E-Financial
Report Raises Concerns over Health of Nigerian Banks
A number of banks in Nigeria are living on borrowed time as they struggle to recover sticky assets and pare down their loan loss provisions, according to Business Hallmark.
The report said that the banks are buried in a heap of poor quality loan assets in the guise of high none performing loans (NPL’s) and that all may not be as well with the banks as the domestic regulator, Central Bank of Nigeria (CBN), would have many believe.
Indeed, recently the international credit rating agency, Fitch, marked a down grade in the credit ratings of virtually all Nigerian banks as the agency pointed to the worsening condition of their credits.
Within the year Fitch’s analysts downgraded the outlook for four Nigerian banks from stable to negative; the banks were Zenith Bank, GT Bank, First Bank and Diamond Bank.
The problems with the banks downgraded were attributed to, ‘heightened vulnerability of capital due to downside asset quality risks’ which in simpler terms meant that these banks were finding it increasingly difficult to get back the monies that they lent to customers.
Third quarter 2017 results for nearly all the banks have been dyed in rose colour. Nine months’ results for the banks have shown profit figures glide up as the economy edges out of recession. But how real are the numbers?
Truth be told with discussions with a fair number of bankers who did not want their names put in print, the profit tally for most of the banks, ‘where beautiful Picasso replicas, as brilliant as they were; they were all fake’ said a senior manager of one of the banks with headquarters in Victoria Island, Lagos.
The banker insisted that, ‘you cannot make omelets without breaking eggs, with interest rates at double digits and manufacturers rolling in escalating debt as retailers groan in agony, how the heck does a bank make money with customers hung over a barrel?’, he asked pensively.
When it was pointed out that banks had stopped granting credit and had actually become more comfortable simply buying treasury instruments at double digit yields he agreed but noted that, ‘banks may have been able to turn a trick or two by buying treasuries over the last two years, but that is not core retail banking; it is more of an investment banking function and it still does not address the problem of proper loan loss charges against risk assets that have already been created.’
In other words most banks have made inadequate provisions for loan impairments or bad credits and have simply engaged in a number of clever accounting rouses to restructure bad loans to make them appear hale and perhaps hearty.
It is obviously difficult to establish how bad Nigerian commercial bank loan portfolios precisely are, especially as even the Central Bank of Nigeria (CBN), the sector’s chief regulator, and the Nigerian Deposit Insurance Company (NDIC) often get caught on the wrong foot as bank examiners serially underestimate impairment charges required by banks to cover their deteriorating loan assets.
This has led to independent observers classifying bank loans as a mixture of financial fact, fiction and something one analyst recently called ‘faction’, a grey area between reality and outright falsehood.
Peering through reams of recently published financial data is not likely to shed very much light on the warm matter of bank assets and capital adequacy.
The problem of poor bank loan books is not just that of the smart reclassification of bank loans by managers form non-performing to performing but also the accounting convention of using historical valuation of bank assets rather than adjustment of the assets on the books by marking to market which means that if interest rates go up the value of banks assets simultaneously go down and vice versa.
It would also mean that the increasing riskiness of bank loans when interest rates rise would be better captured on bank books when loan quality is measured as weaker when rates go up; in other words as interest rates go up bank loan quality comes down.
As lending rates have hovered between 25 and 28 per cent over the last two years, bank asset quality has taken a turn for the worse.
The CBN estimates that delinquent loans as a proportion of loans outstanding on average industry wide is about 12 per cent as against the regulatory rate of 5 per cent. But even the twelve per cent claim is disputable.
Investigations suggest a more accurate rate of double that number putting real average loan impairment ratio closer to 25 per cent or a quarter of all loans outstanding. This clearly indicates that banks would have to recapitalize operations to reduce leverage (debt to equity ratio) and build greater strength in balance sheets.
In a telephone conversion with Business Hallmark, Chidi Ajaegbu, former President Institute of Chartered Accountants of Nigeria (ICAN), noted that the challenge of bank credit assets and their current levels of equity was not dire enough to cause major worry, ‘I don’t think we have an immediate systemic problem but something must be done to ensure that we do not slide into systemic distress’. He was of the opinion that banks may need to raise their capital base in 2018 by either rights issue or Initial Public Offers (IPO’s).
