Bad loans surge in Nigerian banks as CBN tightens regulations
Nigeria’s banking sector is seeing a rise in bad loans after the Central Bank of Nigeria (CBN) ended regulatory forbearance measures. The latest data shows that non-performing loans have exceeded prudential thresholds, raising concerns about asset quality. CBN has introduced several directives to strengthen credit discipline and protect financial stability. Key figures, including Dr. Muhammad Abdullahi and Aku Odinkemelu, have highlighted the risks posed by rising bad loans.
TLDR
- Bad loans in the banking sector rose to 8.03 per cent in January 2026, up from 7.51 per cent in December 2025, according to the CBN’s January 2026 Economic Report.
- The increase followed the withdrawal of regulatory forbearance, with the CBN directing banks in June 2025 to suspend dividends and defer bonuses for those still benefiting from reliefs.
- The CBN ordered bank directors with non-performing insider-related loans to step down in February 2025 and issued further restrictions in a letter dated March 12, 2026.
- Large borrowers with non-performing loans are now barred from obtaining additional credit or certain banking services.
- Despite the rise in bad loans, the industry’s liquidity and capital adequacy ratios remain above regulatory minimums, but regulators warn that rising non-performing loans could threaten financial stability.
