Nigeria’s banking sector has recorded a decline in its capital adequacy ratio (CAR), dropping to 12 % after the Central Bank of Nigeria (CBN) ended its regulatory forbearance program. The CBN provided this update in its monthly economic report released on 12 November 2025.
The forbearance measures had previously allowed banks to delay recognizing certain loan losses and eased some regulatory requirements, giving financial institutions breathing room to manage credit stress amid economic headwinds, including high inflation, currency fluctuations, and slow economic growth.
With the withdrawal of these relief measures, banks are now required to fully account for all risky exposures and potential loan defaults. This adjustment contributed to a 1.43 percentage point decline in CAR from the previous month, signaling greater exposure to credit and market pressures. While the ratio still exceeds the regulatory minimum of 10 %, it reflects a more accurate assessment of the sector’s financial position.
At the same time, non-performing loans (NPLs) have risen to 7.8 %, surpassing the prudential threshold of 5 %, highlighting challenges in managing asset quality and risk.
Industry analysts view the end of forbearance as a pivotal moment for Nigerian banks. They note that it underscores the importance of reinforcing capital buffers, tightening risk management practices, and adopting more disciplined lending strategies. The regulatory shift is seen as necessary to enhance the sector’s long-term stability and resilience.
For both investors and consumers, the development signals a transition from temporary regulatory leniency to stricter oversight, setting the stage for a stronger and more sustainable banking ecosystem in Nigeria.
Banks See Capital Adequacy Slide to 12% as CBN Ends Relief Measures
