By Chinwendu Obienyi
Despite sustained economic reforms and mounting inflationary pressures, Nigeria’s tier-1 banks collectively disbursed approximately N1.79 trillion in new loans to individuals and businesses in the first quarter (Q1) of 2025, according to Daily Sun investigations on Monday.
The surge in lending came amid rising inflation, which climbed to 24.23 percent in March from 23.18 percent in February, and a tightening macroeconomic landscape. Throughout the period, the Central Bank of Nigeria (CBN) held interest rates steady, creating a complex but navigable environment for credit expansion.
The decision, although aimed at curbing inflation and stabilising the naira, has not deterred commercial lending especially by the top banks, which continue to leverage their capital buffers and balance sheet strength.
According to filings obtained from the Nigerian Exchange Limited (NGX)’s website, the tier-1 banks which include; Access Holdings (N582.35 billion), First Bank of Nigeria Holdings (N364.17 billion), Guaranty Trust Holding Company (N151.22 billion), United Bank for Africa (N229.35 billion) and Zenith Holdings (N460.97 billion) reported N1.79 trillion in loans in the reporting period compared to N1.21 trillion recorded in Q1 2024, hence representing a 210.5 per cent increase.
The banks’ interest income collectively rose to N3.44 trillion from N2.38 trillion, representing an increase of 225.2 per cent.
Analysts say the N1.79 trillion in loans marks a cautious but confident expansion by Nigeria’s leading financial institutions. According to them, these banks have remained resilient, managing risk exposure while responding to the demand for credit by households and small-to-medium enterprises (SMEs).
They noted that much of the credit went to energy, manufacturing, trade, fintech, and consumer loans, sectors identified as key to GDP growth and employment. Many tier-1 banks are also shifting their lending focus to include digital credit products, offering smaller, quicker loans through apps and online platforms.
Head, Research at FSL Securities, Chiazor Victor, said, “The aggressive push for loans in this kind of environment indicates that banks are positioning for long-term growth, despite short-term volatility. Tier-1 banks have the capacity to absorb shocks and are using targeted lending to boost earnings and deepen their market share.”
A banker at one of the tier-1 banks who preferred to remain unnamed, said, “Retail lending has become increasingly important. Even though interest rates are high, many individuals and SMEs are seeking capital to hedge against inflation or to finance stock ahead of the mid-year period.”
The CBN’s decision to hold interest rates steady reflects a difficult balancing act between controlling inflation and supporting growth. With reforms in fuel subsidy removal, exchange rate unification, and rising utility tariffs squeezing household incomes and increasing business costs, the central bank has faced pressure to either tighten further or stimulate credit flow.
While inflation has remained elevated due to supply-side factors and imported inflation, there is growing concern that tight monetary policy might restrain economic recovery. However, the latest lending figures suggest that top banks are, so far, undeterred.
Despite the resilience shown in Q1, Victor noted that risks remain. “Non-performing loan (NPL) ratios could rise if inflation continues to erode purchasing power or if GDP growth slows in the second quarter. Also, smaller banks without the same capital strength may not be able to sustain similar levels of lending”, he explained.
Still, the Q1 loan surge signals cautious optimism within the banking sector. With the federal government projecting modest growth in 2025 and promising further support for SMEs and export-led industries, banks are likely to remain active players in the credit market provided macroeconomic stability can be sustained.