Business
Rising non-performing loans put pressure on banks
By Philippine Duru
philippineobetoduru@gmail.com
08034905774
Nigeria’s banking sector is witnessing a paradoxical trend in 2026 as lenders continue to report robust growth in assets, deposits and earnings, while credit expansion to businesses and households slows significantly amid mounting concerns over asset quality and rising non-performing loans (NPLs).
The development comes as banks adjust to tighter monetary conditions and prepare for the full implementation of regulatory measures following the gradual withdrawal of loan forbearance arrangements that had helped cushion borrowers through periods of economic stress.
Industry analysts say the banking sector remains fundamentally strong, supported by record profits, foreign exchange revaluation gains, increased digital banking revenues and aggressive capital-raising efforts. However, the quality of loan portfolios is increasingly coming under scrutiny as more borrowers struggle with high interest rates, inflationary pressures and elevated operating costs.
Despite a significant increase in customer deposits and total assets across the industry, banks have become more cautious in extending new credit, particularly to riskier sectors of the economy.
The cautious stance reflects concerns over the ability of borrowers to service debt in an environment characterized by high borrowing costs. The Central Bank of Nigeria’s monetary tightening cycle has pushed lending rates to multi-year highs, increasing repayment burdens for businesses and consumers alike.
Many lenders are prioritizing liquidity preservation and risk management over aggressive loan growth, leading to a slowdown in credit creation at a time when businesses are seeking financing to expand operations and manage rising costs.
Economic experts warn that prolonged weakness in credit expansion could affect private-sector investment, job creation and overall economic growth, especially for small and medium-sized enterprises that depend heavily on bank financing.
A major factor driving concern within the banking industry is the gradual expiration of regulatory forbearance measures introduced to help borrowers affected by economic disruptions.
During the forbearance period, banks were allowed certain regulatory flexibility in restructuring loans and providing repayment relief to struggling customers. While the policy helped prevent a sharp deterioration in asset quality, analysts note that it also delayed the recognition of some underlying credit weaknesses.
As these relief measures wind down, banks are being required to reassess affected facilities under stricter prudential standards. Loans that were previously classified as performing due to restructuring arrangements are increasingly being reviewed, with some migrating into non-performing categories.
The result has been a noticeable increase in impaired loans across segments such as manufacturing, oil and gas, trade, real estate and small business lending.
Industry observers report that non-performing loan ratios have begun trending upward after several years of relative stability.
Although most major lenders remain within regulatory thresholds, the rising trajectory is attracting attention from regulators and investors who fear that continued economic pressures could trigger further deterioration.
Banks are responding by increasing loan-loss provisions, strengthening recovery efforts and tightening underwriting standards for new borrowers.
Some institutions have also intensified loan restructuring programs aimed at helping viable businesses navigate temporary cash-flow challenges without slipping into outright default.
Financial analysts note that higher provisions could place pressure on future profitability, even though most banks currently retain substantial earnings buffers.
Despite emerging asset-quality concerns, the sector continues to benefit from strong capitalization.
Several leading banks have successfully raised fresh capital through rights issues, private placements and public offers as part of ongoing efforts to meet new regulatory capital requirements.
The recapitalization exercise is expected to strengthen the industry’s resilience against potential loan losses while providing additional capacity to support future lending activities.
Market analysts believe stronger capital buffers will help banks absorb shocks associated with deteriorating credit quality and maintain confidence among depositors and investors.
Investors are increasingly shifting attention from headline profit figures to the sustainability of earnings and the health of loan books.
While many banks continue to report impressive bottom-line growth, analysts caution that profits driven largely by foreign exchange gains and treasury operations may not be sufficient to offset persistent deterioration in loan performance.
Institutional investors are paying close attention to NPL ratios, provisioning levels, cost of risk indicators and management guidance regarding exposure to vulnerable sectors.
The trend is expected to play a significant role in determining market valuations for banking stocks in the second half of 2026.
The broader economic environment remains challenging for borrowers.
Businesses continue to grapple with elevated energy costs, exchange-rate volatility, inflation and weak consumer purchasing power. These factors have reduced operating margins and increased the likelihood of repayment difficulties across several sectors.
For households, rising living costs and higher lending rates have weakened debt-servicing capacity, particularly among consumers with variable-rate loans.
Economists argue that a moderation in inflation and borrowing costs could improve credit conditions and reduce pressure on bank asset quality over time.
Despite concerns over rising bad loans, banking industry experts remain optimistic about the sector’s long-term outlook.
They argue that stronger capital positions, improved risk-management frameworks and enhanced regulatory oversight should help lenders navigate the post-forbearance environment successfully.
However, they caution that banks will need to strike a delicate balance between maintaining profitability, supporting economic growth through lending and managing rising credit risks.
