Banks tighten fraud checks as consumer lending slows
CBN says stronger fraud monitoring flagged more BVNs in 2025, while high interest rates reduced household borrowing despite continued growth in financial inclusion.
Nigeria’s banking industry tightened its grip on fraud in 2025, flagging thousands more Bank Verification Numbers (BVNs) for suspected fraudulent activity, even as high interest rates slowed consumer borrowing and reshaped household lending.
Fresh figures released by the Central Bank of Nigeria (CBN) show that the number of BVNs placed on the industry’s fraud watchlist rose by 38.4 percent to 13,117 in 2025, up from 9,476 a year earlier. At the same time, outstanding consumer credit fell by 19.89 per cent to ₦3.78 trillion, marking the first annual decline since 2019 as elevated borrowing costs discouraged personal loans.
The figures are contained in the CBN’s 2025 Annual Report and Statement of Accounts, which also paints a picture of a banking system becoming more digitally connected. More Nigerians enrolled for BVNs, more bank accounts were linked to the identity platform and active accounts continued to rise, reflecting sustained financial inclusion alongside stronger compliance measures.
According to the apex bank, the increase in flagged BVNs does not simply point to more fraudulent activity. Rather, it reflects improvements in fraud monitoring, risk management and the industry’s ability to identify and resolve suspicious transactions before they become larger threats.
“Fraud-related BVNs on the watchlist rose to 13,117 compared with 9,476 in the preceding period. This highlighted improvement in fraud monitoring and resolution,” the CBN stated.
Financial institutions added 3,641 BVNs to the fraud watchlist during the year as part of broader efforts to strengthen the integrity of Nigeria’s financial system.
Another category that recorded a significant increase was deceased persons’ BVNs on the watchlist, which rose from 21,118 in 2024 to 28,754 in 2025. According to the CBN, the increase reflects ongoing efforts by banks to update customer records and reduce opportunities for identity theft and other forms of financial fraud involving dormant identities.
While banks stepped up fraud surveillance, consumer borrowing moved in the opposite direction. The CBN said outstanding consumer credit declined from ₦4.72 trillion in 2024 to ₦3.78 trillion in 2025, the first annual contraction in six years.
“Consumer credit outstanding moderated in response to the dynamic interest rate environment. Consumer credit outstanding fell by 19.89 per cent to ₦3,783.40 billion in 2025, from ₦4,722.93 billion in the preceding period. The fall was the first since December 2019,” the report stated.
The decline was driven largely by weaker demand for personal loans as higher interest rates made borrowing more expensive for households.
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Personal loans fell to ₦1.85 trillion, while retail lending moved in the opposite direction. Retail loans grew by 63.77 per cent to ₦1.94 trillion, making them the largest component of outstanding consumer credit for the first time in several years.
As a result, retail loans accounted for 51.16 per cent of total consumer credit, while personal loans represented 48.84 percent.
The report also showed that consumer lending accounted for a smaller share of overall private sector credit during the year. Consumer credit represented 6.6 percent of total lending to the private sector by other depository corporations in 2025, down from 7.98 percent a year earlier. The lending pattern was reflected in banks’ broader credit portfolios.
Short-term credit remained the largest asset class for other depository corporations, although its share declined by 7.71 percentage points to 51.6 percent. Medium-term credit edged down slightly to 13.46 percent, while long-term credit increased by 7.82 percentage points to 34.94 per cent.
According to the CBN, banks continued to favour short-term lending because most customer deposits are themselves short-term.
“The dominance of short-term loans and advances reflected banks’ preference for matching short-term lending with short-term deposit liabilities,” the report noted.
That trend was also evident in the liability structure of banks. Deposit liabilities with maturities of one year or less accounted for 91 percent of total deposits in 2025, up slightly from 90.09 percent in the previous year. Medium-term deposit liabilities increased from 2.63 percent to 5.15 percent, while long-term deposit liabilities declined from 7.28 per cent to 3.85 percent.
Despite slower consumer lending, the country’s BVN ecosystem continued to expand. The number of registered BVNs increased from 64.40 million to 67.82 million, adding 3.42 million new enrolments during the year.
The number of bank accounts linked to BVNs also climbed significantly, rising from 297.29 million to 368.92 million, while active bank accounts increased from 311.6 million to 339.26 million.
According to the CBN, the combined growth in BVN registrations, linked accounts and active accounts reflects continued progress in financial inclusion, stronger regulatory compliance and improved confidence in the integrity of Nigeria’s banking system.
