CBN: Loan demand rises as Nigerian banks record fewer defaults in Q2 2026

Demand for corporate and secured loans increased in the second quarter of 2026 as Nigerian banks expanded credit availability and recorded lower default rates across major lending categories, according to the Central Bank of Nigeria (CBN).

The apex bank disclosed this in its latest Credit Conditions Survey, showing that lenders eased credit supply for corporate, secured and unsecured loans, while loan performance improved as defaults declined across households and businesses.

The report also showed that banks approved a higher proportion of loan applications during the quarter, reflecting improving confidence in borrowers and the broader economic outlook.

What the report is saying

The CBN reported that lenders increased credit availability across all major lending categories during the second quarter of 2026.

• Credit availability increased for secured lending (25.2 index points), corporate lending (20.4 index points) and unsecured lending (10.5 index points).
• Demand for secured loans rose to 15.1 index points, while corporate loan demand increased to 15.2 index points. Demand for unsecured loans remained weak at -1.2 index points.
• Banks also reported higher loan approval rates across secured, unsecured and corporate lending compared with the previous quarter.
• Default rates declined across secured lending, unsecured lending and all corporate borrower categories, including small businesses, medium and large private non-financial corporations (PNFCs) and other financial corporations (OFCs).

The CBN said all lending categories recorded stronger demand during the quarter, except borrowing by other financial corporations, which remained broadly unchanged.

According to the report, the expansion in secured lending was driven largely by improving economic conditions, banks’ market share objectives and better liquidity conditions.

• Interest rate spreads also narrowed across most lending categories during the quarter.
• The spread on unsecured household lending relative to the Monetary Policy Rate (MPR) narrowed to 7.8 index points.
• Corporate lending spreads narrowed to 14.0 index points for Other Financial Corporations, 5.0 index points for medium-sized private non-financial corporations and 4.7 index points for large private non-financial corporations.

However, the interest rate spread for small businesses widened to -3.8 index points.

Meanwhile, the spread on secured household lending widened by -4.5 index points relative to the MPR.

More Insights

Credit to Nigeria’s private sector rose to N83.26 trillion in June 2026 from N81.04 trillion in May, according to the latest data from the CBN.

• The CBN data shows that credit to Nigeria’s private sector increased by approximately 2.74% month-on-month between May and June 2026.

Also, the CBN data noted that credit to government fell slightly to N40.03 trillion from N40.38 trillion.

• The CBN noted that consumer credit outstanding fell by 19.89% to N3.78 trillion in 2025 from N4.72 trillion in the preceding period, marking the first decline since December 2019.

The apex bank disclosed this in its 2025 Annual Report and Statement of Accounts, attributing the decline to the dynamic interest rate environment.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.5% following the conclusion of its 305th meeting.

What you should know

The CBN Credit Conditions Survey provides an assessment of banks’ lending behaviour, covering changes in credit availability, loan demand, pricing, approvals and default rates across households and businesses.

Private sector operators, including the Centre for the Promotion of Private Enterprise (CPPE), have warned the CBN against further increases in interest rates, arguing that additional monetary tightening could weaken economic recovery and worsen pressure on businesses and households.

With inflation still elevated and election-related spending expected to increase over the coming quarters, analysts believe policymakers are likely to prioritise stability over aggressive monetary easing for the remainder of the year.