Banks’ Credit to Private Sector Rises to N75.62tn, Lending Hits Post-recapitalisation High

Nume Ekeghe

The Nigerian banking sector’s credit to the private sector edged higher to N75.62 trillion in February 2026, as improved capital buffers from the recently concluded recapitalisation exercise bolstered lending to the domestic economy.

Latest data released by the Central Bank of Nigeria (CBN) showed that total credit to the domestic economy increased to N111.39 trillion in February, representing a 1.8 per cent rise from N109.42 trillion recorded in January.

The figure marks the highest level of aggregate credit since November 2024, when total lending stood at N115.57 trillion, underscoring a gradual recovery in credit expansion following months of tight financial conditions.

A breakdown of the data indicated that credit to the private sector maintained its dominance, rising marginally from N75.24 trillion in January to N75.62 trillion in February. However, on a year-on-year basis, private sector credit dipped slightly by 0.8 per cent compared to N76.25 trillion recorded in February 2025, suggesting lingering constraints in real sector financing.

In contrast, credit to the government recorded a stronger uptick, increasing from N34.18 trillion in January to N35.77 trillion in February. This represents the highest level since November 2024, when government borrowing stood at N39.61 trillion.

Year-on-year, lending to the government surged by 24.2 per cent from N27.11 trillion in February 2025, highlighting sustained fiscal pressures and continued reliance on domestic financing.

Overall, net domestic credit rose by 7.8 per cent year-on-year from N103.36 trillion in February 2025, reflecting a steady expansion in banking sector assets.

Commenting on the development, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, commended the apex bank for executing what he described as an orderly and confidence-enhancing recapitalisation exercise.

However, he expressed concern over the weak flow of credit to small and medium enterprises (SMEs), noting that the segment accounts for only about one per cent of total bank lending, significantly below the sub-Saharan African average of approximately five per cent.

He described the trend as a major structural deficiency in Nigeria’s financial system, stressing the need for a shift in focus from capital adequacy to economic impact.

According to him, “Priority must shift from capital adequacy to economic impact. Nigeria needs not just stronger banks, but banks that work for the economy.”

Meanwhile, monetary data also showed a continued decline in currency outside the banking system after peaking at an all-time high of N5.4 trillion in December 2025.

Further analysis showed that cash held outside banks fell to N5.21 trillion in January and further declined marginally to N5.20 trillion in February 2026. Despite the moderation, the figure remains elevated, reflecting a 15.3 per cent increase compared to N4.51 trillion recorded in February 2025.

The moderation in currency outside banks suggests a gradual return of liquidity into the formal financial system, amid ongoing efforts by monetary authorities to strengthen financial intermediation and deepen cashless transactions.