E-Financial
Banks’ N1.96Trn Black Hole: Who Took the Loans, Who Defaulted, and Why the Real Economy Suffers
By Blaise Udunze
Nigeria’s banking sector has entered a season of reckoning. Eight of the nation’s biggest banks have collectively booked N1.96 trillion in impairment charges in just the first nine months of 2025 which represents a staggering 49 percent increase from the N1.32 trillion recorded in the same period of 2024.
Behind these figures lies a deeper question that speaks to the very soul of Nigerian finance on who received these loans that have now turned sour? Were they the small and medium enterprises (SMEs), entrepreneurs, and job creators that fuel real economic growth, or were they politically connected insiders and corporate giants whose failures are now being quietly written off at the expense of the public trust?
The Central Bank of Nigeria (CBN) is unwinding its pandemic-era forbearance regime, a policy that allowed banks to restructure non-performing loans and delay recognizing potential losses. It was a relief measure meant to protect the economy during the COVID-19 shock. But as the CBN begins to phase out this regulatory cushion, the hidden weaknesses in many banks’ balance sheets are now coming to light.
The apex bank has since placed several lenders under close supervisory engagement, restricting them from paying dividends, issuing executive bonuses, or expanding offshore operations until they meet prudential standards. Those that have satisfied the conditions are being gradually transitioned out ahead of the full forbearance unwind scheduled for March 2026. This shift, though painful, is forcing banks to confront the true state of their loan books and the picture emerging is anything but flattering.
A review of financial statements of Nigeria’s top listed banks reveals the distribution of impairment charges as of the third quarter of 2025.
– Zenith Bank Plc leads the pack with an eye-popping N781.5 billion in impairments, a 63.6 percent jump from N477.8 billion in 2024. Most of this amount to about N711 billion which occurred in the second quarter of 2025, driven by losses on foreign-currency loans and the end of regulatory forbearance. The bank’s gross loans declined by 9 percent to N10 trillion, and though its non-performing loan (NPL) ratio improved to 3 percent, that was largely due to massive write-offs.
– Ecobank Transnational Incorporated (ETI) followed closely, provisioning N393.7 billion, up 47 percent year-on-year. Inflation, exchange-rate volatility, and macroeconomic stress in Nigeria and Ghana all contributed to loan-quality deterioration. Its total loan book stands at N21.1 trillion, with a modestly improved NPL ratio of 5.3 percent.
– Access Holdings Plc posted impairments of N350 billion, representing a 141.5 percent surge year-on-year. About N255 billion of this came from loans to corporate entities and organizations, while the rest were loans to individuals. The bank cited changing macroeconomic conditions, inflationary pressures, and continued regulatory adjustments as the main culprits.
– First HoldCo reported N288.9 billion, up 68.6 percent from N171.4 billion a year earlier. The bank attributed the spike to revaluation losses and write-downs of legacy exposures in the energy and trade sectors. Notably, about N100 billions of this was incurred in the third quarter alone.
– United Bank for Africa (UBA) saw a dramatic improvement, cutting impairments from N123.5 billion to 56.9 billion, thanks to recoveries of N50.4 billion. The bank’s proactive loan-book management and collateral recoveries were credited for this performance.
– Guaranty Trust Holding Company (GTCO) posted N69.8 billion, up slightly from N63.6 billion last year. The group wrote off a key oil-and-gas exposure but maintained strong profitability, with pre-tax return on equity (ROAE) of 39.5 percent.
– Stanbic IBTC Holdings Plc recorded N11.6 billion, a sharp 80 percent decline year-on-year following recoveries of N16.3 billion on previously impaired loans.
– Wema Bank Plc, with N11 billion in impairments, reported one of the lowest provisioning levels in the industry, despite 30 percent loan growth.
Altogether, these eight banks have set aside almost N2trillion in provisions to cover potential losses, a sum roughly equivalent to Nigeria’s entire federal capital expenditure for 2025.
There have been recent claims of a modest level of loan growth that is not commensurate with the overall expansion of the banking system’s balance sheet. Data from MoneyCentral shows that the combined total loans of the nine banks stood at N65.37 trillion as of September 2025, representing a 7.42 percent increase from N60.86 trillion in 2024. This contrasts sharply with a 52.63 percent surge in combined loans recorded in the 2024 financial year and a 32.64 percent increase in 2023, according to data gathered by MoneyCentral.
The underlying question, therefore, is which sectors of the economy are actually benefiting from this reported loan growth?
