In the first quarter of 2025, Nigerian banks reported a varied landscape in the supply and demand for credit across different lending categories, with increases in unsecured and corporate lending availability contrasting with a decline in secured household lending.
This insight comes from the Central Bank of Nigeria’s (CBN) Credit Conditions Survey, which was conducted in February 2025 and captures the views of lenders regarding changes in credit availability, demand, and risk.
According to the survey, credit supply for secured lending to households fell significantly, recording a decline of 10.1 points, even as demand for this type of credit increased by 9.3 points. In contrast, credit supply for unsecured lending rose by 19.4 points, although demand in this segment fell slightly to 18 points. The corporate lending category saw a balanced movement, with both supply and demand increasing and standing at 18.7 points during the quarter.
The CBN survey attributed the increase in unsecured credit availability to banks’ growing interest in capturing a larger market share. For corporate lending, the main driver of increased credit supply was linked to shifts in the economic outlook. Interestingly, that same changing economic outlook was identified as the primary factor behind the decline in secured lending availability.
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In terms of lending rates, the report highlighted a widening in the spread between lending rates and the Monetary Policy Rate (MPR) for both secured and unsecured household credit. Similarly, corporate lending spreads also widened relative to the MPR for most lending types, with the exception of lending to Other Financial Corporations (OFCs), which narrowed during the quarter.
On the risk side, lenders reported an encouraging trend of reduced default rates in both secured and unsecured household lending. For corporate lending, small and medium-sized Private Non-Financial Corporations (PNFCs) experienced lower default rates, while larger PNFCs and OFCs faced higher default rates, signaling increased risk at the higher end of the corporate spectrum.
Despite the general increase in demand across lending types, the report pointed out two notable exceptions: demand for secured mortgage and remortgage loans from households and demand for unsecured credit card lending. These two categories experienced a decline in demand during Q1 2025.
Regarding the underwriting environment, the survey indicated that credit scoring criteria tightened for both secured and unsecured household lending compared to the previous quarter. Nevertheless, the proportion of approved loans increased for secured and corporate loans, while approval rates declined for unsecured credit applications.
The Credit Conditions Survey does not represent the official views of the Central Bank of Nigeria. Rather, it is a reflection of the sentiments and expectations of lenders in the credit market. Each respondent’s input is weighted by their market share, and responses indicating a large change in conditions are given double the weight of those indicating only a small change. The final results are expressed as net percentage balances, calculated as the difference between the weighted share of lenders reporting an increase in demand or supply and those reporting a decrease offering a quantitative snapshot of credit dynamics within the Nigerian economy.
