Nume Ekeghe
Nigerian deposit money banks are showing renewed willingness to extend credit to households and businesses, supported by stronger capital buffers and improving macro-economic sentiment, even as borrowing costs remain elevated and credit risks continue to rise.
This is according to the Central Bank of Nigeria’s (CBN) Q4 2025 Credit Conditions Survey, which indicates that both the supply of, and demand for loans expanded across major lending segments in the final quarter of last year.
According to the survey, credit availability increased across all major loan segments in the final quarter of last year, reflecting a growing willingness by banks to support economic activity amid early signs of macro-economic stabilisation.
Household borrowers, the report said, increased demand for both consumer and secured loans, while corporates stepped up requests for working capital and longer-term investment finance.
The central bank report noted that lenders were increasingly responsive to these dynamics.
It stated, “Lenders indicated a rise in credit availability for secured, unsecured, and corporate lending in Q4 2025. The increase in credit availability was attributed to the changing economic outlooks and market share objectives for secured and corporate lending. For unsecured credit availability, the main factors affecting increase in credit were attributed to changing economic outlook and changing cost/availability of fund.”
THISDAY analysis of the survey showed that secured lending to households rose by 12.8 per cent, while corporate lending jumped by 21.3 per cent points, signalling a stronger inclination by banks to underwrite credit as confidence improves.
Unsecured household credit also expanded by 10.0 per cent, though at a more moderate pace, reflecting lenders’ continued caution around consumer risk.
On the demand side, borrower appetite strengthened across the board. The net balance for demand for secured household credit climbed to 14.8 per cent, while unsecured credit demand rose to 5.9 per cent. Corporate credit demand also increased, reaching 12.4 per cent, underscoring renewed interest in business expansion and operational financing.
However, the survey suggests that this renewed momentum in credit activity is unfolding against a backdrop of elevated pricing and rising default risk. Lending rate spreads continued to reflect tight monetary conditions, with household borrowers facing wider margins relative to the Monetary Policy Rate (MPR).
The report noted, “In Q4 2025, the spreads on secured and unsecured lending rates to households widened to -10.8 and -2.0, respectively, relative to the Monetary Policy Rate (MPR). For corporate lending, spreads narrowed for small businesses, large private non-financial corporations (PNFCs), and other financial corporations (OFCs) at 14.8, 2.9, and 4.3 index points, respectively, while medium PNFCs reported widening spread at 4.8 index points.”
These mixed pricing movements, it added, highlight banks’ differentiated risk assessment across borrower classes, with smaller firms and large corporates benefiting from improved pricing, while medium-sized businesses face tighter terms.
“Loan approval trends also mirrored this cautious optimism. While approval rates improved for secured and corporate loans, banks reported a decline in approvals for unsecured credit, pointing to a preference for collateral-backed exposures amid lingering repayment uncertainties,” it said.
However, further analysis showed that credit risk indicators remain a concern as the survey showed that lenders recorded higher default rates across all loan categories in the period under review.
“Lenders reported higher default rates for Secured, Unsecured and all Corporate lending types in Q4 2025,” the report stated.
