CBN Reports Surge in Personal Loans, N470bn Disbursed in Q4 2024

The Central Bank of Nigeria (CBN) has reported that Nigerian banks issued N470bn in personal loans during the last quarter of 2024. This was revealed in the CBN’s Fourth Quarter 2024 Economic Report, highlighting a significant rise in consumer borrowing.

According to the report, total consumer credit increased by 11.06% to N4.72tn as of December 2024, up from N4.25tn in September 2024. This growth underscores the increasing dependence on personal loans due to economic conditions.

Personal loans saw a notable rise, climbing by 21.27% to N3.82tn, compared to N3.15tn recorded in the previous quarter. This category accounted for the majority of consumer credit expansion. In contrast, retail loans declined by 18.18%, dropping from N1.10tn in September to N0.90tn in December 2024. This shift suggests that more borrowers prefer personal loans over retail credit.

CBN data further revealed that personal loans comprised 80.98% of the total consumer credit portfolio, with retail loans making up the remainder. This indicates a continued preference for personal loans among Nigerians as they seek financial support from banks.

The report stated, “Consumer credit outstanding rose by 11.06% to N4.72tn at the end of December 2024, up from N4.25tn at the end of September 2024. Personal loans increased by 21.27% to N3.82tn compared to the previous quarter, while retail loans declined by 18.18% to N0.90tn.”

The surge in personal loans is likely influenced by rising living costs, economic uncertainties, and broader access to bank credit facilities. Many consumers are turning to these loans to manage financial obligations amid inflationary pressures.

However, this trend coincides with an increase in inflation, which reached 34.80% in December 2024, compared to 34.60% in November. The rise was largely attributed to higher demand for food and non-alcoholic beverages during the festive season.

Related News:

• CBN Targets Improved Corporate Governance with Insider Loan Crackdown
• CBN Bolsters Efforts to Stabilize Naira as Forex Speculation Rises

To combat inflation, the CBN’s Monetary Policy Committee raised interest rates multiple times in 2024, increasing the Monetary Policy Rate (MPR) by 875 basis points to 27.50%. As a result, commercial banks adjusted their lending rates, making personal loans more expensive for borrowers.

While personal loans provide short-term financial relief, higher interest rates could lead to increased repayment challenges, potentially driving up loan defaults, particularly among low-income earners and those with unstable income sources.

Despite these concerns, the CBN noted an improvement in banks’ asset quality, as the non-performing loans ratio declined to 4.50% in December 2024 from 4.58% in September, remaining below the 5.00% prudential threshold. This suggests enhanced loan recovery efforts by financial institutions.