CBN: Consumer lending falls to ₦3.78tn as borrowing costs weigh on households
Nigeria’s consumer credit contracted for the first time in six years in 2025, declining by 19.89 per cent to ₦3.78tn from ₦4.72tn recorded in 2024, as elevated interest rates discouraged household borrowing, according to the Central Bank of Nigeria (CBN).
The decline, contained in the CBN’s 2025 Annual Report and Statement of Accounts, ended a steady growth trend that had persisted since December 2019. The apex bank attributed the contraction to the prevailing high-interest-rate environment, which significantly altered borrowing patterns across the banking sector.
The report showed that the overall decline was driven mainly by a sharp reduction in personal loans, even as retail lending expanded strongly during the year. As a result, retail credit overtook personal loans to become the largest component of Nigeria’s consumer credit portfolio.
According to the report, retail loans rose by 63.77 per cent to ₦1.94tn in 2025, accounting for 51.16 per cent of total consumer credit. Personal loans, however, fell to ₦1.85tn, representing the remaining 48.84 per cent.
The CBN also noted that consumer lending accounted for a smaller share of banks’ overall credit to the private sector. Consumer credit represented 6.60 per cent of total private sector credit extended by other depository corporations in 2025, down from 7.98 per cent in the previous year.
“Consumer credit outstanding moderated in response to the dynamic interest rate environment. Consumer credit outstanding fell 19.89 per cent to ₦3,783.40bn in 2025 from ₦4,722.93bn in the preceding period. The fall was the first since December 2019,” the report stated.
Beyond consumer lending, the report highlighted changes in the maturity structure of banks’ loan portfolios. Short-term credit remained dominant, accounting for 51.60 per cent of total lending, although its share declined by 7.71 percentage points from 2024.
Medium-term credit accounted for 13.46 per cent of total loans, a marginal decline of 0.11 percentage points, while long-term credit expanded significantly, increasing its share by 7.82 percentage points to 34.94 per cent.
The CBN attributed the continued dominance of short-term lending to banks’ strategy of matching loan tenors with their predominantly short-term deposit base. However, the increase in long-term lending indicated a gradual shift in banks’ credit allocation during the year.
On the funding side, deposits with maturities of one year or less continued to dominate banks’ liabilities. Short-term deposits accounted for 91 per cent of total deposit liabilities in 2025, up slightly from 90.09 per cent in 2024. Medium-term deposits rose to 5.15 per cent, while the share of long-term deposits declined sharply to 3.85 per cent from 7.28 per cent a year earlier.
Overall, the report showed that although consumer credit contracted in 2025, the composition of lending shifted towards retail borrowing, while long-term loans accounted for a larger share of banks’ asset portfolios.
Meanwhile, private sector credit continued to expand despite the tight monetary policy environment. Earlier CBN data showed that credit to the private sector increased to ₦83.2tn in June 2026 from ₦81.04tn in May, representing a nine per cent increase from ₦76.13tn recorded in June 2025.
The expansion came despite the Monetary Policy Committee’s decision to retain the Monetary Policy Rate at 26.50 per cent, maintaining its tight monetary policy stance aimed at curbing inflation.