The impairment charges recorded by six financial holding companies rose sharply to N1.49tn in 2025, compared with N1.06tn in 2024, representing a year-on-year increase of N430.39bn, or 40.66 per cent.
This was indicated in the unaudited financial reports of the financial institutions for the year ended December 2025, which were filed with the Nigerian Exchange Limited.
The N430bn year-on-year spike underscores growing stress within loan books across the industry, as banks grapple with deteriorating asset quality and the impact of the Central Bank of Nigeria’s withdrawal of regulatory forbearance last year.
The financial holding companies reviewed included First HoldCo, Ecobank Transnational Incorporated, Stanbic IBTC Holdings, FCMB Group, Sterling Financial Holding Company, and non-interest lender Jaiz Bank.
According to The PUNCH’s analysis of the unaudited reports, the figures show a broad increase in impairment charges across most of the banks reviewed, with only one institution recording a decline over the period.
First Holdco recorded the highest impairment charge in 2025 at N748.13bn, up from N426.29bn in 2024. The increase of more than N321bn marks the largest absolute rise among the banks reviewed. Its banking subsidiary, FirstBank, accounts for the lion’s share of the charges, recording an impairment of N750.73bn. The group’s First Securities Brokers Limited also recorded a N29m impairment charge; however, FirstCap Limited recorded a positive movement of N2.63bn in its impairment line.
Explaining the rationale behind the N748bn impairment charge for losses of the Holdco, the chairman, Femi Otedola, on his X handle stated it was to clean house and “admit old bad loans instead of pretending they do not exist.
That is why profit looks like it crashed by 92 per cent. Painful headline, but it is a serious long-term move. Why do this now? Because the @cenbank is pushing banks to stop kicking problems down the road. So, First HoldCo basically closed the chapter on messy loans from past years, which sends a clear message that borrowing has consequences, and it helps rebuild trust.
“The key point is this: our business itself is STILL strong. It made N2.96tn in interest income and N1.91tn in net interest income, which gave it the strength to take the clean-up and still stay standing. Now at FirstBankngr and beyond, we go into 2026 lighter, cleaner and better prepared for the recapitalisation era and serious growth. Bad loans cleared + strong income engine + long-term thinking = real value creation … F. Ote.”
Pan-African banking group Ecobank followed with N613.26 bn in impairment charges in 2025, compared with N480.57 bn the previous year, reflecting an increase of roughly N132.69 bn. The provision was for loans and advances and other financial assets, with the impairment charges on loans and advances contributing the highest at N535.48bn.
FCMB Group’s impairment charges rose to N86.00bn in 2025 from N41.24bn in 2024, more than doubling year-on-year. Again, the banking subsidiary of the group contributed the highest at N85.74bn.
Sterling Financial Holdings also recorded an increase, posting N26.75bn in 2025 compared with N10.78bn in 2024. Impairment charge on loans, bad debt written off and impairment on investment securities were major contributors to the overall figure. Allowances no longer required dropped to N3.51bn in 2025 from N12.99bn in 2024.
Non-interest lender Jaiz Bank reported impairment charges of N452.08m in 2025, up from N166.33m in the prior year.
Stanbic IBTC Holdings was the only financial holding company to record a decline in impairment charges. The bank posted N14.22bn in 2025, down significantly from N99.36bn in 2024.
In a 13 June circular, the apex bank barred banks from paying dividends and bonuses and investing in foreign subsidiaries over regulatory forbearance in respect of the Single Obligor Limit and other credit facilities. Following the CBN’s directive, the affected banks announced steps that they had taken to exit such positions.
According to the CBN, the withdrawal of forbearance led to a spike in bad loans in the sector. In its latest macroeconomic outlook report, the CBN observed that the banking industry’s non-performing loans ratio climbed to an estimated seven per cent, exceeding the prudential benchmark of five per cent. The CBN said the increase reflected the impact of ending the temporary reliefs earlier granted to banks to cushion the effect of the pandemic on borrowers.
