LAGOS, June 2 – Nigeria’s banking sector has recorded a rise in non-performing loans (NPLs), with the ratio climbing to 8.03% in January 2026, according to the Central Bank of Nigeria (CBN), as the effects of recent regulatory changes continue to filter through the industry.
The figure represents an increase of 0.52 percentage points from 7.51% in December 2025 and remains above the CBN’s prudential benchmark of 5.0%.
The rise follows the end of key regulatory forbearance measures that previously allowed banks to restructure distressed loans without immediately classifying them as non-performing. With the policy now withdrawn, lenders have begun reclassifying affected loans, pushing up reported NPL levels.
According to the CBN’s January 2026 Economic Report, the increase in bad loans was largely driven by this reclassification process after the removal of the forbearance framework.
Despite the rise in impaired loans, the banking sector maintained strong liquidity conditions during the period. The liquidity ratio increased to 63.38% in January from 57.22% in the previous month, remaining well above the regulatory minimum requirement of 30%.
The improvement shows that banks continue to hold sufficient liquid assets to meet short-term obligations and support ongoing lending activities.
Capital strength also remained within acceptable limits. The industry’s capital adequacy ratio stood at 12.05%, slightly lower than 12.35% in the previous month, but still above the 10% regulatory threshold.
The CBN noted that these indicators reflect continued resilience in the financial system, even as credit risks rise following the withdrawal of loan restructuring support.
However, the apex bank has previously warned that higher levels of non-performing loans could place pressure on profitability and limit banks’ ability to extend credit, especially in a high-interest rate environment.
The regulator has also tightened oversight, restricting access to further credit for borrowers with classified non-performing loans as part of efforts to strengthen discipline in the banking system.
