The Nigerian banking industry is poised to receive an additional N900 billion capital injection as several banks accelerate efforts to meet regulatory capital requirements, although the expiration of regulatory forbearance is expected to moderate overall performance, according to Agusto & Co. Limited.
Agusto & Co., a leading business information provider and pan-African credit rating agency, recently published its comprehensive 2025 Nigerian Banking Industry Report. The report offers an in-depth review of the sector, covering its structure, competitive dynamics, regulatory framework, financial health, emerging trends, and near-term outlook.
Despite global and domestic macroeconomic challenges, Nigeria’s banking industry has demonstrated remarkable resilience, maintaining an upward growth trajectory. Total assets and contingents are projected to reach N242.3 trillion ($151.4 billion at N1,600/$) by the end of 2025, representing a 44.9 percent year-on-year increase from N186.6 trillion ($121.5 billion at N1,536/$) recorded as of December 31, 2024.
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Even amid funding pressures caused by a high-interest rate environment and a contractionary monetary policy stance, the industry sustained strong liquidity, with a liquidity ratio rising to 59.4 percent in 2024 from 43.5 percent at the end of 2023. Agusto & Co. expects this ratio to surpass 60 percent by year-end 2025, supported by favorable, though gradually declining yields on treasury securities.
Banks are increasingly adopting innovative funding strategies to ease funding constraints, as evidenced by a notable increase in commercial paper issuances. In the first seven months of 2025 alone, approximately N750 billion worth of commercial papers were issued by various players. This trend is expected to continue, particularly as yields moderate in the latter part of the year.
A key driver of recent recapitalisation efforts was the introduction of a minimum paid-up capital directive in March 2024. Although the regulation will only become fully effective by March 31, 2026, the industry has already witnessed significant capital raising activities. In 2024, 16 banks collectively raised about N1.7 trillion, while roughly N800 billion was raised in the first seven months of 2025. To date, eight banks have already met the minimum paid-up capital requirement ahead of the deadline, though mandatory capital verification processes by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) are still ongoing for some of the raised funds.
Notably, domestic investors have provided the majority of the capital raised over the past 19 months, underscoring strong local confidence in the Nigerian banking sector. Looking ahead, Agusto & Co. anticipates an additional N900 billion capital injection by the end of 2025, as many banks intensify efforts to comply with the minimum capital directive. The influx will not only provide a critical buffer against current business risks but also support near-term growth ambitions within the industry.