Also commenting on the issue, Dr. Afolabi Olowokere of Financial Derivatives Company Limited (FDC) said it is a known fact that the relatively low capital base of banks could constitute a serious problem for such institutions anywhere in the world. ‘It is normal that the capitalisation of banks will be eroded at a time like this if you consider the huge non-performing loans which they have to provide for. I hope the banks do not suffer any shocks because they have links with one another, poor management of one could set off a contagion that hurts all’’, he said.
In his own observations Dr. Adi Bongo, economist and faculty member, Lagos Business School was of the view that the recent Fitch downgrades of local bank was a fallout of the poor macroeconomic management that started last year, adding that the banking industry suffered huge capital flight as portfolio investments that were plugged into banks during the consolidation period, began to pull out on concerns over macroeconomic direction.
He further explained that, ‘Nigeria has been performing poorly in capital importation. As money began to leave the system, banks where many portfolio investors had plunked capital, started having liquidity challenges.’ Noting that, ‘…because of the state of the economy, non-performing loans in banks have increased geometrically. The combination of these two issues has caused banks to face serious challenges, except those that have strong equity bases.’
With calls for bank assets to be marked to market or at least made compliant with International Accounting Standards Board’s (IASB’s) IFRS 9 rules, the days of bankers running rings around regulators in regards to the quality of their balance sheets is slowly fading into distant memory or at least that is the hope
Nigerian fintech giant Moniepoint is set to unveil the second edition of its widely acclaimed Nigeria’s Informal Economy Report in Abuja, reinforcing its commitment to financial inclusion and data-driven policy advocacy.
The launch event, scheduled to take place later this month, will bring together key stakeholders from government, finance, and development sectors to explore insights into Nigeria’s vast informal economy, which accounts for a significant portion of the country’s workforce and GDP.
Moniepoint’s first edition of the report, released in 2024, was praised for shedding light on the challenges and opportunities within Nigeria’s informal sector, including access to credit, digital payments, and regulatory gaps.
According to company officials, the second edition will feature updated data, expanded regional coverage, and actionable recommendations aimed at empowering small businesses and informal workers through technology and financial services.
The report is expected to serve as a valuable resource for policymakers, researchers, and financial institutions seeking to better understand and support Nigeria’s informal economy.
Moniepoint has emerged as a leading force in Nigeria’s fintech space, providing digital banking solutions to millions of individuals and businesses across the country.
FirstBank of Nigeria has launched its latest Digital Xperience Centre (DXC) in Area 10, Abuja, marking a significant step in its drive to revolutionize banking through technology and innovation.
The Group Chief Executive Officer, First Bank of Nigeria Limited, Olusegun Alebiosu (second from left) and Senator Babangida Hussaini commissioning of FirstBank Digital Xperience Centre in Abuja on Wednesday, October 8, 2025.
The fully automated branch is the seventh of its kind across Nigeria, offering customers a paperless, self-service banking experience available 24 hours a day, including weekends.
Speaking at the unveiling ceremony, FirstBank Group CEO Olusegun Alebiosu said the initiative reflects the bank’s commitment to creating a modern, customer-centric banking environment.
“For us, the future is digital,” Alebiosu said. “From account opening to transfers, customers can now perform almost every transaction on their phones. But for those who still need to deposit or withdraw cash, our Xperience Centres provide a 24/7 self-service option.”
He added that the bank has integrated artificial intelligence and biometric verification into its security systems to protect customers against fraud.
The event was attended by dignitaries including Senator Babangida Hussaini, who commended FirstBank for its forward-thinking approach.
“This is a forward-thinking initiative. I commend FirstBank for investing in both people and technology,” Hussaini said.
Customers also expressed satisfaction with the new centre. Mrs. Toyin Balogun described the experience as “smoother and faster,” praising the staff for their friendliness.
The new Abuja centre joins existing DXC locations in Victoria Island, University of Ibadan, Wuse, Banana Island, Lekki, and the University of Nigeria, Nsukka.
FirstBank says the centres are designed to provide seamless access to world-class banking solutions, including instant account opening, interactive digital support, and advanced transaction automation.
E-Financial
Fidelity Bank Set to Disburse NCGC N5bn Credit Guarantee Facility to Boost MSME Financing
Fidelity Bank Plc, tier one lender, has announced its readiness to begin the disbursement of funds under the National Credit Guarantee Company (NCGC) N5 billion Credit Intervention Scheme. The initiative is designed to expand access to finance for Micro, Small and Medium Enterprises (MSMEs), as well as businesses owned by women and youths across Nigeria.
