Obinna Chima
Having navigated the hurdles of recapitalisation, Nigerian banks are now facing a new challenge: regulatory haircuts, which have put earnings under pressure.
The Central Bank of Nigeria’s (CBN) 2025 directive, which required banks to exit the regulatory forbearance loan window and fully align with prudential loan classification standards, was aimed at achieving a deeper clean-up of the banking system, improving asset quality, restoring transparency, and reinforcing long-term financial stability.
Loan loss provision, also referred to as an impairment charge, is an expense set aside to cover potential losses from unpaid loans (bad loans).
Owing to this, almost all the banks had to make provisions for impaired and non-performing loans, with the tier-one banks accounting for the largest share of the regulatory-induced charges.
Focusing on Nigeria’s five largest banking groups — Zenith Bank, Access Bank, Guaranty Trust Holding Company Plc (GTCO), United Bank for Africa Plc (UBA), and First Holdco— their respective impairments surged significantly in the 2025 financial year, placing considerable pressure on profitability despite strong growth in gross earnings and interest income.
First HoldCo Plc was the worst hit, posting impairment charges of N826.3 billion in its delayed audited 2025 results released on the Nigerian Exchange Limited (NGX), representing a 93.8 per cent increase over the N426.29 billion recorded in 2024.
Equally, Zenith Bank recorded N742.19 billion impairment charges, an increase of 12.97 per cent from the N657 billion in 2024, while Access Holdings declared N523.55 billion net impairment charge on financial assets, which was about a 113 per cent increase over the N245.32 billion recorded in 2024.
In the same vein, UBA declared N331.07 billion impairment charge for credit losses on Loans in 2025, representing an increase of 53 per cent from the N217 billion it reported in 2024, while GTCO recorded a significant decline in impairment charges in 2025 of N66.42 billion, from N136.66 billion in 2024.
Despite the short-term earnings shock, the country’s tier-one lenders demonstrated resilience.
For instance, Zenith Bank Plc’s audited group financial results for the full year ended December 31, 2025, showed that the Group recorded gross earnings of N4.19 trillion in 2025, representing a six per cent year-on-year growth from N3.97 trillion in 2024. Despite a five percent drop in its profit before tax to N1.26 trillion, profit after tax grew slightly to close at N1.04 trillion.
Also, UBA in its audited financial results for the year ended December 31, 2025, the Group also delivered gross earnings of N3.09 trillion from the N3.19 trillion recorded the previous year. Its profit before tax, however, dropped to N423 billion in the year under review, compared with N803.7 billion the previous year, also resulting to drop in profit after tax, from N766.5 billion last year, to N404.7 billion this year.
Equally, Access Holdings Plc’s audited results for the financial year ended December 31, 2025, revealed that the financial institution’s profit before tax stood at N1.01 trillion. The amount was a 16.2 per cent increase over N867.02 billion reported in the financial year ended December 31, 2024. Profit After Tax grew to N743.045 billion in 2025, up from the N642.217 billion recorded the previous year.
GTCO’s audited financial statements for the year ended December 31, 2025, showed profit before tax of N1.23 trillion. GTCO’s 2025 profit after tax came in at N865.75 billion against N1.02 trillion recorded in 2024. First Holdco’s posted profit before tax of N220.28 billion, which was a decline by 72 per cent, compared with the N781.88 billion reported in 2024, while profit after tax fell to N147.25 billion, which was a 78 per cent decline from the N663.499 billion reported in 2024.
Overall, the aggressive recognition of impairments may ultimately position the banks for healthier earnings growth, stronger asset quality, and improved shareholder returns in the years ahead. The policy is expected to reshape the banking sector and strengthen discipline.
CBN Governor, Olayemi Cardoso, believes the apex bank’s new risk-based framework will serve as a critical anchor for financial system stability, ensuring that recent banking sector recapitalisation translates into real resilience and renewed investor confidence.
Post-recapitalisation, the CBN has shifted regulatory focus towards stronger risk management, tighter governance standards, and enhanced financial discipline across the sector. tronger regulatory safeguards and macro-prudential policies are expected to preserve financial stability and prevent speculative excesses.
As part of this approach, the apex bank introduced stricter limits on related-party lending to curb insider abuses, while reinforcing expectations on transparency, board independence, and improved disclosure of financial and governance information.
A key pillar of the post-recapitalisation framework is the adoption of risk-based capital requirements, which align banks’ capital positions more closely with the level of risks they undertake. The framework marks a clear departure from the era of regulatory forbearance and reflects the CBN’s transition towards a stricter, risk-focused supervisory regime.
For Cardoso, given the position of the banking system and the pivotal role it plays in the economy, the regulatory measures are expected to result to an elevation in the standards of corporate governance observed across corporations in Nigeria.
Indeed, as Nigeria’s banking industry enters a new regulatory cycle, the ability of the tier-one banks to sustain investor confidence will depend not just on profitability, but on discipline, prudent lending, and a stronger risk management culture.
The recent spike in impairment charges serves as a reminder that aggressive balance sheet expansion without rigorous credit oversight can quickly erode earnings and shareholder value. Going forward, the banks must also resist overreliance on excessive customer charges as a revenue strategy and instead deepen innovation and responsible banking practices that support long-term growth and public trust.