11 banks’ impairment charges climb to N3.4trn in 2025

Nigeria’s 11 banks’ impairment charges have crossed to N3.4 trillion in their 2025 audited financial statements, Daily Trust reports. This is just the regulatory forbearance has ended, triggering the recognition of credit losses previously deferred in earlier periods. The sharp rise followed the Central Bank of Nigeria’s (CBN) decision to unwind Covid-era forbearance measures that […]

Nigeria’s 11 banks’ impairment charges have crossed to N3.4 trillion in their 2025 audited financial statements, Daily Trust reports.

This is just the regulatory forbearance has ended, triggering the recognition of credit losses previously deferred in earlier periods.

The sharp rise followed the Central Bank of Nigeria’s (CBN) decision to unwind Covid-era forbearance measures that had allowed banks to restructure loans and delay the classification of troubled exposures.

Daily Trust reports that following the outbreak of the COVID-19 pandemic, the CBN on May 27, 2020, issued a regulatory forbearance to All Other Financial Institutions (OFIs), directed all DMBs in the country to restructure loan terms and tenors to households and businesses affected by the coronavirus outbreak.

Also, in April 2022, the banking sector regulator extended interest rate forbearance on loans by another year, in a bid to ease pressure on borrowers during COVID-19 recovery.

The CBN had also in September 2023 issued a circular prohibiting banks from using gains from forex revaluation for dividends or other capital expenditures, directing that such revaluation profits should be warehoused in a “Special Regulatory Reserve” until further notice.

The apex bank followed up in March 2024, warning banks against paying dividends using forex gains, especially given the temporary and volatile nature of such windfalls.

Amidst this string of directives, the DMBs have taken measures to exit the forbearance and one of the very drastic measures taken in the 2025 financial year was the suspension of dividends.

As a result, loans previously regarded as “performing” under the forbearance framework have begun migrating into Stage 3, otherwise classified as credit-impaired loans, leading to a significant increase in provisioning under International Financial Reporting Standard (IFRS 9) rules.

Impairment refers to a reduction in the value of a firm’s assets and is commonly recognised as provisions for loan losses. Companies use impairment charges to write off worthless goodwill or reflect a decline in asset value.

To provide further explanation on impairment, one of the banks wrote in its annual report, “Impairment losses on fair value through other comprehensive income investment securities are recognised in profit or loss and the impairment provision is not used to reduce the carrying amount of the investment but recognised in other comprehensive income. For debt securities, the group uses the criteria referred above to assess impairment.

“The Group writes off previously impaired loans and advances (and investment securities) when they are determined not to be recoverable. The Group writes off loans or investment debt securities that are impaired (either partially or in full and any related allowance for impairment losses) when the Group credit team determines that there is no realistic prospect of recovery.”

What this implies simply is that it is an attempt at a deep cleansing of the balance sheet of the affected financial institutions.

Among the banks reviewed, Zenith Bank recorded the highest impairment charge, which rose to N843.4 billion in 2025 from N594.1 billion in 2024.

First HoldCo followed with impairment charges increasing to N710 billion from N371 billion, while Ecobank Transnational Incorporated ranked third as its provisions rose by 47 percent to N707.5 billion from N480.5 billion.

Access HoldCo posted impairment charges of N468.04 billion, up from N368.2 billion, while United Bank for Africa (UBA) recorded N331.1 billion compared to N216.9 billion in the previous year.

Fidelity Bank posted N218bn impairment charges, while FCMB Group’s stood at N41.2 billion against N86.1 billion previously.

Sterling HoldCo recorded N10.7 billion from N26.7 billion, while Wema Bank also posted impairment charges of N21.6 billion compared to N23 billion in 2024.

GTCO and Stanbic IBTC Holdings Plc, however, stood out as exceptions, with impairment charges declining to N66.4 billion from N136.6 billion and N14.2 billion from N99.3 billion respectively, suggesting that both institutions had recognised troubled loans earlier before the end of regulatory forbearance.

 

Dividend pause

Following the move by the DMBs to clean their balance sheet, the shareholders would not be going home with dividends for the last financial year amidst grumbling from a section of the shareholders’  group.

However, shareholders asked the banks to go after loan defaulters, saying those who dragged the banks to the present state were not ghosts.

“It is certain they are not going to pay a dividend but that does not mean that the banks are down,” he said, urging the banks not to relent in pursuing loan defaulters.

Also speaking, President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar described the development as a temporary setback for the shareholders.

“I have to commend the CBN. The CBN of today is different from what we had in the past. They want to ensure that banks are very strong, that is why they brought the recapitalisation to N500bn. But there are a few banks that are still having forbearance and single obligor issues and they have asked them to address that. I believe by the half year, this issue would be addressed. And you cannot go and pay dividends when you have non-performing loans,”  he said.

According to him, what the CBN has done is to protect shareholders and depositors.

The UBA Group Managing Director, Oliver Alawuba while speaking recently assured that the dividend skip is temporary, saying, “UBA has a long history of dividend payments, with yields sometimes reaching double digits.”

He also disclosed that the bank is going after loan defaulters.

Alawuba who is the Chairman, Committee of Banks’ CEOs said, “We paid dividends consecutively from 2023 through the first half of 2025. However, the Central Bank of Nigeria gave banks a window to exit the forbearance regime, and UBA was one of the banks that did so. That required us to reclassify certain accounts in line with prudential guidelines. We made provisions of about N331 billion, which pushed our non-performing loan ratio above the threshold required for dividend payment.

“And doing that also resulted in a non-performing bank loan ratio of about – that’s a bit higher than was expected for a dividend payment. So that dividend didn’t come. However, the good news is that this is a one-off term.

“And this is not recurring. So the portfolio has been reset. And we’re also going after these defaulting customers and the signs that they are paying back.”

 

…No cause for alarm – Analyst 

Financial analyst, Ayokunle Olubunmi in a chat with our correspondent said the sector is undergoing a clean-up phase. However, he said there is no cause for alarm about the stability or otherwise of the financial institutions, noting that most of the banks have enough capital to withstand any shock.

Olubunmi who is the Head of Financial Institutions Rating at Agusto and Co, said, “During the COVID-19 era, there were some facilities that were having issues because of issues in the macro. And those facilities are strategically important.

“So what the CBN now says is that if the banks are classified, they can even foreclose some of those assets. So to avoid a crisis in the economy, what the CBN said is that those facilities should be classified as non-performing. Then another thing also was that in terms of impairments, which is like provisions on the loan, don’t take provisions on the loan.

So, when this forbearance window was closed, which was like a regulatory waiver,  the banks had to take the appropriate level of provision which led to a significant increase in the impairment charges and affected their profitability.

“And then also, in terms of not paying dividends, it is not all of them that was affected by the forbearance. Like UBA, that was what affected it but for Access Bank and FirstBank, there were even much more issues.

“Now, for those loans that were classified as non-performing, it doesn’t mean that those loans are gone and gone forever.

“Once the bank has opened up a loan, they go after them and they try and recover the loans. And the beauty of it is that once they get the recovery, whatever amount that they recover goes straight into their profits.”

“So, for a layman, just think about it as expenses on the loan book which they should have taken but they didn’t take due to the regulatory waiver and CBN is now saying you must take everything now.”