Banks report higher credit risk in Q4 2025 despite improved access to loans
Nigerian banks recorded an increase in loan defaults among households and corporate borrowers in the fourth quarter of 2025, reflecting mounting repayment pressures on consumers and businesses, according to the Central Bank of Nigeria (CBN).
The apex bank disclosed this in its Credit Conditions Survey (CCS) Report for Q4 2025, which showed that lenders experienced higher default rates across both household and corporate loan segments during the period.
According to the report, defaults increased on secured and unsecured household loans, as well as across all 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, pointing to sustained financial strain on borrowers amid challenging economic conditions.
The rise in defaults came despite improved access to credit during the quarter. Banks indicated that credit availability expanded for household and corporate borrowers, supported by changes in the economic outlook and lenders’ efforts to grow market share.
Demand for loans also strengthened, particularly for consumer credit, mortgages, overdrafts, and corporate facilities used for inventory financing and capital investment.
However, the CBN noted that the increase in lending activity was accompanied by heightened credit risk, as many borrowers struggled to meet their repayment obligations.
On loan pricing, the survey revealed that interest rate spreads on secured and unsecured household loans widened relative to the Monetary Policy Rate (MPR) in Q4 2025, signalling tighter risk pricing by banks.
In contrast, lending spreads narrowed for corporate loans extended to small businesses, large PNFCs and OFCs, suggesting relatively improved risk appetite in those segments. However, spreads widened for medium-sized PNFCs, highlighting a more cautious approach toward certain categories of corporate borrowers.
The findings underscore the growing tension between expanding credit access and managing rising default risks, as economic pressures continue to weigh on households and businesses across the country.
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