The banking recapitalisation exercise has a Q1 2026 deadline, and in preparation, many Nigerian banks have been strengthening their equity base. Collectively, banks have raised over N2.5 trillion through recapitalisation efforts, both domestically and internationally.
However, recapitalisation is not the only major development reshaping the industry. In June 2025, the Central Bank of Nigeria (CBN) ended the regulatory forbearance measures that had been in place since 2020. The removal of this support means banks must now reclassify certain loans appropriately, while also ensuring full compliance with the single obligor limit rules.
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Drawing on insights from Agusto & Co’s latest Nigerian banking industry report, BusinessDay highlights four key trends that will define the sector before the end of 2025.
Aggressive capital raising
Between 2024 and mid-2025, banks raised approximately N2.5 trillion in fresh capital, with N800 billion of that amount secured in 2025 alone. Still, compared to the estimated N3.7 trillion required as of May 2024, there remains a shortfall of about N1.2 trillion. Agusto & Co. projects that an additional N900 billion will be needed before the deadline.
With less than eight months to go, capital raising activity is expected to intensify, particularly in Q4 2025. So far, eight banks have already met the new minimum capital threshold.
Among the tier-1 players, UBA and First Holdco are still working toward the N500 billion minimum capital requirement. UBA is on course to meet the mark if its ongoing N157 billion rights issue is fully subscribed, having already raised N239.4 billion in the first tranche of the offer in late 2024.
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First Holdco still needs at least N102 billion to reach the target. Reports indicate that the group plans a private placement of shares to bridge the gap.
Banking profits set to dip in 2025
Early Q1 and H1 2025 results suggest that profits will decline this year. In FY 2024, banks benefitted significantly from the steep depreciation of the naira and the prevailing high-interest rate environment—factors that had bolstered earnings since 2023.
But with the Monetary Policy Rate now stable and the naira showing signs of steadiness, the era of windfall gains appears to be over. Agusto & Co. projects that industry profits could fall by as much as 19.4 percent by year-end 2025. The rating agency attributes this decline to higher impairment charges from increased write-offs, reduced foreign currency revaluation gains, and the expiration of regulatory forbearance.
Rising non-performing loans
The end of forbearance measures and stricter enforcement of the single obligor limit are expected to drive a rise in non-performing loans (NPLs). At the close of 2024, the industry’s NPL ratio stood at 5.2 percent, up from 4 percent in 2023.
This figure is projected to climb further to 6.9 percent by the end of 2025, as previously sheltered exposures are fully reclassified. Analysts, however, expect the ratio to improve in 2026 once balance sheet clean-ups take effect.
Commercial paper issuances
In line with the industry’s strong liquidity position, banks are expected to tap the short-term money market through commercial paper issuances increasingly. Already, lenders have raised about N750 billion from commercial papers this year. With yields projected to decline further into 2025, more banks are likely to leverage this funding window before the year closes.
