With more banks now more than adequately funded with the new capital base, financial institutions are getting more confident in expanding credit supply to households and businesses, even as borrowing costs remain elevated and credit risk continues to rise, according to the Central Bank of Nigeria’s Q4 2025 Credit Condition Survey.
According to the survey, alongside the increase in supply, demand for credit also strengthened across all major loan categories in the final quarter of last year. Households sought more consumer and secured loans, while corporates increased their appetite for working capital and investment finance.
Secured lending to households climbed by 12.8 percentage points. In comparison, corporate lending jumped 21.3 percentage points, indicating a stronger willingness by banks to underwrite credit amid gradual improvements in macroeconomic sentiment. Unsecured household credit also rose, albeit by a smaller 10.0 percentage points, reflecting continued consumer appetite despite tighter conditions.
On the demand side, borrower appetite strengthened across all major categories. The net balance for demand for secured credit increased to 14.8 percentage points, unsecured credit demand strengthened to 5.9 percentage points, and corporate credit demand grew by 12.4 percentage points compared with the prior quarter.
Spreads on household loans widened further relative to the Monetary Policy Rate, with secured and unsecured spreads recorded at -10.8 and -2.0 index points, respectively. For corporate borrowers, pricing showed mixed shifts: spreads narrowed sharply for small businesses (14.8 index points), large private non-financial corporations (2.9), and other financial corporations (4.3), while medium PNFCs saw spreads widen to -4.8.
Loan approval trends also reflected banks’ cautious optimism, as approval rates for secured and corporate lending rose, while respondents reported a decline in approvals for unsecured loans, suggesting a preference for lower-risk or collateralised exposures amid uncertain repayment climates.
The survey found higher default rates across secured, unsecured, and all corporate loan types in the period under review, indicating rising credit risk even as lenders are widening credit lines. Meanwhile, data from the Weekly Interest Rates for the first week of the year showed that commercial banks across the country continue to offer very high lending rates for creditworthy and risk-exposed customers, even as depositors benefit from significantly improved returns on savings and time deposits.
The apex bank’s figures show that savings deposit rates at many banks are remained around 8.10 to 8.25 per cent. Time deposit rates, offered on fixed-term funds and substantially higher, ranged from 19.00 to 15.87 per cent.
However, borrowers continue to face steep credit costs, as prime lending rates, offered to the most creditworthy customers, sit in the mid-20 per cent to low-30 per cent range at many lenders. For instance, several banks reported prime rates of 31.00 per cent, 30.50 per cent, 30.00 per cent, 29.00 per cent, 28.50 per cent, 27.50 per cent and 26.75 per cent.
Maximum lending rates, which represent the highest rates charged to the riskiest category of borrowers, remain substantially elevated. The data shows multiple banks quoting maximum rates above 35 per cent, with others quoting as much as 46.10 per cent and 36.00 per cent.
