Retail lending declined in January 2026 despite continued growth in consumer and personal loans, reflecting tighter liquidity conditions in the banking system and cautious credit expansion by deposit money banks.
Data from the Central Bank of Nigeria’s January 2026 Economic Report showed that retail loans moderated during the review period even as total consumer credit outstanding rose to N3.81tn.
The development comes amid elevated interest rates and the apex bank’s tight monetary policy stance aimed at curbing inflation and stabilising the foreign exchange market.
Despite the slowdown in retail lending, personal loans remained a key driver of household borrowing, supported by increasing demand for salary-backed facilities, digital loans, and short-term consumer financing.
The rise in consumer credit balances indicates that many Nigerians increasingly relied on borrowing to cope with rising living costs and weakening purchasing power.
According to the report, consumer credit outstanding increased by 0.79 per cent to N3.81tn in January 2026 from N3.78tn recorded in the previous month.
The report stated, “Consumer credit outstanding increased by 0.79% to N3.81 trillion, from N3.78 trillion in the preceding month. The increase in consumer credit was due solely to the rise in personal loans by 5.95% to N1.96 trillion from N1.85 trillion, which constituted 51.44% of total consumer credit. Retail loans fell by 4.15% to N1.85 trillion from N1.93 trillion and constituted 48.56% of total consumer credit.”
The trend also reflects the growing role of retail banking products in Nigeria’s credit market as banks continue to deploy digital lending platforms and payroll-based loan products to expand their retail portfolios.
The CBN report further showed that monetary conditions tightened during the review period, contributing to slower lending growth across segments of the economy.
Broad money supply declined by 1.50 per cent in January 2026, largely due to a contraction in net foreign assets. Currency outside depository corporations also fell by 2.02 per cent, while transferable deposits and other deposits recorded declines during the month.
According to the apex bank, tighter liquidity conditions pushed interbank rates higher.
Analysts believe the liquidity squeeze likely forced banks to become more selective in extending retail loans despite sustained demand for consumer financing.
Meanwhile, total credit to the economy expanded marginally by 0.17 per cent to N57.41tn in January 2026 from N57.32tn in December 2025.
The increase was driven mainly by higher lending to the services and agriculture sectors, which grew by 0.12 per cent and 2.77 per cent respectively during the month. Credit to the industrial sector, however, declined by 0.24 per cent.
The services sector remained the largest recipient of bank credit, accounting for 56.98 per cent of total loans in the economy. Industry accounted for 36.55 per cent, while agriculture represented 6.47 per cent.
The CBN added that the banking sector remained stable and resilient during the period, with prudential indicators staying within regulatory thresholds.
Meanwhile, the Centre for the Promotion of Private Enterprise recently expressed concerns over structural weaknesses in Nigeria’s credit system, warning that despite the successful bank recapitalisation exercise, lending remains heavily skewed and insufficiently connected to productive sectors of the economy.
The think tank stressed that stronger bank balance sheets should translate into increased support for the real economy and productive investments.
