Nigeria’s banking industry is undergoing a profound transformation.
What began as a battle to survive in a tough economic climate has now evolved into a story of reinvention, as banks reshape their balance sheets, funding models, and capital structures.
By December 2025, Agusto & Co. projects that total assets will climb to ₦242.3 trillion.
Growth Gains Momentum
The momentum tells its own story.
In just one year, industry assets surged nearly 45%, reaching ₦186.6 trillion by the end of 2024.
Behind the numbers, banks demonstrated their ability to thrive under pressure.
Although high interest rates and the Central Bank of Nigeria’s (CBN) tight monetary stance threatened liquidity, the sector strengthened its position and lifted its liquidity ratio to 59.4%, compared with 43.5% a year earlier.
Agusto & Co Banks Assets
Furthermore, banks embraced innovation to overcome funding constraints.
With conventional borrowing costs soaring, they turned aggressively to commercial papers.
They issued about ₦750 billion in the first seven months of 2025 alone and signalled plans for more as interest rates begin to ease.
At the same time, the CBN’s 2024 recapitalisation directive pushed lenders to act quickly.
Sixteen banks raised over ₦2.5 trillion in fresh capital, while eight already crossed the new benchmark.
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Significantly, domestic investors supplied most of this capital, thereby showing growing confidence in the system.
Risks Weigh On Profitability
However, challenges continue to test the sector.
Non-performing loans rose to 5.2% by the end of 2024 as the naira depreciated sharply.
After the CBN withdrew regulatory forbearance in mid-2025, banks faced stricter reclassification and provisioning rules.
Consequently, Agusto & Co. expects the impaired loan ratio to peak at 6.9% in the short term.
Even so, banks are responding by accelerating write-offs under new regulatory waivers, which should ease pressure before 2026.
Meanwhile, profitability is set to face headwinds.
The sector enjoyed strong foreign exchange gains and high-yield opportunities in 2024, but the CBN’s zero net open position directive limited results.
Looking ahead, Agusto & Co. forecasts a 19.2% drop in profit before tax in 2025, as banks raise provisions and absorb fewer currency revaluation gains.
Nevertheless, the broader outlook remains positive.
With stronger capital buffers, diversified funding, and proactive risk management, banks are positioning themselves for long-term stability.
As Agusto & Co. concludes, the industry is not only adapting to shocks but also converting challenges into opportunities for growth.
