Bank Lending Falls N5.45 Trillion After CBN Ends Forbearance
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. Once the policy was withdrawn, lenders were required to recognise impaired assets, write off non-performing loans and address exposures that exceeded the Single Obligor Limit, all of which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.
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.
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.
Outlook for 2026
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.
