CBN Raises Alarm over Loan Defaults by Households, Corporates

Banks recorded an increase in loan defaults by households and corporates in the fourth quarter of 2025, reflecting growing repayment pressures on consumers and businesses, according to the latest Credit Conditions Survey (CCS) Report by the Central Bank of Nigeria (CBN).

The report for Q4 2025, released on Tuesday, showed that lenders experienced higher default rates on both secured and unsecured household loans, as well as across all categories of corporate lending.

The report also indicated that loan defaults rose among small businesses, private non-financial corporations (PNFCs), and other financial corporations (OFCs), underscoring the impact of sustained economic pressures on borrowers.

According to the survey, “lenders reported higher default rates for secured, unsecured, and all corporate lending types in Q4 2025,” reflecting continued financial strain on households and businesses amid prevailing economic conditions.

The rise in defaults occurred despite improved access to credit during the quarter. Banks reported increased availability of secured, unsecured, and corporate loans, driven by changes in the economic outlook and lenders’ market share objectives.

Demand for credit also strengthened during the period, particularly for consumer loans, mortgages and overdrafts, as well as corporate facilities for inventory financing and capital investment.

However, the survey noted that the expansion in lending was accompanied by heightened credit risk, as many borrowers struggled to meet their repayment obligations.

On pricing conditions, the CCS report revealed that spreads on secured and unsecured household loans widened relative to the Monetary Policy Rate (MPR) in Q4 2025, indicating tighter risk pricing by banks.

In contrast, lending spreads narrowed for corporate loans to small businesses, large PNFCs, and OFCs, while spreads widened for medium-sized PNFCs, pointing to differentiated risk assessments across corporate segments.