Kayode Tokede

On the back of their effort to reduce the negative impact of macro-economic challenges on their risk assets, 10 leading deposit money banks declared N1.99 trillion loan impairment charges in 9 months of 2025. This about 44.5 per cent increase over the N1.37 trillion declared in the corresponding period of 2024.

The banks are: Access Holdings Plc,  Guaranty Trust Holdings Plc (GTCO), First Holdings Plc, Zenith Bank Plc and United Bank for Africa Plc(UBA).

Others are: Ecobank Transnational Incorporated, Wema Bank Plc, Fidelity Bank Plc,Stanbic IBTC Holdings Plc,  and Sterling Financial Holdings Company Plc.

One of the major challenges the banks faced during the period under review was elevated provisioning due to the industry‑wide wind‑down of the Central Bank of Nigeria (CBN) forbearance regime.

Loan  impairment charges, often referred to as loan losses or credit losses, reflect provisions set aside by banks to cover potential defaults and deterioration in the value of their financial assets.

The figure represents the cost of risky lending and exposure to a volatile macro-economic environment, including inflationary pressure, naira depreciation, and constrained consumer and business liquidity.

Analysis of the banks unaudited financial results for the nine months ended September 30, 2025, showed that they declared N5.5 trillion profit before tax representing about 3.2 per cent increase over N5.3 trillion in nine months of 2024.

Zenith Bank, followed by Ecobank Transnational Incorporated and Access Holdco significantly increased their loan impairment charges in the period under review.

While Zenith Bank recorded N781.5 billion loans impairment charges in nine months of 2025 an increase of 64 per cent increase from N477.77 billion in nine months of 2024, Ecobank Transnational Incorporated posted N393.68 billion loan impairment charges in nine months of 2025, about 47.4 per cent increase when compared to N267.13billion declared in nine months of 2024.

Access Holdings in the period under review declared N349.99 billion loan impairment charges, up by 141.5 per cent from N144.95billion declared in the corresponding period of 2024.        

The Group Managing Director/CEO, Zenith Bank, Dr. Adaora Umeoji, in a statement noted that, “In the face of elevated provisioning due to the  industry‑wide wind‑down of the Central Bank of Nigeria (CBN) forbearance regime, our total asset quality has recorded a marked improvement while our balance sheet remains strong, liquid and well positioned to capture emerging opportunities across our core markets.”

She added that the group  made a substantial loan provisioning required for a one‑off write‑off of   forbearance loans.

The actual provisioned loans of Zenith Bank topped N830 billion but was reduced by loan recoveries.

The 47.4 per cent increase in Ecobank Transnational Incorporated ‘s loans impairment charges was driven by challenging conditions in its key markets, particularly Ghana and Nigeria, where inflation and foreign exchange volatility impacted loan quality.

The actual loans provisions of the Pan-African financial institution were a whopping N530.3 billion; however, recoveries of about N185.6 billion helped reduce the total provisioning for the period under review to N393.7 billion.

Access Holdings stated in its interim results that about N255 billion of the impaired loans were loans to corporate entities and other organisations. The balance were loans to individuals.

Access Holdings also appears to have seen its loan provisioning increase by a whopping N100 billion in the third quarter of the year, signalling aggressive provisioning ahead of meeting the CBN’s forbearance mandates.

Access Holdings noted that its Nigerian operations “experienced underperformance during the period, attributable to changing macro-economic conditions, inflationary pressures, and continued regulatory adjustments.”

Analysts had attributed Zenith Bank and Access Holdco growth in loan impairment charges to regulatory compliance that has to do with the forbearance package of the CBN.

The CBN had said the move was part of its ongoing efforts to strengthen the resilience and stability of the Nigerian banking sector.

Ahead of the full unwind in March 2026, the CBN disclosed that at least eight banks have already met the requisite forbearance-related standards, signalling an improving regulatory stance.

This followed the June 13, 2025 circular from the CBN, which barred affected banks from paying dividends, bonuses and investments in foreign subsidiaries over regulatory forbearance in respect of the Single Obligor Limit and other credit facilities.

The Central Bank had begins unwinding its pandemic-era forbearance measures, regulatory relief that previously allowed banks to restructure exposures and delay the classification of non-performing loans.

Zenith Bank and Access Holdings had stated that they would comply with the apex bank’s directive on regulatory forbearance

The company secretary, Zenith Bank, Michael Otu, had stated that  “The bank has successfully raised and surpassed the new regulatory capital requirement of N500billion.

“The bank’s exposure under the SOL forbearance relates solely to a single obligor. We are confident that this exposure will be brought within the applicable regulatory limit on or before 30 June 2025.

“With respect to the forbearance granted on other credit facilities, the bank confirms that this applies to only two customers. We have made substantial provisions in respect of these facilities and have taken appropriate and comprehensive steps to ensure full provisioning by 30 June 2025. Upon completion, the bank will no longer be under any forbearance arrangements in this regard. The bank expects to have exited all CBN forbearance arrangements by the end of the first half of 2025.”

 While banks increased their lending partly due to the CBN’s policy on loan-to-deposit ratio (LDR), which is put at 65 per cent, macro-economic challenges in Nigeria and Sub-Sahara Africa countries and the need to comply with CBN’s forbearance package policy have disrupted interim dividend payout to  shareholders.

Capital market analysts said the growing loan impairment charges does not come as a surprise  following some Tier-1 banks’ move to meet with the CBN’s  June 30, 2025 forbearance packaging regulation.

Investment bank, Renaissance Capital Africa, has revealed that six  banks hold about $3.52 billion in forbearance loans.

According to the report titled, ‘Nigerian Banks: Cash is King’, the investment firm indicated that the banks would be impacted by the CBN’s  directive that lenders under the regulatory forbearance suspend dividend payments to improve their capital base.

 In absolute terms, Renaissance Capital said, “We estimate regulatory forbearance exposures at $304million, $887million, , $282million, and $1.6 billion for Access Corp, First Holdco, United Bank for Africa and Zenith Bank Plc, respectively.”

Investment Banker & Stockbroker, Mr. Tajudeen Olayinka in  a chat with THISDAY stated that  some of the financial institutions had to comply with CBN directive on the need to pay dividend.

He said, “Most of these  banks  are expected to clean up by June 2025 ending in a move to pay interim dividend  to shareholders.  Some banks took advantage of cleaning up and paying interim dividends.

“The huge loan impairment charges by these  banks is attributed to CBN’s forbearance package of June 30, 2025 deadline. Some banks extended it  and did not make provisions- they    are expected to spread it and will not pay interim dividend  to  shareholders.”