Nigerian Banks absorb N3.77trn in loan losses amid economic turmoil

Despite Nigeria’s volatile economic climate, ten of the country’s top commercial banks listed on the Nigerian Exchange (NGX) collectively incurred a staggering N3.77 trillion in loan impairment charges between full-year 2023, full-year 2024, and the first quarter of 2025.

Breakdown of the figures shows loan losses jumped from N1.34 trillion in 2023 to N2.13 trillion in 2024, with another N297.10 billion recorded in just the first quarter of 2025.

The spike in provisions was largely driven by macroeconomic pressures including the steep naira devaluation in mid-2023, spiraling inflation, and aggressive interest rate hikes, all of which have tightened financial conditions for businesses and households.

However, Nigerian banks appear to be weathering the storm better than expected. Despite the elevated impairments, key risk indicators remain within manageable thresholds for most lenders, with many executives affirming confidence in their institutions’ resilience.

Fidelity Bank CEO Nneka Onyeali-Ikpe, in the bank’s 2024 earnings release, noted: “Net Interest Margin improved to 12.0% from 8.1% due to the high-yield environment.

Despite the increase in the Monetary Policy Rate, our funding cost remained relatively constant at 5.2%. Our NPL ratio improved from 3.5% to 3.0%, and the cost of risk moderated from 2.6% to 1.5%, reflecting the efficiency of our risk management processes.”

“Asset quality remains stable with a marginal improvement in the NPL ratio to 2.76% (Dec 2023: 2.78%)… We maintain an outlook of less than 5% NPL ratio in 2025,” it noted in its results presentation.

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Zenith Bank, which posted the highest total impairments, also demonstrated strong provisioning discipline.

“We maintain a solid portfolio quality with 96% of our loans in Stage 1 and Stage 2… Our NPL coverage ratio rose to 223% in 2024, indicating strong buffers against credit losses,” the bank stated.

Here’s how each of the ten banks fared during the period under review:

10 – Wema Bank

Total Impairments: N26.6 billion

2023: N7.53bn

2024: N17.99bn

Q1 2025: N1.13bn

Cost of Risk (2024): 3.18%

NPL Ratio: Improved to 3.86% (from 4.31% in 2023)

Impairments as % of Net Interest Income: 8.19%

9 – FCMB

Total Impairments: N93.55 billion

2023: N46.75bn

2024: N34.12bn

Q1 2025: N12.69bn

Impairments as % of Net Interest Income: 19.12%

8 – Stanbic IBTC

Total Impairments: N109.59 billion

2023: N16.8bn

2024: N88.7bn

Q1 2025: N4.10bn

Cost of Risk (2024): 3.5%

NPL Ratio: Rose to 4.2% (from 2.4% in 2023)

Impairments as % of Net Interest Income: 14.9%

7 – Fidelity Bank

Total Impairments: N128.88 billion

2023: N63.4bn

2024: N51.6bn

Q1 2025: N10.83bn

Cost of Risk: Declined to 1.5% (from 2.6% in 2023)

NPL Ratio: Improved to 3.0%

Impairments as % of Net Interest Income: 11.47%

6 – Access Holdings

Total Impairments: N247.34 billion

2023: N84.4bn

2024: N92.9bn

Q1 2025: N70bn

Cost of Risk: Stable at 1.25%

NPL Ratio (2024): 2.76%

Impairments as % of Net Interest Income: 13.75%

5 – GTCO

Total Impairments: N253.04 billion

2023: N102.8bn

2024: N137bn

Q1 2025: N13.4bn

Impairments as % of Net Interest Income: 13.95%

4 – UBA

Total Impairments: N423.63 billion

2023: N154bn

2024: N258.9bn

Q1 2025: N11.1bn

Cost of Risk: Steady at 3.18%

Impairments as % of Net Interest Income: Moderate

3 – First Holdco (First Bank Holdings)

Total Impairments: N586.94 billion

2023: N174.7bn

2024: N371bn

Q1 2025: N41.2bn

NPL Ratio: Surged to 10.2% (from 4.7% in 2023)

NPL Coverage Ratio: Fell to 51% (from 92%)

Impairments as % of Net Interest Income: ~25%

2 – Ecobank (ETI)

Total Impairments: N869.5 billion

2023: N288.4bn

2024: N484.5bn

Q1 2025: N96.6bn

Impairments as % of Net Interest Income: Over 29%

Impact: Significant drag on profitability

1 – Zenith Bank

Total Impairments: N1.03 trillion

2023: N401bn

2024: N594bn

Q1 2025: N36bn

NPL Ratio: 4.7%

Cost of Risk: Flat at 7.3%

NPL Coverage Ratio: Rose to 223% (from 171%)