Figures cited by Vanguard show that the non-performing loans (NPLs) ratio within the Nigerian banking sector rose to 9.94 per cent in the first quarter of 2026, exceeding the Central Bank of Nigeria’s (CBN) regulatory target of 5.0 per cent. The surge in delinquent debt was primarily triggered by the final withdrawal of long-standing COVID-19 forbearance measures previously extended to protect commercial lenders and borrowers from widespread defaults.
Despite the recorded rise in impaired assets, official economic reports indicate that the overarching financial system maintains structural resilience. The sector’s liquidity ratio strengthened significantly to 67.32 per cent, comfortably surpassing the statutory 30 per cent requirement, while overall capital adequacy ratios remained well within acceptable risk limits.
Confirming the trend, the Central Bank of Nigeria noted in its Q1 financial review that “with the withdrawal of the Bank’s long-standing COVID-19-related forbearance measures to promote transparency and accountability in the banking system, the non-performing loans ratio stood at 9.94 per cent.” Additionally, BusinessDay reported that financial analysts view the adjustment as necessary for transparency, quoting market experts who observed that “the expiration of emergency relief reflects actual credit realities without endangering systemic liquidity.”
Echotitbits take:
Stripping away regulatory forbearance exposes the true condition of commercial loan portfolios following years of macro-economic pressures and currency adjustments. While high liquidity buffers prevent immediate panic, commercial banks will likely tighten underwriting guidelines, which could temporarily constrain credit flow to small and medium enterprises. Investors should watch how major commercial institutions adjust provisioning in their upcoming half-year earnings statements.
Source: Vanguard – https://www.vanguardngr.com/2026/08/withdrawal-of-covid-19-forbearance-pushes-banks-bad-loans-above-cbn-limit/, August 5, 2026
Photo credit: The Guardian
