By Dickson Pat
Nigeria’s financial sector has reported higher default rates in the last quarter of 2024 with 10.1% households defaulting on their loan obligations during the period.
The Central Bank of Nigeria’s 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 10.1%, while loans given to Corporate Small Businesses had a 9.0% default rate.
Loans channeled to Medium Private Non-Financial Corporations also witnessed default of 7.4% Also, 6.8% of loans to Small Businesses and Other Financial Corporations ,OFCs, ended up in default.
Large Private Non-Financial Corporations defaulted by 4.3% down from 4.9% recorded in Q3, 2024 while secured loans to households also dropped from 5.5% default in Q3 to 3.1% 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% amid a 27.2% increase in the demand for corporate loans.
Unsecured loans rose 15.8% which outweighed the 6.7% rise in the demand for unsecured loan by households.
The availability of secured loans saw a decline of 1.2% during the period despite the 1.3% rise in the demand for unsecured credit.
