Banks’ non-performing loans (NPLs) ratio jumped to 8.03 per cent, seven months after the Central Bank of Nigeria (CBN) ended key regulatory forbearance measures that had allowed banks to restructure troubled loans without immediately classifying them as impaired.

According to data released by the CBN as contained in its January 2026 Economic Report, the banking sector recorded a further deterioration in asset quality in the same period under review.

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The NPL atio increased by 0.52 percentage points from 7.51 per cent in December 2025, remaining significantly above the prudential benchmark of 5.0 per cent.

The increase followed the reclassification of loans after the withdrawal of regulatory forbearance, which required lenders to recognise previously restructured facilities as non-performing where applicable.

According to the CBN, the deterioration in asset quality was directly linked to the withdrawal of forbearance and subsequent loan reclassification.

“Following the Bank’s loan reclassification after the withdrawal of forbearance, the non‑performing loans (NPLs) ratio rose by 0.52 percentage point to 8.03 per cent compared with the level in the preceding period and was above the 5.00 per cent prudential threshold,” the CBN report read.

Despite the increase in non-performing loans, the banking sector maintained strong liquidity during the review period.

The industry’s liquidity ratio rose to 63.38 per cent in January 2026 from 57.22 per cent in the preceding month, remaining well above the regulatory minimum of 30 per cent.

The improvement indicates that banks continued to hold sufficient liquid assets to meet short-term obligations and support financial intermediation activities.

The banking sector’s capital adequacy ratio stood at 12.05 per cent in January 2026, compared with 12.35 per cent in December 2025, but remained above the regulatory minimum requirement of 10%.

According to the CBN, the ratio underscores the industry’s ability to absorb potential losses arising from credit and market risks despite the rise in impaired loans.

The report noted that the banking industry remained resilient, with most financial soundness indicators staying within prudential thresholds and supporting overall financial system stability.