Nigerian banks recorded a rise in loan defaults by households and businesses in the fourth quarter of 2025, highlighting mounting repayment pressures amid challenging economic conditions.
This was disclosed by the Central Bank of Nigeria (CBN) 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, default rates increased on secured and unsecured household loans, as well as on all categories of corporate lending. These include loans 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 stated, attributing the trend to sustained financial strain on borrowers.
The rise in defaults occurred despite an improvement in access to credit. Banks reported increased credit availability for household and corporate borrowers, driven by a more optimistic economic outlook and efforts to expand market share.
Demand for credit 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 conditions, the survey showed that banks widened interest rate spreads on secured and unsecured household loans relative to the Monetary Policy Rate (MPR), reflecting a more cautious approach to risk in consumer lending.
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. However, spreads widened for medium-sized PNFCs, indicating a more selective risk assessment among mid-sized firms.
The CBN report highlights the delicate balance banks face between expanding credit to support economic activity and managing rising credit risks, as households and businesses continue to navigate inflationary pressures and higher borrowing costs.
