CBN Reports Increase in Secured Loan Defaults in Q3 2025 as Lending Expands

Nigeria’s banking sector recorded a rise in secured loan defaults in the third quarter of 2025, according to the Central Bank of Nigeria’s latest Credit Conditions Survey. Secured loans, those backed by collateral such as homes, vehicles, or fixed assets, saw more customers struggling to meet repayment obligations during the period.

In contrast, the CBN report revealed that unsecured loan defaults declined, indicating stronger repayment performance among borrowers without collateral.

Despite the uptick in secured-loan defaults, banks said they expanded total credit availability in Q3 2025 compared to the previous quarter, signalling a more open lending environment. According to the CBN, lenders attributed the increase in secured-loan defaults to changing economic conditions affecting both households and businesses that borrowed against collateral.

Banks Approve More Loans as Economic Outlook Improves

The survey shows that banks increased their willingness to issue secured loans, unsecured loans, and corporate loans during the quarter. This lending expansion was driven by an improved economic outlook and a stronger appetite among banks to grow their loan portfolios.

Corporate borrowers, including small businesses, medium-sized enterprises, large corporations, and other financial institutions, all recorded lower default rates, pointing to stronger credit performance in the business sector.

Banks also reported that loan approval rates rose in Q3, meaning a higher proportion of loan applications were approved across secured, unsecured, and corporate lending categories.

Interest Rate Spreads Shift Across Borrower Segments

The CBN noted a slight increase in the spread between household loan interest rates and the Monetary Policy Rate (MPR) for both secured and unsecured loans. This indicates that borrowing costs for households rose marginally during the quarter.

For corporate borrowers, changes in spreads varied by business size:

• Medium-sized firms and financial institutions saw a decrease in spreads.
• Small businesses and large corporations experienced an increase in borrowing cost spreads.

These shifts reflect banks’ evolving risk assessments across different borrower categories.