The real puzzle behind these numbers is who actually received these loans that are now being impaired. While banks have long positioned themselves as engines of private-sector growth, evidence suggests that much of their lending goes to a narrow base of corporate borrowers, politically connected elites, and oil-and-gas companies. These sectors offer large-ticket deals and quick interest earnings but also carry enormous risk.
In contrast, the SME sector, which employs more than 80 percent of Nigeria’s workforce, continues to face credit starvation. Many small businesses are forced to rely on expensive informal loans or personal savings because banks deem them too risky. The pattern is clear that banks chase safety and short-term profits over inclusive growth. When their big corporate bets fail, they write them off through impairment charges, but the cumulative effect is that real economic activity suffers while the credit system grows more fragile.
Another dimension to the problem is the banking industry’s heavy investment in government securities. Over the past two years, Nigerian banks have channeled N20.4 trillion into treasury bills, bonds, and other fixed-income instruments, reaping risk-free returns rather than funding productive ventures. This “securities trap” is profitable for banks but disastrous for the economy. Instead of financing factories, farmers, or tech innovators, banks earn easy money by lending to government thereby crowding out private investment and weakening the transmission of credit to the real sector. When interest rates rise or currency values swing, the market value of these securities falls, forcing banks to record mark-to-market losses that translate into impairment charges. Thus, the same safety net that shields banks from loan risk ends up creating financial volatility of its own.
Beyond macroeconomic challenges, Nigeria’s banks are also grappling with homegrown problems like insider abuses, weak corporate governance, and ineffective risk management. Past crises in the banking sector, from the 2009 consolidation fallout to the 2016 oil-sector shock, reveal a consistent pattern: directors and senior executives often have outsized influence over loan approvals, sometimes extending credit to themselves or politically exposed entities without proper collateral or due diligence. These insider-related loans frequently turn toxic, hidden under layers of restructuring and accounting manoeuvres until a regulatory audit forces exposure.
The recent impairments may well reflect a new cycle of these historical sins as loans extended under pressure, influence, or misplaced optimism, now coming home to roost as the CBN tightens oversight. Corporate-governance codes exist, but enforcement remains uneven. Some banks continue to operate “relationship banking,” were loyalty trumps prudence. The lack of whistleblower protection, combined with weak internal-audit independence, further compounds the problem. Until boards and regulators impose real consequences for reckless lending, the system will continue rewarding the wrong behaviour and punishing taxpayers and shareholders in the long run.
At its heart, impairment is a measure of how well banks anticipate and manage risk. A rise in impairments signals that too many loans were made without properly assessing the borrower’s ability to repay, or that risk models failed to adjust to changing macroeconomic conditions. Several banks blamed their losses on exchange-rate volatility and inflation, but these are hardly new risks in Nigeria’s economic environment. The fact that impairments ballooned even as profits remained high suggests that risk-management frameworks were reactive rather than preventive which focused on compliance rather than foresight. In some cases, the sheer scale of provisioning, such as Zenith’s N781 billion or Access’s N350 billion, points to systemic underestimation of credit risk.
Every naira written off as an impairment represents not just a failed loan but a lost opportunity for the real economy. N1.96 trillion could have funded tens of thousands of new small businesses, millions of jobs, and critical infrastructure projects. Instead, these funds are trapped in the closed circuit of banking losses or vanish into opaque corporate failures. This has broader implications: as banks absorb losses, they tighten lending criteria, making it harder for genuine borrowers to access loans. High impairments signal instability, discouraging foreign investors and depositors, while credit flow dries up, productivity and job creation suffer. The result is a paradoxical economy where banks post impressive profits yet the productive sector languishes.
If there is a silver lining, it is that some banks, notably UBA, Stanbic IBTC, and Wema Bank are demonstrating improved loan-recovery strategies, more disciplined credit models, and a stronger focus on risk-weighted assets. Their experiences prove that impairment is not inevitable; it is the outcome of choices like governance, culture, and accountability. For others, the current round of provisioning should serve as a wake-up call to rethink their business models, diversify exposures, and strengthen compliance culture.
To its credit, the CBN’s forbearance unwind is a critical step toward transparency. By compelling banks to recognize their true loan losses and restricting dividend payouts until they meet prudential standards, the regulator is forcing a long-overdue cleansing of the system. However, reform must go deeper than technical compliance. The CBN must enforce public disclosure of insider-related loans, tighten penalties for concealment, and promote lending to productive sectors through targeted incentives. For instance, a tiered capital framework could reward banks that extend a higher proportion of credit to SMEs and manufacturing, while imposing stricter capital charges on speculative or insider-related lending.
