The withdrawal of the Central Bank of Nigeria’s (CBN) COVID-19 regulatory forbearance has pushed the banking industry’s non-performing loans (NPLs) ratio well above the apex bank’s prudential threshold, according to the CBN’s First Quarter 2026 Economic Report.
The report showed that the industry’s NPL ratio rose to 9.94 per cent in the first quarter of 2026, exceeding the CBN’s maximum benchmark of 5.0 per cent. This represents an increase of 2.43 percentage points from 7.51 per cent recorded in the fourth quarter of 2025.
The CBN attributed the sharp rise in bad loans to the discontinuation of pandemic-era regulatory relief measures introduced during the COVID-19 crisis, which were designed to cushion borrowers and preserve financial system stability.
According to the report, the withdrawal of the long-standing forbearance was intended to strengthen transparency and accountability within the banking sector by ensuring that impaired credit facilities are properly recognised.
“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, above the 5.00 per cent threshold,” the report stated.
Despite the deterioration in asset quality, the CBN maintained that the Nigerian banking industry remains resilient, noting that most financial soundness indicators continue to exceed regulatory minimum requirements.
The report highlighted strong capital buffers, adequate liquidity and ongoing supervisory oversight as key factors supporting the stability of the financial system despite the increase in non-performing loans.
Regulatory forbearance had allowed banks to restructure loans affected by the COVID-19 pandemic without immediately classifying them as non-performing. However, with the withdrawal of the concessions, several restructured facilities have now been reclassified as non-performing loans (NPLs), resulting in the industry’s NPL ratio rising above the regulatory limit.
