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.
This means that 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.
According to the apex bank, 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.
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.
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.
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.