Nigeria’s banking sector has shown resilience through crises, from the global financial meltdown to oil-price collapses. But resilience should not become an excuse for complacency. The N1.96 trillion impairment charges of 2025 are more than a balance-sheet adjustment; they are a mirror reflecting structural flaws in lending culture, governance, and the alignment between finance and development. To rebuild trust and relevance, banks must reorient lending toward real-sector growth, invest in credit analytics and risk intelligence that anticipate shocks, enforce transparency in board-level loan approvals and insider exposures, and collaborate with regulators to design sustainable credit frameworks for SMEs. Above all, there must be a moral recalibration of banking purpose from chasing short-term profits to fueling long-term national prosperity.
The spike in impairment charges does not mean Nigeria’s banks are collapsing. Rather, it signals an industry confronting its hidden fragilities. As the forbearance curtain lifts, the system has a chance to reset to clean up bad debts, rebuild credibility, and reconnect finance with development. But that opportunity will be wasted if the same patterns persist: insider lending, governance lapses, and a preference for easy returns over real investment. Until these issues are confronted head-on, the question will continue to echo through boardrooms and regulatory halls are Nigerian banks truly financing growth or merely recycling risk and protecting privilege? Only transparency, discipline, and a renewed sense of purpose can answer that question in the affirmative.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]
Kayode Egbetokun, inspector-general of Police (IGP), has declared Nigeria’s banking industry a strategic national asset, ordering an immediate intelligence-led crackdown on cybercriminal networks, insider facilitators, and transnational financial crime syndicates threatening the stability of the financial system.
Kayode Egbetokun, inspector-general of Police (IGP),
Speaking at a strategic meeting with the Chartered Institute of Bankers of Nigeria (CIBN) and the Body of Bank Chief Executive Officers in Lagos, where he said the Nigeria Police Force was shifting from reactive policing to proactive dismantling of organised criminal structures targeting banks.
According to him, the financial sector remains central to national stability.
He said: “The Nigerian banking industry is not merely a driver of economic activity; it is a core component of our national stability architecture. The integrity, continuity, and resilience of the financial system are directly linked to public confidence, investor perception, and the credibility of Nigeria’s economic governance.”
In a major policy shift, Egbetokun announced that regular police officers would no longer be deployed for routine cash-in-transit escorts or non-essential VIP protective duties within the private sector.
He explained that the decision aligned with national policy direction and manpower optimisation within the Force, adding that the traditional model of conventional police deployment for banking sector protection was being reviewed and progressively restructured.
“This policy adjustment is not designed to diminish the security framework supporting the banking industry. Rather, it reflects a deliberate transition towards a more sustainable, professional, and institutionally governed model of security support,” he said.
Egbetokun warned that conventional risks such as armed robbery and cash-in-transit vulnerabilities, though still present, have been overtaken by more complex and technologically sophisticated threats.
“These threats are adaptive, technologically sophisticated, and often coordinated across borders. They include cyber-enabled fraud, identity compromise, insider facilitation, organised financial crime, and illicit financial flows,” he told the bankers.
The IGP stressed that disruptions to banking operations now carry international reputational consequences, citing global compliance standards set by the Financial Action Task Force FATF and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations.
He said: “In an era shaped by FATF standards, AML/CFT obligations, and heightened scrutiny of financial flows, the strength of a nation’s enforcement and security architecture is now directly relevant to investor confidence and market stability.”
The police noted that: “The speed and sophistication of cyber-enabled fraud illustrate the urgency of integration. Delayed reporting windows can render enforcement ineffective, while rapid escalation, evidence preservation, and coordinated response can significantly improve disruption, recovery, and prosecution outcomes.
“Modern financial crime operates at a pace that requires equally modern security coordination.”
Egbetokun disclosed that the Force had already intensified covert operations targeting kidnapping syndicates, illegal arms networks, and organised criminal enterprises whose activities threaten commercial stability.
He added that the Police were strengthening coordination with the Economic and Financial Crimes Commission (EFCC), the Nigeria Financial Intelligence Unit (NFIU), and the Central Bank of Nigeria (CBN) to ensure that criminal enterprises do not exploit gaps between enforcement, compliance, and oversight.
The IGP told the bankers that sustainable security cannot be achieved through episodic contact or fragmented interventions, calling for structured cooperation between law enforcement and financial institutions.
