Nigerian Banks Report Rising Loan Defaults Amid Strong Demand, CBN Survey Shows Economic Stress

Nigerian banks are facing a rise in loan defaults across households and businesses despite an improvement in loan supply and increased demand, according to the Central Bank of Nigeria's credit conditions survey for the fourth quarter of 2025. Lenders have recorded higher default rates in both secured and unsecured categories of corporate lending, indicating a worsening repayment capacity among borrowers.

The challenging economic environment, characterized by high interest rates, weak consumer income, and rising operating costs, continues to weigh on economic activities. Default rates on secured loans have further increased in the fourth quarter, reflecting the financial strain faced by borrowers.

The persisting challenges in loan repayment, even with collateral backing, highlight the depth of financial stress in the system.