Nigerian Banks See Rising Defaults on Secured Loans Amid Growing Credit Access in Q3 2025

 

The Central Bank of Nigeria (CBN) has released its latest Credit Conditions Survey, revealing a notable trend in the nation’s lending landscape during the third quarter of 2025 (Q3’25). According to the report, banks recorded higher default rates on secured loans, even as overall credit availability expanded across multiple lending categories. Interestingly, default rates on unsecured loans declined over the same period, signaling a nuanced shift in risk patterns among lenders.

The CBN attributes the rise in credit availability to a cautiously optimistic economic outlook, particularly for secured and corporate lending. For unsecured credit, the expansion was driven primarily by lenders’ increased appetite for risk, reflecting a willingness to extend credit to more borrowers despite potential repayment challenges.

The survey highlights that, while defaults on secured lending rose, corporate lending maintained stability. Default rates fell across all corporate categories, including small businesses, medium-sized Private Non-Financial Corporations (PNFCs), large PNFCs, and Other Financial Corporations (OFCs). This suggests that companies with structured financial operations and collateral-backed borrowing remain relatively insulated from the risks affecting household secured loans.

Loan approvals across all sectors—including secured, unsecured, and corporate lending—also increased during Q3 2025, reinforcing the broader trend of expanding credit access. Lenders appear more confident in issuing loans, though they continue to monitor risk closely, especially in the secured household segment where defaults have climbed.

The report further sheds light on lending rate spreads relative to the Monetary Policy Rate (MPR). For households, spreads on secured and unsecured loans widened by –0.1 and –1.8 index points, respectively. Corporate lending saw mixed movements: spreads narrowed for medium PNFCs and OFCs by 2.6 and 14.4 index points, while small businesses and large PNFCs experienced slight widening at –0.8 and –0.4 index points. These shifts suggest ongoing adjustments by lenders to balance profitability with borrower risk profiles.

Overall, the CBN’s findings paint a picture of a credit market in transition. While secured household loans face higher default pressures, the broader lending environment is characterized by increased access to credit, improved loan approvals, and strategic adjustments in interest spreads. For Nigerian consumers and businesses alike, the message is clear: borrowing opportunities are expanding, but careful financial planning remains essential in navigating the evolving credit landscape.