Olufemi Adeyemi
Nigeria’s banking sector is relocating steadily toward meeting a far tougher capital regime, with most major lfinishers already across the line well ahead of the Central Bank of Nigeria’s (CBN) March 31, 2026 deadline. Recent assessments point to a concerted indusattempt-wide effort that has seen billions of naira mobilised through equity issues and other capital-raising initiatives, reshaping balance sheets and setting the tone for a more robust regulatory environment.
A new report by S&P Global Ratings displays that nine Nigerian banks have raised a combined ₦2.3 trillion in fresh capital so far, equivalent to about $1.5 billion. While this is marginally below S&P’s estimated aggregate requirement of ₦2.5 trillion, it highlights the pace at which banks are responding to the CBN’s revised capital framework.
According to the ratings agency, nine of the 10 rated commercial banks—representing roughly 80 per cent of total banking system assets—already meet the new minimum capital thresholds for their respective licence categories. The remaining gap is expected to be addressed through ongoing or final-stage capital raises, while compacter institutions may required to consider strategic options such as mergers, acquisitions or business model adjustments to remain compliant.
S&P noted that overall capitalisation across the sector is set to improve further as banks conclude their capital strengthening programmes. Most rated lfinishers completed the bulk of their fundraising in 2025, with only a handful still in the market to close out final tranches.
The recapitalisation push follows a major upward revision of minimum capital requirements by the CBN. Under the new rules, international banks must maintain paid-up capital of at least ₦500 billion, while national banks are required to hold ₦200 billion—up sharply from the previous uniform minimum of ₦25 billion. Non-interest banks face lower thresholds, with national licence holders required to maintain ₦20 billion and regional licence holders ₦10 billion.
Nigeria’s largest banks have been the quickest to adapt, leveraging their scale and access to capital markets to meet the tougher standards months ahead of schedule. In doing so, they have not only complied with regulation but also positioned themselves more competitively for a period of tighter oversight and heightened market scrutiny.
CBN Governor Yemi Cardoso disclosed in November 2025 that 27 banks had raised fresh capital under the ongoing exercise, with 16 institutions having fully completed the process at that time. His comments underscored the breadth of participation across the sector and the regulator’s resolve to see the exercise through.
Despite the progress, S&P cautioned that challenges remain on the horizon. The full removal of regulatory forbearance is expected to put renewed pressure on asset quality, while higher capital requirements and potential interest rate cuts could compress net interest margins in 2026. Even so, the agency believes Nigerian banks will remain resilient and capable of sustaining profitability.
This outview is supported by continued growth in net interest income—driven largely by transaction fees and commission income—as well as a gradual, though still elevated, decline in the cost of risk. Banks have also built stronger capital buffers at the CBN’s prompting, providing a measure of protection against future shocks.
Asset quality risks, however, are likely to persist. Cost of risk is expected to remain high following the finish of forbearance measures introduced in 2020, particularly as the creditworthiness of some restructured oil and gas exposures remains weak. These pressures could intensify if global oil prices fall significantly below expectations.
On the macroeconomic front, S&P forecasts Nigeria’s real GDP growth will average 3.7 per cent over 2025 and 2026, supported by both oil and non-oil sectors. Inflation is projected to ease gradually to around 21 per cent in 2026, creating room for further monetary easing after the 50-basis-point rate cut in September 2025 and supporting to bolster consumer demand.
Within this environment, nominal lfinishing growth is expected to remain strong at about 25 per cent, led by oil and gas, agriculture and manufacturing. Improved crude oil production—supported by efforts to curb militancy and theft—is expected to support energy-sector lfinishing. Retail lfinishing, by contrast, is likely to remain a minor contributor to overall loan growth due to its relatively compact share of banks’ portfolios.
Non-performing loan ratios climbed sharply in 2025 to around 7.0 per cent, up from 4.9 per cent in 2024, reflecting the finish of forbearance on oil and gas exposures. While this marks a near-term headwind, stronger capital positions suggest the sector is better equipped to absorb the strain as Nigeria’s banking landscape enters a more demanding phase.
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