2025, reflecting mounting repayment pressures amid challenging economic conditions.
This was disclosed in the Central Bank of Nigeria’s (CBN) Credit Conditions Survey (CCS) Report for Q4 2025, which showed higher default rates across both household and corporate loan segments during the period.
According to the report, defaults rose on secured and unsecured household loans, as well as across all major categories of corporate lending, including facilities extended to small businesses, private non-financial corporations (PNFCs) and other financial corporations (OFCs).
“Lenders reported higher default rates for secured, unsecured and all corporate lending types in Q4 2025,” the CBN said, attributing the trend to sustained financial strain on borrowers.
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The rise in defaults came despite improved access to credit. Banks reported increased credit availability for both household and corporate borrowers, driven by a more optimistic economic outlook and efforts to expand market share.
Credit demand also strengthened during the quarter, particularly for consumer loans, mortgages and overdrafts, as well as corporate facilities used for inventory financing and capital investment. However, the CBN noted that the expansion in lending was accompanied by elevated credit risk, with many borrowers struggling to meet repayment obligations.
On pricing, banks widened interest rate spreads on secured and unsecured household loans relative to the Monetary Policy Rate (MPR), reflecting a more cautious stance toward consumer lending risk.
In contrast, lending spreads narrowed for corporate loans to small businesses, large PNFCs and OFCs, suggesting competitive pricing and improved risk appetite in those segments. Spreads, however, widened for medium-sized PNFCs, indicating a more selective risk assessment of mid-sized firms.
The CBN said the findings underscore the delicate balance banks face between expanding credit to support economic activity and managing rising credit risks, as households and businesses continue to grapple with inflationary pressures and higher borrowing costs.
