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Nigeria’s consumer credit fell 19.89 percent to ₦3.78 trillion in 2025, marking the first annual decline since December 2019 as high interest rates curbed household borrowing and reduced the share of consumer loans in private sector credit.
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Personal loans contracted sharply to ₦1.85 trillion, while retail lending surged 63.77 percent to ₦1.94 trillion, making retail credit the largest component of consumer lending for the first time in years.
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The CBN said banks continued to favour short-term lending despite a growing share of long-term credit, while private sector credit rose to ₦83.26 trillion in June 2026, underscoring stronger corporate borrowing than consumer lending.
July 29, (THEWILL) —Nigeria’s outstanding consumer credit declined to ₦3.78 trillion in 2025, marking its first contraction in six years as elevated interest rates weighed on household borrowing and reshaped banks’ lending patterns.
The Central Bank of Nigeria (CBN), in its 2025 Annual Report and Statement of Accounts, disclosed that consumer credit outstanding fell by 19.89 percent from ₦4.72 trillion recorded in 2024, ending a growth streak that had lasted since December 2019.
The apex bank attributed the decline largely to the prevailing high interest rate environment, which increased borrowing costs for households and altered the composition of consumer lending.
Personal loans decline as retail lending gains ground
According to the CBN, the contraction was driven mainly by a sharp decline in personal loans, which dropped to ₦1.85 trillion during the review period.
In contrast, retail loans rose significantly by 63.77 percent to ₦1.94 trillion, accounting for 51.16 percent of total consumer credit. Personal loans represented the remaining 48.84 percent, marking a notable shift in the structure of consumer lending.
The report also showed that consumer credit’s share of total private sector credit provided by other depository corporations declined to 6.60 percent in 2025 from 7.98 percent a year earlier.
The CBN stated that the moderation in consumer lending reflected banks’ response to tighter monetary conditions and higher borrowing costs.
Banks maintain preference for short-term lending
The report further showed that short-term credit remained the largest component of banks’ loan portfolios despite a gradual shift towards longer-tenor facilities.
Short-term credit accounted for 51.60 percent of the total assets portfolio of other depository corporations, although this represented a decline of 7.71 percentage points from the previous year.
Medium-term credit eased marginally by 0.11 percentage points to 13.46 percent, while long-term credit expanded by 7.82 percentage points to 34.94 percent.
According to the CBN, the continued dominance of short-term lending reflects banks’ strategy of matching loan maturities with their predominantly short-term deposit liabilities.
Deposit structure remains heavily short-term
On the funding side, the banking sector continued to rely largely on short-term deposits.
Deposit liabilities with maturities of one year and below accounted for 91.00 percent of total deposits in 2025, up slightly from 90.09 percent recorded in 2024.
Medium-term deposits increased to 5.15 percent, while long-term deposits declined to 3.85 percent from 7.28 percent a year earlier.
The changes in funding and asset maturity profiles coincided with the CBN’s tight monetary policy stance, which kept benchmark interest rates at elevated levels throughout much of the period.
Consumer lending weakens despite stronger private sector credit
The decline in consumer credit comes even as lending to businesses continued to expand.
Latest CBN data showed that credit to the private sector rose to ₦83.26 trillion in June 2026 from ₦81.04 trillion in May. On a year-on-year basis, private sector credit increased by about nine per cent from the ₦76.13 trillion recorded in June 2025.
The divergence suggests that while businesses continued to access financing, households became more cautious in taking new loans amid higher borrowing costs, with banks also adjusting their lending mix in response to the interest rate environment.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
