High Credit Default Rate Hits Nigeria’s Financial Sector In Fourth Quarter

Nigeria’s financial sector has reported higher default rates in the last quarter of 2024 with 10.1 per cent households defaulting on their loan obligations during the period.

The Central Bank of Nigeria’s (CBN) December 2024 Credit Condition Survey revealed the rise in loan default.

The survey is based on the response of lenders across Nigeria’s financial institutions, the apex bank said.

“Lenders observed higher default rates for all lending types in the review quarter,” CBN said.

The classes of loans are secured and unsecured loans to households, Corporate Small Businesses, Private Non-Financial Corporations (PNFCs), Small Businesses and Other Financial Corporations (OFCs).

A breakdown of the default showed that unsecured loans given to households had the highest default rate of 10.1per centt, while loans given to Corporate Small Businesses had a 9.0 per cent default rate.

Loans channeled to Medium Private Non-Financial Corporations also witnessed default of 7.4 per cent. Also, 6.8 per cent of loans to Small Businesses and Other Financial Corporations (OFCs) ended up in default.

Large Private Non-Financial Corporations defaulted by 4.3 per cent down from 4.9 per cent recorded in Q3, 2024 while secured loans to households also dropped from 5.5 per cent default in Q3 to 3.1 per cent default rate in Q4 2024.

During the period, banks reported an increase in credit for unsecured and corporate lending in Q4, 2024 while unsecured lending to households declined.

The report disclosed that the availability of corporate loans rose by 23.4 per cent amidst a 27.2 per cent increase in the demand for corporate loans.

Unsecured loans rose 15.8 per cent which outweighed the 6.7 per cent rise in the demand for unsecured loan by households.

The availability of secured loans saw a decline of 1.2 per cent during the period despite the 1.3 per cent rise in the demand for unsecured credit.

High Credit Default Rate Hits Nigeria’s Financial Sector In Fourth Quarter is first published on The Whistler Newspaper