At least eleven commercial banks in Nigeria breached the regulatory limit for non-performing loans (NPLs) in April 2025.
This was disclosed by Mustapha Akinkunmi, a member of the Central Bank of Nigeria’s Monetary Policy Committee (MPC).
In his personal statement following the 300th MPC meeting in May recently published by the CBN on its website, Akinkunmi disclosed that the NPL ratio climbed to 5.62%, crossing the CBN’s prudential benchmark of 5%.
The breach, he noted, was largely driven by loan reclassifications following annual risk assessments conducted across the banking industry.
He further revealed that eleven banks had crossed the regulatory limit, compared to just six banks a year earlier.
However, he did not disclose the names of the banks in his personal statement.
This development highlights emerging credit quality concerns despite the broader indicators of resilience in Nigeria’s banking sector, which has recently been undergoing a major recapitalisation push.
His personal statement read, “Meanwhile, the Non-Performing Loans (NPL) ratio rose to 5.62% in April 2025, exceeding the 5% prudential threshold, largely due to loan reclassifications following annual risk assessments. 11 banks were above the NPL limit, up from 6 a year earlier.
“The CBN may consider temporary forbearance measures for sectors such as oil and gas, which are exposed to external shocks, to avoid systemic risk.”
Despite the NPL breach, Akinkunmi stressed that Nigeria’s banking system remains fundamentally strong. He pointed to the significant improvement in key financial ratios, especially capital adequacy. The industry-wide Capital Adequacy Ratio (CAR) rose from 10.81% in April 2024 to 15.55% in April 2025 a development he attributed to the CBN’s ongoing recapitalisation directive.
“The increase in CAR from 10.81% in April 2024 to 15.55% in April 2025 is largely attributed to ongoing bank recapitalization efforts. So far, 19 banks have raised additional capital, and 7 have met new requirements. However, Nigeria’s CAR still lags international benchmarks, necessitating further strengthening to enhance systemic resilience,” Akinkunmi noted. The improved capital position enhances banks’ ability to absorb shocks and maintain lending activity in the face of economic uncertainty.
In addition to higher capital buffers, liquidity across the banking system has strengthened. The Liquidity Ratio increased from 50.6% in January to 55.4% in March 2025. Net interest margin also rose to 67.0% in April, supported by declining operating costs.
Other indicators confirm the sector’s robustness. Total bank assets grew by N30.83 trillion year-on-year, representing a 22.35% expansion. Industry deposits rose by N19.93 trillion (23.58%), while credit availability increased by N5.99 trillion (10.89%). In just two months March and April 2025 banks issued 19,504 new credit facilities worth N417.1 billion, reflecting strong financial intermediation despite macroeconomic headwinds.
The Deputy Governor of Economic Policy at the Central Bank of Nigeria, Muhammad Sani Abdullahi, in his personal statement, also clarified that the increase in NPLs was not indicative of a generalised deterioration in asset quality.
He stressed that the CBN continues to monitor the banking sector closely and that stability remains a top priority.
“The banking sector remains robust, continuing to support economic activities, with non-Performing Loans (NPLs) at 5.6 per cent, which is above the prudential threshold of 5.0 per cent. The rise in NPLs is attributable to the reclassification of loans during the annual risk assets examination.
“The banking sector remains robust, continuing to support economic activities, with non-Performing Loans (NPLs) at 5.6 per cent, which is above the prudential threshold of 5.0 per cent. The rise in NPLs is attributable to the reclassification of loans during the annual risk assets examination.
“Notwithstanding, the Central Bank remains vigilant in ensuring the banking system’s stability and soundness.,” he said.
Naijaonpoint earlier reported that the CBN issued a fresh directive instructing banks operating under regulatory forbearance to suspend dividend payments, defer bonuses for executives, and halt investments in foreign subsidiaries or offshore ventures.
According to Renaissance Capital’s estimates, Zenith Bank, FirstBank, and Access Bank rank highest in terms of forbearance exposure.