Non-performing loans (NPLs) in Nigeria’s banking industry rose to 8.03% in January 2026, marking a noticeable deterioration in asset quality seven months after the Central Bank of Nigeria (CBN) ended its regulatory forbearance programme.
According to the CBN’s January 2026 Economic Report, the NPL ratio increased by 0.52 percentage points from 7.51% in December 2025. The current level remains significantly above the regulator’s prudential limit of 5%.
The report directly linked the rise to the reclassification of previously restructured loans after the withdrawal of forbearance measures.
Impact of Forbearance Withdrawal
In June 2025, the CBN directed banks benefiting from regulatory relief on credit exposures and single obligor limits to suspend dividend payments, defer executive bonuses, and stop new investments in foreign subsidiaries. The apex bank also terminated COVID-19-era forbearance effective June 30, 2025, requiring banks to classify affected facilities strictly according to prudential guidelines.
As a result, many loans that had been restructured during the pandemic have now crystallised as non-performing, pushing the industry-wide NPL ratio higher.
Regulatory Crackdown Continues
The CBN has introduced several measures to strengthen credit discipline:
In February 2025, bank directors with non-performing insider-related loans were ordered to step down immediately, with banks directed to recover such debts through collateral enforcement, including seizure of the directors’ shareholdings.
In March 2026, the regulator banned banks from granting additional credit facilities or banking services to large borrowers with non-performing loans recorded in the Credit Risk Management System (CRMS) or licensed credit bureaus.
These actions are aimed at reducing moral hazard, improving risk management, and protecting the stability of the financial system.
Outlook
The CBN warned that a continued rise in bad loans could weaken banks’ balance sheets and create systemic risks. To tackle the problem, the apex bank recommended full integration of the Global Standing Instruction (GSI) framework across all financial institutions to improve loan recovery processes and enforce better credit discipline.
The latest increase in NPLs highlights the challenges banks face as regulatory relief measures are removed, forcing them to confront and resolve long-standing credit weaknesses that were previously masked.
