Nigerian banks recorded an expansion in credit availability and a decline in default rates during the second quarter of 2026. The Central Bank of Nigeria disclosed these findings in its latest Credit Conditions Survey, which tracks lending behavior, pricing, and approvals across households and businesses.
According to the apex bank, lenders approved a higher proportion of loan applications during the quarter. This shift reflects growing confidence in borrowers and an improving broader economic outlook.
Credit Availability and Demand Trends
The survey showed that credit availability increased across all major lending categories. Secured lending led the expansion at 25.2 index points, followed by corporate lending at 20.4 index points and unsecured lending at 10.5 index points. Lenders attributed the expansion in secured lending to improving economic conditions, market share objectives, and better liquidity conditions.
Demand for secured loans rose to 15.1 index points, while corporate loan demand reached 15.2 index points. In contrast, demand for unsecured loans remained weak, registering at -1.2 index points. Despite weak unsecured demand, banks reported higher loan approval rates across all secured, unsecured, and corporate lending categories compared to the previous quarter.
Borrower performance also improved during the period. Default rates declined across secured and unsecured household lending, as well as all corporate categories. This improvement spanned small businesses, medium and large private non-financial corporations, and other financial corporations.
Narrowing Spreads and Private Sector Credit Growth
Interest rate spreads narrowed across most lending categories during the second quarter. The spread on unsecured household lending relative to the Monetary Policy Rate narrowed to 7.8 index points. For 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, some categories experienced widening spreads. The interest rate spread for small businesses widened to -3.8 index points, while the spread on secured household lending widened by -4.5 index points relative to the MPR.
This credit expansion aligns with broader monetary data showing that credit to Nigeria’s private sector rose by 2.74% month-on-month, reaching N83.26 trillion in June 2026 from N81.04 trillion in May. Meanwhile, credit to the government fell slightly to N40.03 trillion from N40.38 trillion. This comes after consumer credit outstanding fell by 19.89% to N3.78 trillion in 2025 from N4.72 trillion in the preceding period, which was the first decline since December 2019.
The Monetary Policy Committee of the CBN recently retained the MPR at 26.5% at its 305th meeting. Private sector operators, including the Centre for the Promotion of Private Enterprise, have cautioned the CBN against further interest rate hikes, warning that additional tightening could weaken economic recovery and pressure businesses.
