The Central Bank of Nigeria has said that many large companies and other financial groups failed to repay their loans properly in the first quarter of 2025.
This was revealed in the CBN’s latest *Credit Conditions Survey Report*, which looked at how loans were being managed by different groups in Nigeria’s economy.
The report showed that large private companies, also known as Private Non-Financial Corporations (PNFCs), and Other Financial Corporations (OFCs), had a negative loan repayment performance, with both groups recording a default index score of -0.6.
According to the CBN, a negative score means that more banks saw loan repayments getting worse rather than better in these groups.
“Lenders reported lower default rates for secured and unsecured lending in the review quarter. For corporate lending, small businesses and medium PNFCs reportedly had lower default rates, but large PNFCs and OFCs had higher default rates,” the report said.
This is a change from the last quarter of 2024, when large companies recorded a positive default index of 4.3. The score was even better in the third quarter of 2024, at 4.9. OFCs also had stronger performance in previous quarters, with scores of 5.0 and 6.8.
The new figures suggest that large companies are now under more pressure and may be struggling to pay their debts on time. This is a concern because these companies usually hold a big share of the loans banks give out.
However, the CBN noted that small and medium businesses are doing better with loan repayments. Small businesses had a default index of 0.5, while medium businesses scored 3.0.
This could be because smaller businesses are now getting more access to credit and banks may be applying stricter checks before giving out loans. Their improved cash flow may also be helping them pay back loans more easily.
Household loans also showed improvement. People who took secured loans—like car or home loans—recorded a default index of 3.9. Those with unsecured loans—like personal or emergency loans—scored even higher at 5.0.
This marks a big improvement from 2022 and early 2023, when many Nigerians were defaulting on personal loans.
The report also said there was more demand for loans, especially for corporate and secured loans, in the first quarter of 2025. However, banks also became more selective by tightening their rules for loan approvals. While more loans were approved for secured and corporate borrowers, there were fewer approvals for unsecured loans.
CBN added that many large firms needed loans for inventory financing—that is, to buy or manage stock—which was one of the main reasons for their borrowing in this period.
When it comes to loan pricing, banks increased the interest spread (the gap between the loan interest rate and the Central Bank’s Monetary Policy Rate) across most loan types. This means banks were being more careful and charging higher rates to cover risks.
Interestingly, loan rates for OFCs did not increase like others, even though they had more repayment problems. This could mean that banks are hoping that these financial firms will soon get better funding or support from the government.
The CBN explained that the findings are based on feedback from lenders and may not reflect the bank’s official position, but they are useful for understanding current credit risks in the country.
While small businesses and households are showing better repayment behaviour, the troubles faced by big companies and financial firms could make banks more careful in giving large loans going forward.
