Nigerian Banks Slash Lending by N5.4 Trillion Across Key Sectors

Nigerian banks significantly cut lending to crucial economic sectors in 2025, reducing credit by N5.4 trillion. This contraction primarily stems from the Central Bank of Nigeria's (CBN) decision to end regulatory forbearance on troubled loans and banks' own efforts to clean up their loan portfolios.

The impact is widespread, affecting sectors like oil and gas, information and communication technology (ICT), construction, education, manufacturing, real estate, and general services. Latest CBN data reveals that credit to these eight sectors dropped to N31.31 trillion in 2025 from N36.77 trillion in 2024.

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The major reason for the decline in loans to certain sectors was the removal of regulatory forbearance on challenged loans by CBN.

General Services experienced the steepest decline, with credit falling by 25.02 percent, a reduction of N1.45 trillion. Manufacturing followed closely, seeing a 22.52 percent drop, amounting to a contraction of N1.92 trillion. Real Estate also faced a significant 17.2 percent decrease in bank credit.

Experts attribute this trend to the CBN's withdrawal of regulatory forbearance, a policy that temporarily allowed financial institutions to manage bad loans during economic crises. The removal of this support compelled banks to settle outstanding amounts with the CBN, thereby diminishing their capacity to extend new loans. This move has led to substantial loan write-offs by banks, impacting their overall lending capabilities.

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This lifting of forbearance resulted in sizable write-offs of loans by banks, which ultimately re