Nigeria’s banking sector is tightening its grip on lending as economic uncertainty, high interest rates, and stricter regulatory conditions continue to reshape financial decision-making. New data from the first quarter of 2026 shows that major banks significantly reduced credit expansion in a cautious move aimed at protecting asset quality.
An analysis of financial statements from five leading banks—Access Bank, First Holdco, Zenith Bank, Guaranty Trust Holding Company (GTCO), and United Bank for Africa (UBA)—revealed that total loans and advances fell by about 24.94% year-on-year. Combined lending dropped to N458.98 billion in Q1 2026 from N611.52 billion in the same period last year, signalling a clear shift toward a more defensive banking strategy.
The most notable contraction came from Access Bank, which recorded a steep 26.5% decline in loans and advances, falling to N427.82 billion from N582.35 billion. In contrast, a few lenders posted mild growth, with First Holdco, Zenith Bank, GTCO, and UBA recording slight increases, though not enough to offset the broader industry slowdown.
Financial analysts attribute the trend to Nigeria’s high-interest-rate environment, persistent inflation, and weakening consumer demand. Businesses and households are increasingly struggling with the cost of borrowing, while banks are becoming more selective in lending to sectors exposed to foreign exchange volatility and economic instability. Small and medium-sized enterprises, in particular, are feeling the pressure as access to affordable credit tightens.
The development is expected to feature in discussions at the upcoming Monetary Policy Committee meeting of the Central Bank of Nigeria, as policymakers attempt to balance inflation control with the need to stimulate growth. Experts warn that while the cautious approach may protect banks from rising non-performing loans, a sustained credit slowdown could weaken investment, job creation, and overall economic recovery if not addressed through coordinated fiscal and monetary support.
source: The sun