Nigeria TV Info 

Banks’ Bad Loans Spike After CBN Withdraws Forbearance

Nigeria’s banking sector has seen a noticeable rise in non‑performing loans (NPLs) after the Central Bank of Nigeria (CBN) withdrew pandemic‑era regulatory forbearance measures. According to the CBN’s latest macroeconomic report, the industry’s NPL ratio climbed to an estimated 7% in 2025, surpassing the 5% prudential threshold set by regulators.

Forbearance had previously allowed lenders to restructure distressed loans without immediately classifying them as impaired — effectively concealing potential credit weaknesses. With this safety net removed, many restructured facilities have now been reclassified as bad loans, pushing the aggregate industry ratio above acceptable limits.

While the apex bank insists the financial system remains broadly stable — citing strong liquidity and capital adequacy ratios — the surge in NPLs signals emerging vulnerabilities for credit portfolios. Analysts warn that continued increases could weaken asset quality, strain bank balance sheets, and constrain future lending.

The CBN has also underscored ongoing reforms, including tougher credit‑risk frameworks and accelerated recapitalisation of banks, to bolster risk management and strengthen the sector’s resilience amid a difficult macroeconomic environment.

Key Highlights

• NPL ratio at ~7%, above the 5% regulatory limit after forbearance ended.
• Previously restructured loans now classified as bad, revealing hidden credit stress.
• CBN says banking system still stable but warns of risks to profitability and balance sheets.
• Policy shifts include stronger capital requirements and tighter credit‑risk oversight.