L-R: Executive Director, South Directorate, Fidelity Bank Plc, Pamela Shodipo; Executive Director, Lagos & South West, Fidelity Bank, Dr. Ken Opara; Executive Director, Strategy and Operations, National Credit Guarantee Company Limited (NCGC), Mrs. Tinuola Aigwedo; Executive Director/Chief Risk Officer, Fidelity Bank Plc, Kevin Ugwuoke; MD/CEO, NCGC, Mr. Bonaventure Okhaimo; Managing Director/Chief Executive Officer, Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe; Executive Director/Chief Operations and Information Officer, Fidelity Bank Plc, Stanley Amuchie; and Executive Director, Risk Management, NCGC, Prof Ezekiel Oseni, during the Memorandum of Understanding (MoU) Signing Ceremony between Fidelity Bank and NCGC in Lagos.
This was disclosed by the Managing Director/Chief Executive Officer of Fidelity Bank Plc, Dr. Nneka Onyeali-Ikpe, during the signing of a Memorandum of Understanding (MoU) between the bank and NCGC.
According to Dr. Onyeali-Ikpe, the partnership with NCGC represents a significant step in the bank’s ongoing efforts to enhance financial inclusion and stimulate economic growth through increased access to credit. “This guarantee will enable us to further expand financing opportunities for those who need it most, while strengthening our capacity to support businesses across key sectors of the Nigerian economy,” she said.
The facility will cover critical sectors including food processing, secondary agriculture (such as fish and poultry processing), fashion, green energy, light manufacturing, the agricultural value chain (feed mills and equipment fabrication), export-oriented businesses, and education.
Dr. Onyeali-Ikpe highlighted that Fidelity Bank has consistently supported diverse sectors through targeted initiatives such as the Green Energy Financing Programme for renewable energy entrepreneurs, the Fidelity SME Hub for small businesses with a special arm – Creativerse, dedicated to the creative industry and the Fidelity Bank Education Support Scheme which provides affordable financing for educational infrastructure and technology upgrades.
“With the backing of the NCGC credit guarantee, we can now extend financing to businesses that have traditionally been excluded from formal credit systems—without compromising our risk standards or operational efficiency,” she added. “While we have supported MSMEs with short-term facilities in the past, this partnership allows us to provide long-term credit facilities that empower businesses to expand sustainably.”
Over the past five years, Fidelity Bank has disbursed over N500 billion in loans to MSMEs, empowering thousands of entrepreneurs and creating sustainable livelihoods.
Also speaking at the event, Managing Director of NCGC, Mr. Bonaventure Okhaimo, emphasized that the organization was established to bridge the financing gap faced by MSMEs in Nigeria by mitigating lender risks through credit guarantees.
“Although MSMEs are key contributors to Nigeria’s economic development, many of them struggle to secure funding from financial institutions due to perceived high risks,” he said. “Through the credit guarantee scheme, NCGC shares this risk with banks, making it easier for MSMEs to access much-needed capital.”
Mr. Okhaimo added that NCGC and Fidelity Bank will also collaborate to provide financial literacy and business management training to MSME beneficiaries, ensuring they have the knowledge and skills to effectively manage their loans and achieve sustainable growth.
The Fidelity Bank–NCGC partnership reinforces both institutions shared commitment to fostering entrepreneurship, strengthening MSMEs, and driving inclusive economic development across Nigeria.
Ranked among the best banks in Nigeria, Fidelity Bank Plc is a full-fledged Commercial Deposit Money Bank serving over 9.1 million customers through digital banking channels, its 255 business offices in Nigeria and United Kingdom subsidiary, FidBank UK Limited.
The Bank is a recipient of multiple local and international Awards, including the 2024 Excellence in Digital Transformation & MSME Banking Award by BusinessDay Banks and Financial Institutions (BAFI) Awards; the 2024 Most Innovative Mobile Banking Application award for its Fidelity Mobile App by Global Business Outlook, and the 2024 Most Innovative Investment Banking Service Provider award by Global Brands Magazine.
Additionally, the Bank was recognized as the Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence and as the Export Financing Bank of the Year by the BusinessDay Banks and Financial Institutions (BAFI) Awards.
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