Rising Loan Defaults: CBN Survey Reveals Higher Credit Risks in Nigeria’s Banking Sector

A new survey released by the Central Bank of Nigeria (CBN) has revealed that banks experienced a rise in repayment defaults on secured loans during the third quarter of 2025. The report, titled “Credit Condition Survey,” also showed that unsecured loan defaults dropped within the same period.

According to the CBN, lenders reported stronger credit availability in Q3 2025 when compared to the previous quarter. The improvement was linked to shifting economic expectations for secured and corporate lending, while appetite for risk played a major role in the boost in unsecured loan availability.

The report noted that lenders saw lower default rates among small businesses, medium-sized Private Non-Financial Corporations, large PNFCs, and Other Financial Corporations. Despite this improvement in corporate credit performance, lenders still faced rising defaults on secured household loans.

The survey also highlighted that approval rates for secured, unsecured, and corporate loans increased in Q3 2025. This trend suggests that banks continued to push credit into the economy despite mixed repayment patterns.

In terms of lending rates, the spreads on secured and unsecured loans to households widened in relation to the Monetary Policy Rate (MPR) at -0.1 and -1.8 points respectively. For corporate borrowers, spreads tightened for medium-sized PNFCs and OFCs at 2.6 and 14.4 index points. However, spreads widened slightly for small businesses and large PNFCs at -0.8 and -0.4 index points.

The CBN survey underscores ongoing changes in credit behavior across the financial sector as banks balance rising risks with the demand for loans. The central bank is expected to continue monitoring lending conditions as economic pressures evolve.