The share of bad loans in Nigeria’s banks rose to 8.03 percent in January as the end of pandemic relief forced lenders to reveal long hidden troubled loans.
The figure, from the Central Bank of Nigeria (CBN), sits well above the regulator’s five percent ceiling for nonperforming loans (NPLs) and marks a jump from 7.51 percent in December.
The CBN said the rise stemmed largely from reclassifying loans after it wound down regulatory relief introduced during the COVID-19 pandemic. That relief had let banks restructure distressed credit without immediately labelling it bad.
With the forbearance programme ending, lenders must now measure those exposures against standard prudential rules. Several previously restructured loans have been reclassified as nonperforming, surfacing problems the temporary support had masked. The increase comes seven months after the central bank began removing the measures.
The cleanup is part of a wider CBN push for discipline. In June 2025 it told banks relying on forbearance to suspend dividends, defer executive bonuses, and halt new investments in foreign subsidiaries until their capital and provisioning fully met the rules.
The regulator has also moved to deny extra credit and some services to large borrowers already holding bad loans, aiming to curb the systemic risk from major defaults and tighten repayment discipline.
Despite the rise, the CBN insisted “the Nigerian banking industry remained resilient.” The industry’s liquidity ratio climbed to 63.38 percent in January, far above the 30 percent minimum, while capital adequacy held at 12.05 percent, above the 10 percent floor.
Even so, the bank warned that a sustained climb in bad loans could erode balance sheets and asset quality. Higher interest rates, a weaker naira, and tough economic conditions have made debt harder to service, raising the risk of further defaults.
