By Our Correspondent

National News – Nigeria’s banking sector is facing mounting pressure as high borrowing costs continue to slow credit expansion across the economy.

The situation follows the decision of the Central Bank of Nigeria to retain the Monetary Policy Rate at 26.50 per cent in a bid to stabilise the naira and curb inflation.

The policy stance was maintained by the Monetary Policy Committee despite concerns from businesses and households struggling with expensive loans.

Analysts at Meristem Securities Limited warned that the prolonged high-interest-rate environment could weaken lending activities and delay economic growth in the country.

According to the analysts, many companies are finding it difficult to secure affordable financing for expansion projects, while consumers are reducing discretionary borrowing due to rising repayment costs.

The report explained that both lenders and borrowers are becoming more cautious because of tight financial conditions and fears over loan defaults.

The development is also changing how banks generate income.

Instead of relying heavily on loan growth, many financial institutions are now focusing on treasury bills, bonds, and other fixed-income investments that offer attractive returns in the current market.

Analysts noted that earnings growth in the banking sector may remain concentrated around investment securities rather than broad lending activities.

Speaking after the MPC meeting in Abuja, Olayemi Cardoso defended the decision to maintain strict monetary policies.

He explained that exchange rate stability remains essential to controlling inflation, especially as external economic shocks continue to affect prices.

How the policy affects ordinary Nigerians is becoming increasingly visible as businesses slow expansion plans, job creation weakens, and consumers avoid taking new loans.

Economists believe the cautious approach may continue until inflation declines more convincingly and the naira achieves stronger stability.