Nigerian Financial Sector Faces Rising Non-Performing Loans Following Expiration of Central Bank Support Measures

The Nigerian banking industry is currently grappling with a significant surge in bad debt as the Central Bank of Nigeria CBN officially terminates its regulatory forbearance policy. This shift has triggered widespread anxiety among investors and financial analysts regarding the long-term stability and liquidity of several Tier 1 and Tier 2 lenders across the country.

The increase in Non-Performing Loans NPLs follows the withdrawal of special concessions that previously allowed banks to restructure loans without declaring them as delinquent. With these safety nets removed, many financial institutions are now forced to reflect the true state of their loan portfolios, exposing a higher volume of defaults from the private and corporate sectors. High-ranking keywords such as Nigerian banks bad loans 2026, CBN forbearance policy update, and banking sector liquidity crisis are currently trending as the market reacts to these disclosures.

Economic experts suggest that the combined impact of high inflation, currency devaluation, and rising interest rates has hindered the capacity of borrowers to meet their repayment obligations. The end of the CBN grace period means that banks must now set aside larger provisions for credit losses, a move that could significantly dampen profitability and impact share prices on the Nigerian Exchange Group.

The Central Bank has maintained that the return to standard reporting is necessary to ensure transparency and force banks to strengthen their risk management frameworks. However, there are fears that smaller banks with lower capital adequacy ratios may struggle to absorb the shock of rising defaults.

As the 2026 fiscal year begins, the banking sector remains under intense scrutiny. Stakeholders are calling for more robust government interventions to stabilize the macroeconomic environment, which remains the primary driver of credit risk in the Nigerian economy.