Nigeria’s banking sector recorded a sharp increase in non-performing loans (NPLs) after the Central Bank of Nigeria (CBN) ended its regulatory forbearance policy, according to the apex bank’s February 2026 Economic Report.
The report showed that the industry’s NPL ratio rose from 8.03 per cent in January to 9.85 per cent in February 2026, exceeding the CBN’s prudential benchmark of 5.0 per cent.
“Loan reclassification following the withdrawal of regulatory forbearance pushed the NPL ratio to 9.85 per cent.”
The CBN explained that the increase followed the reclassification of loans that had previously benefited from temporary regulatory relief.
Despite the rise in bad loans, the apex bank maintained that Nigeria’s banking sector remains financially stable, citing strong liquidity and adequate capital levels.
The report revealed that the industry’s liquidity ratio increased to 69.27 per cent in February, well above the regulatory minimum of 30 per cent.
The banking sector’s capital adequacy ratio also improved to 12.55 per cent, remaining above the required 10 per cent benchmark.
According to the CBN, the figures reflect the sector’s resilience despite the deterioration in asset quality.
Analysts believe the stricter loan classifications will improve transparency across the banking industry, even though they have temporarily pushed up the level of non-performing loans.
Source: Central Bank of Nigeria (CBN) February 2026 Economic Report
