Outstanding personal loan balances in Nigeria dropped significantly within one year as borrowers repaid about N1.33 trillion in household loans, according to new financial data released by the Central Bank of Nigeria.
The figures, contained in the apex bank’s Economic Report for November 2025, show that total personal loan balances fell from N3.32 trillion recorded in November 2024 to N1.99 trillion in November 2025, highlighting a sharp decline in consumer borrowing activity across the banking sector.
Brandspur Banking News Desk reports that the contraction in personal lending contributed to a broader drop in consumer credit across Nigeria’s financial system during the review period.
Data from the report indicated that total consumer credit outstanding declined from N4.42 trillion in November 2024 to N3.19 trillion in November 2025 as households reduced borrowing amid tighter financial conditions.
Despite the contraction, personal loans remained the dominant segment of consumer lending in the country. The CBN said personal loans accounted for about 62.38 percent of total consumer credit at N1.99 trillion, while retail loans represented 37.62 percent valued at approximately N1.20 trillion.
While personal borrowing declined sharply, retail lending recorded moderate growth within the same period. Retail credit increased from N1.11 trillion in November 2024 to N1.20 trillion in November 2025, representing a year-on-year rise of roughly N90 billion.
However, the increase in retail lending was insufficient to offset the steep drop in personal loans, resulting in the overall contraction in consumer credit recorded in the banking system.
Analysts link the shift in borrowing patterns to Nigeria’s tight monetary policy environment during most of 2025, when the central bank maintained elevated interest rates to curb inflationary pressures.
Throughout the period, the Monetary Policy Committee retained the benchmark Monetary Policy Rate at 27.5 percent for several months before implementing a 50-basis-point reduction to 27 percent in September 2025. The rate was subsequently maintained at that level during the committee’s November policy meeting.
High borrowing costs typically discourage new loan applications while encouraging borrowers to prioritise repayment of existing debts, particularly among households and small businesses.
The monetary authority later implemented another modest adjustment in February 2026 when the policy committee reduced the benchmark rate to 26.5 percent as inflationary pressures began to ease.
Governor Olayemi Cardoso said the decision was supported by sustained declines in inflation and improving external sector indicators.
According to the apex bank, Nigeria’s headline inflation eased to 15.10 percent in January 2026 from 15.15 percent in December 2025, extending a downward trend that had persisted for eleven consecutive months.
Food inflation also dropped significantly during the period, while core inflation recorded further moderation, signalling a gradual easing of price pressures across the economy.
The CBN also highlighted improvements in the country’s external position, noting that gross external reserves climbed to $50.45 billion in February 2026, the highest level recorded in over a decade.
Despite the improving outlook, the central bank warned that increased fiscal spending, particularly in the run-up to future elections, could pose risks to the current inflation trajectory and economic stability.
