Banks Gradually Ease Credit As Borrowers Return — Central Bank Survey

In a significant sign of shifting confidence within the financial sector, financial institutions in Nigeria reported an increased availability of credit across all major segments during the third quarter of 2025, even as loan defaults simultaneously spiked for corporate entities and unsecured household borrowers.

According to the latest Credit Conditions Survey Report (CCS) for Q3 2025, published by the Central Bank of Nigeria’s (CBN) Statistics Department, lenders indicated an apparent easing of supply, driven primarily by an improved economic outlook.

The survey results indicate a consensus among lenders to expand credit, with increased credit availability noted for Secured, Unsecured, and Corporate lending during the period under review. The decision to loosen lending conditions was attributed mainly to the changing economic outlook, influencing both secured and corporate credit availability. For unsecured credit, lenders cited a changing appetite for risk as the primary factor driving the increased availability.

Correspondingly, institutions reported that the percentage of loan approvals rose for Secured, Unsecured, and Corporate lending compared to the previous quarter, indicating a higher rate of successful applications.

The easing of credit supply was met with a surge in demand from both households and the corporate sector, signalling increased economic activity. Overall demand for Secured, Unsecured, and Corporate lending increased.

Within the corporate segment, the heightened demand was focused mainly on key productive areas such as inventory finance, which was stated as the primary factor influencing the increase in demand for Corporate lending.

Capital Investments was the second leading factor, while balance sheet restructuring contributed significantly to the demand increase. Lending demand rose across all categories of businesses, including Small businesses, Medium Private Non-Financial Corporations (PNFCs), Large PNFCs, and Other Financial Corporations (OFCs).

However, the survey noted a deceleration in corporate appetite for loans related to Commercial Real Estate (-9.7) and Merger and acquisition (-6.2) purposes, where demand decreased.

While overall household credit demand increased, the dynamics were mixed; financial institutions saw a rise in demand for Consumer Loans and Overdraft/personal loans. Demand for secured mortgage and remortgage lending from households declined, as did demand for unsecured credit card lending.

Despite the general trend of easing supply, the cost of borrowing for specific segments increased, and default rates painted a worrying picture for unsecured and corporate borrowers. In terms of loan pricing, the overall spreads on Secured and Unsecured lending rates to households widened relative to the Monetary Policy Rate (MPR) in Q3 2025.

For Corporate lending, the rising cost was felt unevenly, as spreads widened for Small businesses (-0.8 index points) and large PNFCs (-0.4 index points). Conversely, spreads narrowed for Medium PNFCs (by 2.6 index points) and Other Financial Corporations (OFCs) (by 14.4 index points).

Financial institutions also reported a generalised increase in risk, as Unsecured lending experienced higher default rates during the review quarter. For the corporate sector, defaults were reported higher across the board, affecting small businesses, medium PNFCs, large PNFCs, and OFCs. Secured lending was the only segment to report lower default rates.