CBN report reveals banks tightened lending in January 2026 despite rising consumer borrowing and growing demand for salary-backed loans…..
Retail lending in Nigeria recorded a decline in January 2026 as tighter banking system liquidity and cautious lending by commercial banks slowed credit expansion across the economy.
This is according to the latest Economic Report released by the Central Bank of Nigeria (CBN), which showed that although overall retail loans weakened during the period, consumer credit continued to rise as more Nigerians turned to borrowing to cope with rising living costs.
The development comes amid persistently high interest rates and the apex bank’s aggressive monetary tightening measures aimed at controlling inflation and stabilising the foreign exchange market.
According to the report, total consumer credit outstanding rose to N3.81 trillion in January 2026 from N3.78 trillion recorded in the previous month.
The increase was driven largely by a sharp rise in personal loans, which climbed by 5.95 per cent to N1.96 trillion from N1.85 trillion in December 2025.
The CBN noted that personal loans accounted for more than half of total consumer credit during the period, highlighting growing dependence on salary-backed loans, digital lending platforms and short-term household financing.
“The increase in consumer credit was due solely to the rise in personal loans,” the report stated.
However, while personal borrowing increased, retail loans declined by 4.15 per cent to N1.85 trillion from N1.93 trillion recorded in the previous month.
The decline suggests that banks became more selective in extending retail credit as liquidity conditions tightened within the financial system.
Analysts say the trend reflects the difficult economic reality facing many households, with consumers increasingly relying on credit facilities to manage rising food prices, transportation costs and weakening purchasing power.
The report also highlighted a broader tightening in monetary conditions across the banking sector during the review period.
Broad money supply fell by 1.50 per cent in January 2026, driven mainly by a contraction in Nigeria’s net foreign assets.
Currency held outside banks also declined by 2.02 per cent, while deposits across the financial system weakened during the month.
According to the apex bank, tighter liquidity conditions pushed interbank lending rates higher and contributed to slower loan growth across several sectors of the economy.
Despite the slowdown in retail lending, total credit to the economy still recorded a marginal increase of 0.17 per cent, rising to N57.41 trillion from N57.32 trillion in December 2025.
The growth was largely supported by increased lending to the services and agriculture sectors.
Credit to agriculture expanded by 2.77 per cent during the month, while lending to the services sector rose slightly by 0.12 per cent.
In contrast, credit to the industrial sector declined by 0.24 per cent, reflecting weaker lending appetite toward manufacturing and industrial activities.
The services sector remained the biggest beneficiary of bank loans, accounting for nearly 57 per cent of total credit in the economy.
Industry followed with 36.55 per cent, while agriculture accounted for 6.47 per cent of total lending.
The CBN maintained that Nigeria’s banking sector remained stable during the period, noting that key prudential and regulatory indicators stayed within acceptable thresholds.
However, concerns continue to grow over the structure of lending within the economy.
The Centre for the Promotion of Private Enterprise recently warned that despite ongoing bank recapitalisation efforts, credit distribution remains heavily skewed and insufficiently aligned with productive sectors capable of driving long-term economic growth.
The group argued that stronger bank balance sheets must translate into increased financing for businesses, manufacturing and sectors that can stimulate employment and economic expansion.
For many Nigerians, however, the latest figures underline a growing dependence on personal borrowing as economic pressures continue to squeeze household incomes.
