Banks in Nigeria recorded more customers failing to repay their secured loans in the third quarter of 2025, according to the Central Bank of Nigeria’s latest Credit Conditions Survey released earlier this week.
Secured loans are facilities that are backed by collateral, such as a house, a car, or other fixed assets. However, the CBN report showed that unsecured loan defaults dropped in the same period, meaning more customers without collateral were able to meet their repayment deadlines.
At the same time, banks said they increased the amount of credit available in Q3 2025 compared to Q2, pointing to a more open lending environment during the review period.
Lenders Loosen Credit Standards Amid Shifting Borrowing Conditions
According to the CBN, banks attributed the rise in secured-loan defaults to changing economic conditions, especially for households and companies that borrowed against collateral.
The report indicated that lenders increased their willingness to provide secured loans, unsecured loans, and loans to businesses in the last quarter. This increase was attributed to a more positive economic outlook and banks’ increased desire to lend.
For company borrowers, the CBN said small businesses, medium-sized firms, large corporations and other financial institutions all recorded lower default rates, suggesting better loan performance in the corporate sector.
Banks also reported that the percentage of loan approvals increased in Q3 for secured loans, unsecured loans, and corporate lending. This means more applications were granted compared to the previous quarter.
The survey also indicated that the difference between interest rates on household loans and the Monetary Policy Rate (MPR) increased slightly for both secured and unsecured loans during the period.
The difference in borrowing costs (spreads) for corporate loans changed depending on the size of the company. Spreads decreased for medium-sized companies and financial institutions, but increased for small businesses and large corporations.
Key Findings from the CBN Survey
- •Interest-rate spreads shifted differently across company sizes.
- •Secured-loan defaults increased in Q3 2025.
- •Unsecured-loan defaults decreased.
- •Banks expanded credit availability for all loan categories.
- •Loan approvals rose across secured, unsecured, and corporate lending.
- •Corporations recorded lower default rates overall.