The PUNCH reports that the regulatory forbearance allowed banks to restructure loans affected by the pandemic without immediately classifying them as non-performing. With the withdrawal of the measure, a number of previously restructured facilities have now crystallised as bad loans, pushing the industry ratio above the regulatory ceiling.
The surge in impairments comes against the backdrop of the CBN’s withdrawal of regulatory forbearance introduced during the COVID-19 crisis. The policy had allowed banks to restructure loans without immediately classifying them as non-performing.
Global rating agencies have warned that the exit from regulatory relief will continue to pressure asset quality into 2026. S&P Global Ratings cautioned that Nigerian banks face pressure from tighter regulation but remained hopeful that they would be able to maintain profitability.
In its Nigerian Banking Outlook 2026, released this February, the rating agency stated, “The end of regulatory forbearance will challenge asset quality while increased capital requirements come due and net interest margins come under pressure because of expected interest rate cuts. Despite this, we anticipate Nigerian banks will prove resilient and capable of preserving their profitability. This is due to growth in NII (driven by transaction fees and commission growth) and a declining but still high cost of risk. The latter will remain elevated as the Central Bank of Nigeria has removed regulatory forbearance measures and the creditworthiness of some restructured exposures remains weak. These could weigh on banks’ asset quality in 2026 and beyond, particularly if the oil price drops significantly below our expectations.”
On the bad loans, S&P Global stated, “NPLs increased significantly in 2025 to about 7.0 per cent compared with 4.9 per cent in 2024 because of the end of forbearance on oil-and-gas exposures. The forbearance introduced in 2020 allowed banks to maintain some exposures to this sector in Stage 2, thus limiting provisioning needs. Some banks have proactively written off exposures under forbearance measures, while others are still in the process of restructuring and writing off these exposures. The credit quality of these exposures remains weak, and they continue to be vulnerable to a drop in oil prices. We expect the oil price to average $60 in 2026 and $65 after that, which should be sufficient to keep these exposures afloat and borrowers solvent. Therefore, we expect the NPL ratio to stabilise at six to seven per cent in 2026 and stage 2 loans to remain stable at about 20 per cent – 22 per cent compared with 18 per cent – 20 per cent as of 30 Sept. 2025.
“Banks’ loan books are heavily concentrated by single name, sector, and currency. Approximately 50 per cent of loans are denominated in foreign currency, and roughly one-third are exposed to the oil and gas sector in 2026. This concentration exposes them to both economic shocks and the evolving energy transition risks. Although banks have been reducing upstream exposure, potential reforms driven by the Petroleum Investment Act could shift focus to the downstream sector. Finally, a significant portion of banks’ lending, an average of 50 per cent of gross loans, is concentrated within the top 20 loans, with considerable overlap in borrowers among the largest banks. This high level of single-name and industry concentration further elevates credit risk for certain institutions.”
Similarly, Fitch Ratings, in a commentary last October, stated the expiry of forbearance will result in increased loan impairment charges as “banks reclassify some large stage 2 loans as impaired following the expiry of longstanding systemwide forbearance relating to the classification and provisioning of problem loans (notably oil and gas). This, combined with the expiry of forbearance relating to single-obligor limit breaches, will exert pressure on capital adequacy ratios.
“Mitigants, including restructuring of many stage 2 loans and capital raisings ahead of new paid-in capital requirements, will enable most banks to exit forbearance by end-2025.”
Both agencies emphasise that elevated provisioning levels may persist through 2026, particularly if macroeconomic volatility, including exchange-rate pressures and high borrowing costs, continues to strain obligors.
Despite the spike in impairments, banks have so far maintained profitability, supported by robust interest income and improved margins in a high-rate environment. However, analysts note that sustained high provisioning could erode returns if credit performance weakens further.
Meanwhile, the recapitalisation drive is seen as a buffer against the impact of higher credit losses. Stronger capital positions are expected to enhance resilience as banks adjust to a post-forbearance regulatory regime.
