Nigeria’s outstanding consumer credit declined sharply to N3.03 trillion in February 2026, following a steep drop in retail lending as high borrowing costs and tighter credit conditions continued to discourage households from taking new loans despite improving liquidity in the banking system.
The Central Bank of Nigeria (CBN) disclosed this in its February 2026 Economic Report, which showed that total consumer credit fell by N780 billion, or 20.48 per cent, from N3.81 trillion recorded in January.
The decline reversed part of the gains recorded earlier in the year and comes despite the apex bank’s gradual easing of monetary policy following a slowdown in inflation.
Consumer credit had exceeded N4 trillion a year earlier and peaked at about N5 trillion in May 2025.
According to the report, personal loans remained the largest component of household credit, accounting for 64.58 per cent of the total outstanding portfolio, equivalent to about N1.96 trillion, while retail loans represented the remaining 35.42 per cent, or approximately N1.07 trillion.
The CBN attributed the contraction to declines in both retail and personal lending, with retail loans recording the sharpest drop.
According to the report:
“Consumer credit outstanding to households declined by 20.48% to N3.03 trillion, from N3.81 trillion in the preceding month. The contraction was driven by reductions in both retail and personal loans by 41.85 and 0.40%, respectively.”
The apex bank said the decline suggested that households were repaying existing loans faster than banks were extending new credit.
It stated:
“The observed decline in the stock of consumer credit suggests the possibility of repayments outpacing new credit extensions. In terms of composition, personal loans sustained dominance, accounting for 64.58% of the total consumer credit, while retail loans constituted the balance.”
Despite the weakness in household lending, overall credit to the economy continued to expand.
The report showed that aggregate credit increased by 0.82 per cent to N57.88 trillion in February from N57.41 trillion in January, driven largely by increased lending to the agriculture, industry and services sectors.
The expansion indicates that banks continued to channel credit towards productive sectors even as consumer borrowing weakened.
The report also showed that borrowing costs remained elevated despite the CBN’s more accommodative monetary stance.
The average maximum lending rate rose to 35.17 per cent in February from 32.68 per cent in January, making consumer loans more expensive for households.
Although the average prime lending rate eased slightly to 19.29 per cent from 19.54 per cent, the marginal decline did little to reduce borrowing costs for most retail customers.
On the savings side, the weighted average savings and term deposit rate fell to 8.12 per cent from 8.52 per cent, widening the gap between deposit and lending rates.
Meanwhile, liquidity conditions across the banking system improved during the month.
Average banking system liquidity increased by 23.69 per cent to N3.08 trillion, up from N2.49 trillion in January, supported by fiscal injections and inflows from maturing Treasury bills and Federal Government bonds.
Improved liquidity also contributed to lower interbank rates during the period.
The latest data comes amid growing concerns over structural weaknesses in Nigeria’s credit market.
The Centre for the Promotion of Private Enterprise (CPPE) recently warned that despite the successful bank recapitalisation programme, lending remains heavily skewed and insufficiently directed towards productive sectors of the economy.
The think tank argued that stronger bank balance sheets should translate into greater financing for businesses and economic growth.
Similarly, Tony Elumelu, Chairman of UBA Group, recently called for increased access to credit, noting that entrepreneurs continue to face stringent lending conditions from commercial banks.
He attributed the challenge largely to tighter regulatory requirements and observed that commercial banks are constrained in the amount of risk they can assume, particularly when financing small and medium-sized enterprises (SMEs).
Boluwatife Enome
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