Nigerian banks increased lending to trade and financial services in the first quarter of 2026 with credit to trade and general commerce surging 70.8 percent year-on-year to N6.3 trillion while loans to the oil and gas sector fell 13 percent to N16.2 trillion.
Total credit extended by deposit money banks stood at N59.7 trillion in the first quarter of 2026, according to data from the Central Bank of Nigeria’s Quarterly Statistical Bulletin.
The figure was only 1 percent higher than a year earlier, although it increased 4 percent compared with the preceding quarter.
However, the modest movement in aggregate lending masks substantial changes in where banks are deploying their funds.
Oil and gas remained the largest destination for bank credit, with exposure valued at N16.2 trillion, equivalent to 24.1 percent of total lending. Despite retaining the top position, credit to the industry contracted 13 percent year-on-year.
The decline contrasts sharply with the movement in financial services and commercial activities.
Credit to finance and insurance climbed 16.7 percent from a year earlier to N9.8 trillion, giving the sector a 16.4 percent share of total bank lending. On a quarter-on-quarter basis, financing to the sector increased 6.1 percent.
An even sharper expansion occurred in trade and general commerce, where bank credit jumped 70.8 percent year-on-year to N6.3 trillion. Lending to the sector also increased 36.9 percent compared with the previous quarter.
The acceleration suggests that businesses operating across Nigeria’s commercial value chain are absorbing significantly more bank financing, including funding required to purchase inventory and maintain day-to-day operations.
With the cost of goods, transportation and other operating expenses elevated, companies require larger amounts of working capital to maintain business activity, potentially increasing demand for short-term bank facilities even without a corresponding increase in physical output.
Agriculture also attracted additional financing during the period.
Bank credit to the sector increased 21.9 percent year-on-year to N3.9 trillion, while lending rose 7.1 percent from the previous quarter.
Despite the increase, agriculture represented just 6.5 percent of total bank credit, considerably below the amount allocated to oil and gas as well as finance and insurance.
The lending pattern indicates that Nigerian banks are becoming more selective about sector exposure at a time when monetary conditions remain restrictive.
High interest rates increase financing costs for companies while simultaneously affecting the risk-return calculations banks make when deciding where to extend new loans.
The relatively small 1 percent annual increase in overall credit therefore contrasts with the rapid growth recorded in selected sectors, pointing to a redistribution of lending rather than broad-based credit expansion.
For businesses, the development means access to financing remains uneven across industries even as Nigerian banks emerge from a major recapitalisation exercise with stronger capital positions.
The direction of credit growth in subsequent quarters will increasingly depend on monetary conditions, borrowing costs and banks’ assessment of credit risks across different parts of the economy.
A sustained decline in interest rates could eventually encourage broader private-sector borrowing, while continued tight monetary conditions could keep banks focused on sectors offering stronger cash flows and more attractive risk-adjusted returns.
The changing composition of lending will also be important for Nigeria’s wider economic expansion, particularly the extent to which additional bank financing reaches businesses capable of increasing production, employment and investment rather than being absorbed predominantly by rising working-capital requirements.
