In 2025, Nigeria’s banks faced a turning point as the CBN ended pandemic loan relief.
Previously, the CBN had allowed banks to restructure loans without classifying them as non-performing.
Pandemic Relief Ends
Once the relief ended, loans that seemed manageable began to reveal their actual risks.
Consequently, the sector’s Non-Performing Loans (NPL) ratio rose to 7%, surpassing the 5% prudential limit.
This increase occurred because banks could no longer apply special treatment to restructured loans.
“The NPL ratio stood at 7%, reflecting the withdrawal of COVID-19 forbearance,” the CBN explained.
Nevertheless, liquidity remained strong at 65%, well above the 30% minimum requirement.
Similarly, capital adequacy held at 11.6%, exceeding the 10% regulatory threshold.
These buffers allow banks to absorb shocks and continue normal operations without stress.
Rising Risks
However, rising NPLs heighten credit risk as borrowers face higher interest rates and economic pressures.
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If credit discipline weakens, banks could suffer lower profitability, reduced lending, and weaker risk resilience.
Therefore, the CBN urged banks to integrate the Global Standing Instruction framework more effectively.
Stronger recoveries will help banks reduce losses and improve capital buffers.
Moreover, ongoing recapitalisation should strengthen balance sheets and support economic growth.
Throughout most of 2025, the CBN maintained tight monetary conditions to stabilise prices and exchange rates.
Even after the September rate cut, the bank prioritised financial system stability.
Strengthening Bank’s Loans
Banks under forbearance now suspend dividends, defer executive bonuses, and halt foreign investments.
These measures reinforce capital buffers and protect balance sheets from unexpected shocks.
Renaissance Capital highlighted that Zenith, FirstBank, and Access Bank carry significant exposure to forbearance loans.
Therefore, the CBN continues close supervision to prevent systemic risks.
Looking ahead, banks must maintain strong capital, diversify loan portfolios, and strengthen risk management.
Furthermore, recapitalisation efforts and regulatory reforms aim to support stability and boost investor confidence.
