Nigerian Banks Cut Loans to 8 Key Sectors by N5.45 Trillion as CBN Ends Forbearance
- Nigerian deposit money banks reduced credit to eight major sectors by N5.45 trillion in 2025 after the CBN withdrew regulatory forbearance
- Manufacturing recorded a N1.92 trillion drop in bank lending, while MAN warned the decline threatens factory output and jobs
- Analysts expect credit to recover in 2026 as banks complete balance sheet clean-up under the CBN recapitalisation programme
Deposit money banks in Nigeria extended N5.45 trillion less credit to eight major sectors of the economy in 2025, with total lending falling 14.8% to N31.31 trillion from N36.77 trillion the previous year, according to figures published by the Central Bank of Nigeria (CBN).
The reduction followed the CBN's decision to discontinue regulatory forbearance, a policy that had previously permitted banks to restructure problem loans and temporarily breach prudential limits without incurring regulatory penalties.
Source: Getty Images
Once the policy was withdrawn, lenders were required to recognise impaired assets, write off non-performing loans and address exposures that exceeded the Single Obligor Limit, all of which compressed their capacity to issue new credit.
A single obligor limit (SOL) is a regulatory cap on the maximum credit exposure a financial institution can have to a single borrower or a group of related borrowers.
Industry estimates placed the value of loans covered by forbearance at over $4.01 billion across seven major banks as of the first quarter of 2025, Vanguard reports.
Sectors That Recorded the Steepest Falls
Manufacturing bore the sharpest absolute decline, with bank lending contracting by N1.92 trillion to N6.61 trillion.
General services posted the largest percentage drop, falling 25% to N4.35 trillion.
Credit to oil and gas services fell 12.4% to N4.85 trillion, while lending to the broader oil and gas industry declined 8.8% to N10.59 trillion.
Real estate lending dropped 17.2% to N792.71 billion, and the ICT, education and construction sectors also recorded lower credit allocations.
The Manufacturers Association of Nigeria (MAN) said the credit contraction directly undermines Nigeria's industrialisation goals.
However, not all sectors saw a pullback. Agricultural lending rose 26.4% to N3.61 trillion, and credit to the finance, insurance and capital market sector grew 19.3% to N9.24 trillion.
Source: Getty Images
Analysts expect overall credit to rebound in 2026 as banks conclude their balance sheet restructuring and raise fresh capital under the CBN's recapitalisation programme, with telecommunications, manufacturing, oil and gas, construction and real estate identified as sectors likely to attract renewed lending.
FG releases approved loan apps for 2026
Earlier, Legit.ng reported that the federal government, through the Federal Competition and Consumer Protection Commission (FCCPC), stated that a total of 457 companies had secured full approval to operate as digital lenders in the country.
A total of 35 others are said to have gotten conditional approval from the Commission, while 103 digital lenders are under the watch of the FCCPC.
The Nigerian government is making real efforts to ensure citizens do not patronise unregulated apps and also avoid unethical collection practices such as harassment or public shaming.
Source: Legit.ng
