CBN Reports Improved Credit Access as Rising Loan Defaults Persist

The Central Bank of Nigeria (CBN) has reported improved credit availability across key lending segments in the fourth quarter of 2025, even as lenders recorded higher default rates on loans to households and businesses.

This is according to the CBN’s Q4 2025 Credit Conditions Survey, which highlights cautious expansion in lending amid mounting repayment risks.

While overall lending conditions delivered mixed outcomes, the apex bank noted that financial institutions are gradually widening access to credit, reflecting improving economic expectations and strategic repositioning—despite persistent pressures on loan performance.

Key Credit Trends in Q4 2025

The survey shows divergent borrowing conditions for households and businesses during the quarter.

Households faced higher borrowing costs, as spreads on secured and unsecured loans widened to –10.8 and –2.0 index points, respectively, relative to the Monetary Policy Rate (MPR).

For corporate borrowers, lending conditions were mixed. Spreads narrowed for small businesses (14.8 index points), large private non-financial corporations (PNFCs) (2.9), and other financial corporations (OFCs) (4.3). However, medium-sized PNFCs recorded a widening spread of –4.8 index points, indicating tighter pricing conditions.

Across all categories—secured, unsecured, and corporate lending—lenders reported an increase in loan defaults, underscoring ongoing repayment challenges in the economy.

Why It Matters

The data suggests that although credit supply improved in select sectors, rising default rates remain a key risk to overall loan performance and financial stability.

Backstory

Earlier in the month, the CBN reported that private sector credit rose to N74.63 trillion in November 2025, up from N74.41 trillion in October, signalling a modest rebound in lending activity following the CBN’s 50-basis-point policy rate cut in September 2025.

The figures indicate that while tight monetary conditions constrained lending for much of the year, easing policy signals are beginning to stabilise credit flows to both businesses and households.

Previous CBN reports have consistently shown that:

Household borrowing remains constrained by high interest rates and limited disposable income

Corporate lending has benefited from targeted policy interventions and liquidity support, particularly for large firms and small businesses

Persistent macroeconomic pressures—including inflation and rising operating costs—continue to weigh on loan performance and default trends

What You Should Know

The Q4 2025 findings reflect cautious optimism among lenders, as banks expand credit while closely monitoring repayment risks.

According to the CBN, increased credit availability for secured and corporate loans was driven by shifting economic outlooks and strategic market positioning by lenders.

Growth in unsecured lending was linked to changes in economic expectations and adjustments in funding costs and availability.

The apex bank stressed that these developments highlight the delicate balance financial institutions must strike between supporting economic growth and managing elevated credit risk.

In September 2025, the CBN Monetary Policy Committee (MPC) cut the MPR by 50 basis points to 27 per cent, before retaining the rate in November while adjusting the interest rate corridor.