NPL Rises To 9.85% As Banks Exit Regulatory Forbearance

The non-performing loans (NPLs) ratio in Nigeria’s banking sector rose sharply to 9.85 per cent in February 2026, exceeding the regulatory benchmark of 5.0 per cent, following the withdrawal of regulatory forbearance and the reclassification of loans, the Central Bank of Nigeria (CBN) has said.

According to the CBN’s February 2026 Economic Report, the deterioration in asset quality occurred despite the banking industry maintaining strong liquidity and capital buffers.

The report stated that, “Asset quality, however, weakened following the withdrawal of regulatory forbearance, as loan reclassification drove the non-performing loans (NPLs) ratio higher by 1.82 percentage points to 9.85 per cent, exceeding the 5.00 per cent prudential threshold.”

The latest figure represents an increase from 8.03 per cent recorded in January 2026. Despite the rise in bad loans, the apex bank maintained that the financial system remained resilient, supported by strong liquidity and adequate capitalisation.

“The Nigerian banking sector sustained strong systemic resilience, with most financial soundness indicators remaining within regulatory benchmarks,” the report noted.

The industry liquidity ratio rose to 69.27 per cent in February from 63.38 per cent in January, remaining well above the prudential minimum of 30 per cent. The CBN said the development underscores banks’ strong capacity to meet short-term obligations and support financial intermediation.

Similarly, the capital adequacy ratio (CAR) improved to 12.55 per cent from 12.05 per cent in the preceding month, remaining above the regulatory minimum requirement of 10 per cent. According to the report, the improvement reflects the sector’s “robust solvency, and resilience against credit and market risks.”

The CBN further noted that monetary conditions eased during the review period, while liquidity in the banking system strengthened, contributing to lower interbank rates and supporting overall financial stability.