“Security is not merely the absence of crime; it is the presence of stability that enables productivity, investment, and growth. A secure banking environment supports savings mobilisation, credit expansion, financial inclusion, and the confidence of both domestic and international investors.
“When citizens trust financial institutions, participation in the formal economy increases. When investors perceive a stable internal security environment supported by credible enforcement, Nigeria becomes more bankable, more investable, and more competitive.
“The outcome of this meeting should not be limited to dialogue. It should produce structured liaison mechanisms between law enforcement and the banking sector, clear operational protocols for high-risk areas, joint capacity building, and lawful information-sharing.
“The Nigeria Police Force stands ready to work with the banking sector not merely as an enforcement institution, but as a strategic partner in safeguarding the integrity, stability, and international credibility of Nigeria’s financial architecture,” he said.
Earlier in his remarks, Oliver Alawuba, chairman of the Body of Bank Chief Executive Officers, who acknowledged the Police boss for measures put in place to tackle insecurity in the country, highlighted the banking industry’s past support.
He said: “The Bankers’ Committee was responsible for the renovation of over 42 police stations that were destroyed during the EndSARS protests. We stepped in when police infrastructure was in ruins. Today, we expect that same urgency when our own infrastructure is under digital siege.”
Professor Pius Olarenwaju, president, CIBN, on his part, painted a grim picture of an industry under silent assault, warning that the velocity of cyberattacks now outstrips the response capacity of traditional law enforcement.
“The banking sector plays a pivotal role in Nigeria’s economic development, and our critical functions can only flourish in a secure and stable environment. But we are fighting a war where the enemy no longer carries guns , they carry laptops and exploit system vulnerabilities in milliseconds,” he told the IGP.
Olarenwaju further stressed that the rapid digital transformation of financial services has created a security paradox.
“As we deepen financial inclusion and expand digital channels, we also expand the attack surface for cybercriminals. The same technology that empowers the unbanked also empowers fraudsters operating from jurisdictions where Nigerian law enforcement has no reach. This is the new reality, and we need the police to evolve with it,” he said.
Present at the occasion were Managing Directors and Chief Executive Officers of banks such as Union Bank, Signature Bank, Parallex Bank, Standard Chartered Bank, Keystone Bank, Coronation Merchant Bank, Guaranty Trust Bank, United Bank for Africa, among others.
E-Financial
Rashidat Adebisi Unveils Strategic Roadmap for Nigeria’s Insurance Sector under NIIRA 2025
Following a landmark 21-year career in institutional finance, Rashidat Adebisi, the former Executive Director at AXA Mansard, has officially launched “The Re-Architecture Project.”
This strategic pivot aims to align Nigeria’s insurance and financial infrastructure with the federal government’s ambitious $1 trillion economy goal, positioning the sector as a critical driver of macro-economic stability.
As Nigeria navigates the complexities of the Nigeria Insurance Industry Reform Act (NIIRA 2025), Adebisi identifies this moment as a “watershed” for the industry.
She argues that the path to a trillion-dollar economy requires more than just capital, it demands a total re-architecture of how financial systems interact with the informal economy, which currently accounts for over 60% of employment in Africa.
Macro-Economic Resilience as a National Imperative
The Re-Architecture Project reframes insurance from a transactional product into the “secret sauce” of a resilient economy.
Adebisi asserts that for Nigeria to achieve its macro-economic targets, the insurance industry must bridge the massive “protection gap,” as penetration currently remains below 3% across many African markets.
Insurance as an Economic Safety Net: “Insurance is the net that allows a nation to jump higher,” Adebisi stated.
She emphasizes that every decimal point in a financial model represents a business stabilized and a future secured, providing the essential foundation for macro-economic growth.
Infrastructure Beyond Capital: The project posits that Nigeria is not lacking capital but “invisible infrastructure”, specifically Trust, Access, and Regulatory Clarity.
NIIRA 2025: From Compliance to Competitive Advantage
Adebisi describes NIIRA 2025 as a vital structural reinforcement rather than regulatory friction. The Act’s focus on Capital Recalibration, Stronger Governance, and Consumer Protection is essential for building the institutional rigour required to support a $1 trillion GDP.
Recalibrating Foundations: The reform represents a necessary recalibration of the industry’s foundations while accelerating digital transformation.
Strategic Policy Fluency: “Those who view compliance as a burden will struggle; those who see it as a competitive advantage will thrive,” Adebisi noted, identifying policy fluency as a core leadership competency for the next decade.
