Nigeria Banks Face Rising Bad Loans After CBN Ends Pandemic Relief
Nigeria’s Banking Industry is confronting a renewed rise in non-performing loans following the Central Bank of Nigeria’s (CBN) withdrawal of regulatory forbearance measures introduced during the COVID-19 pandemic, Global Mirror News has gathered.
Recent financial stability data indicate that bad loans across the sector have climbed above the CBN’s prudential benchmark, reflecting underlying credit stress that had been temporarily masked by regulatory relief.
The forbearance policy, which allowed banks to restructure distressed loans without immediately classifying them as non-performing, was designed to cushion the economy and financial system during the height of the pandemic.
With the Policy now fully withdrawn, several restructured facilities have reverted to impaired status.
Industry analysts say the increase in bad loans highlights the challenges facing borrowers amid tighter monetary conditions, high inflation, and exchange-rate pressures that have affected businesses and households.
Sectors such as manufacturing, trade, and oil and gas are reported to be among the most exposed, as higher operating costs and weaker consumer demand continue to strain cash flows.
The CBN has, however, maintained that Nigeria’s banking system remains broadly resilient.
According to the Apex Bank, key indicators including capital adequacy and liquidity ratios are still above regulatory minimums, providing buffers against potential losses.
Banks have also been encouraged to strengthen credit risk management, intensify loan recovery efforts, and improve underwriting standards to prevent further deterioration in asset quality.
Global Mirror News gathered that Market watchers note that Nigeria’s experience mirrors developments in other emerging economies where the removal of pandemic-era support has exposed latent vulnerabilities in the financial system.
Globally, regulators are walking a fine line between restoring prudential discipline and ensuring that tightening measures do not choke economic recovery.
For investors, the rising non-performing loans underscore the importance of close monitoring of balance-sheet health and regulatory responses.
Credit rating Agencies and International financial institutions are expected to keep Nigeria’s banking sector under review as reforms continue and macroeconomic conditions evolve.
As the CBN pushes ahead with broader financial sector reforms, stakeholders say sustained economic growth, improved business conditions, and effective enforcement of credit recovery frameworks will be critical to reversing the trend and safeguarding long-term stability in Africa’s largest Economy.
