Nigeria’s banking sector noticed a recent rise in dangerous loans in 2025 after the Central Bank of Nigeria (CBN) withdrew the regulatory forbearance that allowed banks to restructure pandemic-hit services with out classifying them as non-performing.
Information from the CBN’s newest macroeconomic outlook confirmed that the banking trade’s Non-Performing Loans ratio climbed to an estimated 7%, pushing the sector above the prudential ceiling of 5%.
The regulator defined that the rise adopted the crystallisation of beforehand restructured loans that would not qualify for particular consideration as soon as the aid window expired.
What the report is saying
The report learn, “The Non-performing Loans ratio stood at an estimated 7% relative to the prudential restrict of 5%. The extent of NPLs mirrored the withdrawal of the regulatory forbearance granted to banks through the COVID-19 pandemic.”
Regardless of the spike in dangerous loans, the apex bank reported that the monetary system remained steady in 2025.
Liquidity ranges averaged 65%, far above the 30% minimal requirement, whereas capital adequacy was recorded at 11.6%, nonetheless larger than the ten% regulatory threshold. The CBN mentioned these buffers ensured lenders retained the capability to soak up shocks and proceed regular operations with out stress.
The bank added that recapitalisation efforts at the moment underway are anticipated to strengthen steadiness sheets additional and enhance the sector’s potential to assist financial progress by way of elevated lending.
CBN flags threat considerations, pushes stronger recoveries
The CBN cautioned that the soar in NPLs exposes the sector to rising credit score threat, particularly as debtors deal with larger rates of interest and financial pressures.
It warned that elevated bad-loan ranges may weigh on profitability, lending capability and general threat resilience if credit score self-discipline weakens.
The report learn, “Rising NPLs pose a direct menace to banks’ profitability, credit score availability, and general risk-bearing capability. This underscores the necessity to maintain measures to make sure that, worsening NPLs don’t weaken banks’ steadiness sheets, impair asset high quality, and set off systemic contagion. Though latest positive factors in capital adequacy and liquidity ratios present a buffer, these indicators stay prone to unexpected macroeconomic shocks.”
To mitigate the chance, the regulator known as for deeper integration of the International Standing Instruction framework throughout the trade to strengthen mortgage restoration and compensation self-discipline. It famous that stronger recoveries would assist banks cut back operational losses and enhance capital buffers, significantly in MSME and retail lending.
The report additionally confirmed that financial situations remained tight by way of most of 2025 because the apex bank prioritised worth and exchange-rate stability. Whereas the Financial Coverage Price was eased barely in September, the CBN maintained that monetary system stability would stay a key coverage focus.
Wanting forward, the bank mentioned the outlook for the sector stays broadly steady however famous that lenders should proceed strengthening risk-management practices, diversify mortgage portfolios and keep sturdy capital positions to protect towards future shocks. The continuing recapitalisation drive, alongside reforms within the FX and tax methods, is anticipated to assist investor confidence into 2026.
What it’s best to know
Nairametrics earlier reported that the CBN issued a recent directive instructing banks working beneath regulatory forbearance to droop dividend funds, defer bonuses for executives, and halt investments in international subsidiaries or offshore ventures.
This short-term suspension, in response to the CBN, is a part of a broader technique to strengthen capital buffers, enhance steadiness sheet resilience, and guarantee prudent capital retention throughout the banking sector.
The directive applies particularly to banks at the moment benefitting from forbearance in relation to credit score exposures and Single Obligor Restrict (SOL) breaches situations that counsel potential stress within the affected establishments.
A analysis observe by Renaissance Capital has revealed that a number of of Nigeria’s most outstanding banks are dealing with vital publicity to regulatory forbearance loans.
In line with Renaissance Capital’s estimates, Zenith Bank, FirstBank, and Access Bank rank highest by way of forbearance publicity.
The CBN earlier confirmed that banks at the moment affected by forbearance measures are beneath shut supervision.
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