On June 2, 2025, ten commercial banks listed on the Nigerian Exchange (NGX) reported cumulative loan impairment charges of N3.77 trillion from 2023 to the first quarter of 2025, reflecting the severe impact of Nigeria’s macroeconomic volatility. The charges, equivalent to approximately $2.39 billion at the exchange rate of N1,579/$1, were recorded as N1.34 trillion in 2023, N2.13 trillion in 2024, and N297.10 billion in Q1 2025. This surge in bad loans stems from a mid-2023 naira devaluation, soaring inflation rates exceeding 30%, and elevated interest rates, which have strained corporate profitability and household incomes, increasing debt servicing costs. Despite these challenges, banks like Fidelity, Access Holdings, and Zenith have demonstrated resilience through stable or improving risk metrics, signaling cautious optimism for the sector’s ability to navigate the economic storm.
Zenith Bank topped the list with the highest loan losses at N1.03 trillion over the period, including N401 billion in 2023, N594 billion in 2024, and N36 billion in Q1 2025. Despite this, Zenith strengthened its risk buffers, with its non-performing loan (NPL) coverage ratio rising to 223% in 2024 from 171% in 2023, and its cost of risk remaining stable at 7.3%. The bank’s diversified portfolio, with 30.5% exposure to oil and gas and 26.6% to general commerce, and 96% of loans in Stage 1 and Stage 2, underscores its robust risk management. Ecobank Transnational Incorporated (ETI) followed with N869.5 billion in losses, comprising N288.4 billion in 2023, N484.5 billion in 2024, and N96.6 billion in Q1 2025. These impairments, representing over 29% of ETI’s N2.9 trillion net interest income, highlight a significant drag on earnings, though the bank has maintained operational stability across its regional operations.
First Bank Holdings (First Holdco) recorded the third-highest losses at N586.94 billion, with N174.7 billion in 2023, N371 billion in 2024, and N41.2 billion in Q1 2025, equating to 25% of its N2.3 trillion net interest income. Asset quality deteriorated significantly, with the NPL ratio doubling to 10.2% in 2024 from 4.7% in 2023, and the NPL coverage ratio dropping to 51% from 92%, signaling heightened credit risks. United Bank for Africa (UBA) reported N423.63 billion in losses, with N154 billion in 2023, N258.9 billion in 2024, and N11.1 billion in Q1 2025. UBA’s cost of risk remained steady at 3.18% in 2024, up slightly from 3.09% in 2023, indicating stable loan quality despite the economic headwinds.
Guaranty Trust Holding Company (GTCO) incurred N253.772 billion in loan losses, with N102.8 billion in 2023, N137 billion in 2024, and N13.972 billion in Q1 2025, representing 42% of its N1.81 trillion net interest income. Access Holdings reported N247.42 billion in losses, including N84.4 billion in 2023, N92.9 billion in 2024, and N70 billion in Q1 2025, or 13.75% of its N1.80 trillion net interest income. Access Holdings maintained a low cost of risk at 1.25% in 2024, from 1.22% in 2023, and a stable NPL ratio of 2.76%, reflecting effective risk management. Fidelity Bank recorded N128.88 billion in losses, or 11.47% of its N1.098 trillion net interest income, with a cost of risk improving to 1.5% in 2024 from 2.6% in 2023, and an NPL ratio of 3.0%, down from 3.5%.
Stanbic IBTC reported N109.59 billion in impairments, equivalent to 14.9% of its N735.53 billion net interest income, with N16.8 billion in 2023, N88.7 billion in 2024, and N4.10 billion in Q1 2025. Its NPL ratio rose to 4.2% from 2.4%, with a cost of risk at 3.5% in 2024. First City Monument Bank (FCMB) saw N93.55 billion in losses, or 19.12% of its N489.39 billion net interest income, while Wema Bank recorded the lowest at N26.66 billion, or 8.69% of its N306.74 billion net interest income, with an improved NPL ratio of 3.86% in 2024 from 4.31% in 2023.
The macroeconomic environment(tracking, including the Naira’s 40% devaluation in 2023 and sustained high inflation at over 30% has significantly increased credit risk, as borrowers face higher repayment burdens. The Central Bank of Nigeria’s (CBN) tight monetary policy with the Monetary Policy Rate at 27.5% and Cash Reserve Ratio at 58% for commercial banks has further raised borrowing costs. contributing to a 4.9% NPL ratio industry-wide-wide, as noted by Fitch Ratings. The Naira’s exchange rate, closing at N1,630/$1 in the parallel market and N1,585.50/$1 in the official market by May 30, 2025, has compounded foreign currency loan defaults, particularly in oil and gas and manufacturing sectors.
Despite these pressures, bank executives project confidence. Bank’s Fidelity, CEO, Nneka Onyeali-Ikpe, highlighted a 12% net interest margin in 2024, up from 8.1%, driven by a high-yield environment, with stable funding costs at 5.2%. Access Holdings emphasized proactive risk monitoring, targeting an NPL ratio below 5% in 2025. Zenith Bank’s diversified portfolio and high provisioning levels provide a buffer against further deterioration. Posts on X, such as from @Nairametrics, underscore the macroeconomic challenges, while @ruffydfire highlights banks’ resilience, noting their strategic focus on risk management.
The CBN’s foreign exchange reforms, including clearing a $7 billion backlog in foreign currencies and introducing a new forex matching platform, have improved liquidity and narrowed the official-parallel market gap, supporting lending capacity. Private sector credit rose to N77.9 trillion in April 2025, up from N76.2 trillion in March, signaling increased economic activity. However, analysts warn that sustained high interest rates and inflation could drive NPLs higher, potentially triggering mergers among smaller banks struggling with capital requirements, as per Fitch Ratings.
The banking sector’s ability to recover from these losses reflects robust risk frameworks, but challenges remain. Enhanced provisioning, as seen in Zenith’s 223% coverage ratio, and digital transformation efforts are critical to sustaining stability. The sector’s resilience is further evidenced by Moody’s recent upgrade to Nigeria’s credit rating to B3, citing improved fiscal and external positions. As Nigeria navigates global oil price risks, with OPEC+ planning a 411,000 barrels per day production increase in July 2025, banks must balance growth with prudent credit management to mitigate future impairments and support economic recovery.
