Lenders Face High Loan Default Rates In Q4 2024

Introduction A recent survey by the Central Bank of Nigeria (CBN) has revealed that financial institutions experienced a significant increase in loan defaults during the fourth quarter of 2024 (Q4’24). The findings indicate a surge in default rates across all lending categories, including secured, unsecured, and corporate loans.

Key Findings from the Report The report, titled “Credit Condition Survey Report for Q4’24”, highlighted that lenders observed higher default rates across all loan types in the review period. Despite this trend, the survey also found that credit availability for corporate lending increased, whereas secured lending to households declined.

Furthermore, the demand for loans grew across all lending categories in Q4’24. The key factors driving this rise included consumer loans and credit card borrowing from households for secured and unsecured loans, respectively. For corporate lending, the primary drivers were inventory financing and capital restructuring.

Factors Influencing Corporate Credit Demand The CBN identified several factors contributing to the increased demand for corporate credit in Q4’24, including:

Commercial real estate balance sheet restructuring
Inventory financing
Capital investments, mergers, and acquisitions

Additionally, while demand for general loans increased, the report noted a decline in mortgage and re-mortgage requests from households during the period.

Conclusion The findings from the CBN survey reflect a dynamic credit market in Q4’24, characterized by heightened loan demand alongside rising default rates. While corporate lending availability improved, the decline in secured household lending suggests shifts in borrowing patterns. The data provides crucial insights for financial institutions, policymakers, and economic stakeholders navigating Nigeria’s lending landscape.