Economic Visibility: Integrating the Informal Sector
A central pillar of the project is “Engineering Inclusive Ecosystems,” exemplified by the FileAm App. This initiative reimagines tax compliance as a digital utility for SMEs and informal entrepreneurs, moving them from economic invisibility into formal digital tax rails, insurance coverage, and credit ecosystems.
The Wealth Pipeline: By building digital identity and verifiable credentials, the project aims to turn compliance into credit history, and credit history into the capital access required for intergenerational wealth creation.
As a Financial Systems Architect, Adebisi’s blueprint for the next decade is governed by a singular core rule: Data-aware. Policy-conscious. Africa-focused.. The project calls on industry leaders and policymakers to move beyond incremental adoption toward designing interoperable ecosystems that can sustain the Africa of tomorrow.
“The future of finance in Africa will not be inherited. It will be architected,” Adebisi concluded. “It is our turn to build.”.
The National Insurance Commission (NAICOM) has unveiled a far-reaching reform agenda aimed at strengthening industry stability, improving consumer confidence, and positioning the sector to play more strategic role in national economic growth.
Speaking at the 2026 management retreat in Uyo, Olusegun Ayo Omosehin, commissioner for Insurance/CEO, NAICOM, described the initiative as a defining moment for the industry, stressing that the transformation drive is designed to modernise regulatory oversight, deepen market penetration, and build a more resilient and globally competitive insurance industry.
The renewed policy direction was unveiled at the Commission’s 2026 Management Retreat held in Uyo, Akwa Ibom State, under the theme “Insurance Regulation: Reset, Reimagine, Refocus.”
Omosehin, described the retreat as a watershed moment in the Commission’s 29-year evolution, declaring that the regulator is embarking on a decisive transformation phase anchored on integrity, professionalism, accountability, and institutional unity.
He stressed that the reform agenda represents a deliberate shift away from outdated regulatory practices towards a modern, proactive, and impact-driven supervisory framework capable of strengthening market confidence and driving sustainable industry growth.
Omosehin explained that the retreat’s theme reflects a strategic call to action designed to reset legacy regulatory approaches, reimagine the untapped potential of Nigeria’s insurance market, and refocus regulatory strategies to deliver measurable economic value.
He further underscored the Commission’s strategic role in supporting the economic expansion blueprint of president Bola Ahmed Tinubu, noting that achieving Nigeria’s ambitious $1 trillion economic target requires a resilient, well-capitalized, and shock-resistant insurance sector capable of underwriting major risks, attracting investment inflows, and supporting long-term national development.
Central to the reform drive is NAICOM’s ongoing recapitalization programme, which the commissioner described as one of the most far-reaching regulatory interventions in the history of Nigeria’s insurance industry.
He clarified that the initiative goes far beyond capital injection, stressing that it is designed to strengthen insurers’ financial stability, enhance consumer protection, deepen insurance penetration across underserved segments, reinforce the industry’s capacity to withstand economic shocks, and rebuild public trust in insurance as a credible financial safety net.
He emphasized that the credibility of the exercise will be measured by its transparency, fairness, and professional execution, warning that the Commission will tolerate no ambiguity, compromise, or preferential treatment in the process.
Addressing management staff, Omosehin delivered a firm directive for internal discipline and cohesion, urging leaders within the Commission to uphold integrity as a guiding principle, professionalism as an operational compass, and transparency as a non-negotiable regulatory standard.
He stressed that NAICOM’s effectiveness depends on institutional collaboration, warning that departmental silos and bureaucratic rivalries undermine regulatory efficiency.
In a symbolic demonstration of commitment, management staff collectively pledged to uphold fairness, accountability, and global best practices in executing the recapitalization roadmap and safeguarding the future of the insurance sector.
The Commissioner also outlined key strategic priorities expected to reposition the industry, including strengthening regulatory oversight, ensuring disciplined execution of the recapitalization framework, deepening stakeholder engagement, expanding institutional capacity in risk-based supervision and data analytics, driving market development through digital innovation, strengthening organizational culture, and reinforcing policyholder protection mechanisms.
Omosehin also invoked an African proverb to emphasize the importance of unity and collective resolve, noting that sustainable transformation of the insurance sector can only be achieved through shared commitment among regulators, operators, and stakeholders.
He reaffirmed NAICOM’s determination to build an insurance industry that is resilient, globally competitive, trusted by policyholders, and fully aligned with Nigeria’s long-term economic transformation agenda.
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