Loan demand rises as banks expand credit on falling default rate

Demand for loans strengthened in the second quarter of 2026 as Nigerian banks expanded credit to households and businesses while recording lower default rates across major lending categories.

This is contained in the Central Bank of Nigeria’s (CBN) latest Credit Conditions Survey released yesterday.

The survey showed lenders increased the supply of secured, unsecured and corporate credit during the quarter, with a higher proportion of loan applications also approved compared with the previous quarter. The findings, however, represent the views of participating lenders and not those of the CBN.

According to the report, credit availability rose across all major lending categories, with secured lending posting an index of 24.2, corporate lending 20.4 and unsecured lending 10.5.

Demand for secured loans increased to 15.1 index points, while corporate lending rose to 15.2 index points. Demand for unsecured lending, however, remained weak at minus 1.2 index points.

The report attributed the increase in secured lending to an improving economic outlook, banks’ market share objectives and better liquidity conditions. Growth in unsecured credit was linked to changes in the cost and availability of funds, while stronger corporate lending reflected tighter wholesale funding conditions, a changing economic outlook and shifts in sector-specific risks.

Demand for corporate borrowing was largely driven by balance sheet restructuring, capital investment and inventory financing. Lending also increased to small businesses, medium and large private non-financial corporations, while demand for consumer loans, mortgages, house purchase financing and overdraft facilities improved. Credit card lending, however, declined during the quarter.

On pricing, the survey showed that the spread between unsecured household lending rates and the Monetary Policy Rate (MPR) narrowed to 7.8 index points.

Corporate lending spreads also narrowed to 14.0 index points for other financial corporations, 5.0 index points for medium private non-financial corporations and 4.7 index points for large private non-financial corporations. However, the spread for small businesses widened to minus 3.8 index points, while secured household lending spreads widened by minus 4.5 index points.

The survey further showed an improvement in loan performance, with lenders reporting lower default rates across secured and unsecured lending as well as all corporate borrower categories.