By Mathew Chima

Banks’ non-performing loans (NPLs) ratio rose to 7.51 percent in December 2025, exceeding the Central Bank of Nigeria’s (CBN) prudential benchmark of 5 percent, according to the regulator’s 2025 annual report and atatement of accounts.

The report showed that the industry’s NPL ratio increased from 4.5 percent in 2024 and 4.07 percent in 2023.

According to the CBN, the increase reflected banks’ post-forbearance adjustments following the return to standard credit risk recognition.

“The increase reflected banks’ post-forbearance adjustments, marking a return to standard credit risk recognition and greater transparency,” the report said.

Despite the increase in bad loans, the apex bank said the banking sector remained sound and stable, with key financial soundness indicators broadly within regulatory thresholds.

The report said the industry’s capital adequacy ratio moderated to 12.35 percent at the end of 2025 from 15.25 percent a year earlier.

According to the CBN, the decline reflects strong growth in risk-weighted assets driven by increased banking activity and financial intermediation.

The report also showed that the industry’s liquidity ratio improved to 60.27 percent in 2025 from 48.57 percent a year earlier, with only one bank falling below the minimum regulatory liquidity ratio during the review period, compared with five banks in 2024.

The CBN said the stress tests conducted during the year reaffirmed the resilience of the financial system under mild and moderate adverse scenarios.

It added that the ongoing banking sector recapitalisation programme is expected to strengthen banks’ capital position, improve their resilience to shocks and enhance their capacity to support economic growth.

CONSUMER CREDIT FALLS FOR FIRST TIME SINCE 2019

The report also showed that Nigeria’s consumer credit outstanding fell by 19.89 percent to N3.78 trillion in 2025 from N4.72 trillion in the previous year.

Consumer credit outstanding is the total amount of active, unpaid debt that individuals owe to financial institutions, retailers, and other lenders for personal, non-business purchases at a specific point in time.

According to the CBN, the decline was the first recorded since December 2019.

“Consumer credit outstanding moderated, in response to the dynamic interest rate environment,” the report said.

The apex bank attributed the decline to a reduction in personal loans.

Source: TheCable