Central Bank of Nigeria (CBN) has shown that banks recorded higher default rates on secured loans in the third quarter of 2025 (Q3’25), even as defaults on unsecured facilities declined.
The findings, contained in the apex bank’s Credit Conditions Survey released earlier this week, revealed a contrasting trend in loan repayment patterns across the banking sector during the period under review.
According to the report, lenders reported that default rates increased on secured lending but declined on unsecured loans in Q3 2025.
Despite the rise in defaults on secured facilities, the CBN said respondents indicated increased credit availability across all loan categories—secured, unsecured and corporate—when compared to the previous quarter.
The increase in credit supply was attributed to changing economic outlooks for secured and corporate lending, while lenders’ appetite for risk was identified as the key factor influencing unsecured credit availability.
On corporate lending performance, the survey showed that default rates fell among small businesses, medium-sized Private Non-Financial Corporations (PNFCs), large PNFCs, and Other Financial Corporations (OFCs).
The report also indicated a rise in loan approvals across all segments—secured, unsecured, and corporate lending—during the quarter.
It added that the overall spreads on secured and unsecured lending rates to households relative to the Monetary Policy Rate (MPR) widened by -0.1 and -1.8 index points, respectively.
For the corporate segment, lending spreads narrowed for medium PNFCs and OFCs by 2.6 and 14.4 index points, while spreads widened for small businesses and large PNFCs by -0.8 and -0.4 index points.
The development comes amid growing concerns that many manufacturers continue to stay away from bank loans due to high lending rates, a trend analysts say may further slow investment and production across key sectors.
