Demand for corporate and secured loans strengthened significantly in the second quarter of 2026 as improving economic conditions, stronger banking sector liquidity and increased lender confidence encouraged Nigerian banks to expand credit to businesses and households, the Central Bank of Nigeria (CBN) has said.
The bank disclosed this in its Second Quarter 2026 Credit Conditions Survey, which showed that banks eased lending conditions across major credit segments, approved more loan applications and recorded lower default rates among both corporate and household borrowers.
The report indicates that the improvement in credit conditions reflects growing confidence in the economy, with lenders increasing the supply of loans while borrowers, particularly businesses, sought additional financing to support expansion and working capital requirements.
According to the CBN, credit availability increased across all major lending categories during the quarter.
Secured lending recorded the strongest expansion with an index score of 25.2 points, followed by corporate lending at 20.4 points, while unsecured lending also improved, rising to 10.5 points.
The survey also showed stronger demand for credit, particularly among corporate borrowers and customers seeking secured facilities.
Demand for secured loans rose to 15.1 index points, while corporate loan demand increased to 15.2 index points. In contrast, demand for unsecured loans remained subdued at -1.2 index points, suggesting households remained relatively cautious about unsecured borrowing despite improving economic conditions.
Banks equally reported a higher proportion of approved loan applications during the quarter compared with the previous three months, reflecting increased willingness to extend credit as macroeconomic conditions continued to stabilise.
A major highlight of the report was the improvement in loan performance across the banking industry.
The CBN said default rates declined across secured and unsecured household lending as well as corporate loans granted to small businesses, medium-sized private non-financial corporations (PNFCs), large PNFCs and other financial corporations (OFCs).
The reduction in loan defaults suggests that borrowers’ repayment capacity improved during the quarter, supported by better business conditions and stronger cash flows across key sectors of the economy.
According to the survey, virtually all borrower categories recorded stronger demand for loans during the period, with the exception of other financial corporations, where borrowing demand remained broadly unchanged.
The apex bank attributed the expansion in secured lending primarily to improving economic conditions, banks’ efforts to increase market share and stronger liquidity positions within the financial system.
It noted that these factors encouraged lenders to ease credit conditions while maintaining confidence in asset quality as loan performance continued to improve.
The report further showed that lending costs moderated across most credit categories during the second quarter as interest rate spreads narrowed relative to the Monetary Policy Rate (MPR).
The spread on unsecured household loans narrowed to 7.8 index points, indicating relatively lower borrowing costs for consumers.
Similarly, 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, reflecting more favourable financing conditions for businesses.
However, lending conditions remained relatively tight for small businesses, with the interest rate spread widening to -3.8 index points, suggesting that many small firms continued to face higher borrowing costs compared with larger corporate borrowers.
The survey also showed that the spread on secured household lending widened by -4.5 index points relative to the MPR during the review period.
The latest Credit Conditions Survey underscores improving confidence within Nigeria’s banking sector as lenders continue to expand credit to productive sectors of the economy while benefiting from lower loan defaults and stronger borrower demand.
Analysts believe that sustained improvements in macroeconomic stability, easing inflationary pressures and stronger banking sector liquidity could further support credit growth in the coming quarters, strengthening investment, business expansion and overall economic activity.
(The Whistler)