As the effects of forbearance withdrawal become more visible in coming quarters, the health of loan portfolios is likely to emerge as one of the most important indicators of the banking sector’s stability and performance in 2026.
By Philippine Duru
philippineobetoduru@gmail.com
08034905774
Nigeria has warned EgyptAir to modernise the aircraft deployed on its Nigerian routes, stressing that continued use of ageing planes could affect the airline’s operations in the country.
The Minister of Aviation and Aerospace Development, Festus Keyamo, gave the warning during a bilateral meeting with his Egyptian counterpart, Sameh El-Hefny, on the sidelines of the ongoing El-Alamein International Airshow (EIAS 2026) in Egypt.
According to a statement issued by Keyamo’s media aide, Tunde Moshood, the meeting focused on improving air connectivity between Nigeria and Egypt and strengthening cooperation between the two countries’ civil aviation authorities.
The discussions also covered the expansion of technical and professional capacity, as well as opportunities for greater collaboration among airlines, airports, regulators and other aviation stakeholders.
Keyamo specifically urged EgyptAir to deploy newer-generation aircraft on its Nigerian routes, rather than continuing with what Nigeria considers ageing aircraft.
“The minister also used the engagement to emphasise the need for a stronger and more modern fleet deployment by EgyptAir on its Nigerian routes,” Moshood said.
He said Keyamo urged the airline’s management to move away from the continued deployment of ageing aircraft and prioritise newer-generation aircraft in the Nigerian market.
According to the minister, fleet modernisation was essential to improving passenger experience, operational efficiency and the airline’s competitiveness.
Keyamo further stressed the strategic importance of Nigeria-Egypt aviation relations, noting that both countries occupy important positions within Africa’s aviation ecosystem.
He reaffirmed Nigeria’s commitment to expanding strategic international partnerships to improve air connectivity, promote tourism and trade, support airline growth and deliver greater value to passengers and the aviation industry.
The Nigerian delegation also expressed the country’s readiness to work with Egypt’s Ministry of Civil Aviation to identify areas of mutual cooperation, particularly within the framework of the Single African Air Transport Market (SAATM).
Responding, El-Hefny welcomed the engagement and reaffirmed Egypt’s commitment to deepening aviation cooperation with Nigeria.
He called for closer collaboration between the two countries to advance air transport development and strengthen links between their aviation industries.
The Egyptian minister also advocated stronger institutional cooperation between the African Civil Aviation Commission (AFCAC) and the League of Arab Civil Aviation (LACA).
“Enhanced collaboration between the two regional aviation bodies could promote stronger partnerships and facilitate greater cooperation among African and Arab States,” El-Hefny said.
The meeting ended with both ministers reaffirming their commitment to sustained dialogue, stronger institutional cooperation and initiatives aimed at delivering tangible benefits to the aviation sectors of Nigeria and Egypt.
Philippine Duru
philippineobetoduru@gmail.com
08034905774
Akwa Ibom State Governor, Umo Eno, has recounted his early experience in entrepreneurship, revealing that he once made not less than ₦10 million in a month from selling akara and bread.
Eno, who spoke while reflecting on his journey before entering public service, said the business experience played an important role in shaping his understanding of enterprise, hard work and wealth creation.
According to the governor, he started from a modest venture involving the sale of akara and bread before gradually expanding his business activities.
“I started selling akara and bread. I made not less than ₦10m in a month,” Eno said.
The governor’s account highlights the entrepreneurial path he pursued before rising through the ranks in business and eventually becoming governor of Akwa Ibom State.
Eno has frequently emphasised the importance of entrepreneurship and economic empowerment, particularly as a means of creating opportunities for young people and reducing dependence on government employment.
His recollection of the akara and bread business also underscored his view that small businesses, when properly managed and supported, can grow into significant sources of income and employment.
The governor’s comments come amid growing conversations around entrepreneurship, youth empowerment and the need to create sustainable livelihoods in Nigeria, where many young people are turning to small and medium-scale enterprises to earn a living.
Eno has continued to advocate policies and initiatives aimed at expanding economic opportunities and encouraging residents to become self-reliant through productive ventures.
His story of moving from selling akara and bread to occupying the highest political office in Akwa Ibom has also been presented as an example of how entrepreneurship, persistence and business experience can shape an individual’s journey to leadership.
The Nigerian Exchange Limited (NGX) rebounded last week, with the All-Share Index (ASI) gaining about 0.81 per cent to close at 241,298.47 points, as renewed investor interest in oil and gas and banking stocks lifted market sentiment.
The week’s gain translated into an estimated ₦1.29 trillion increase in market capitalisation, pushing the value of listed equities to about ₦155.83 trillion.
With the latest appreciation, the NGX’s year-to-date return remained strong at approximately 55 per cent, underscoring the market’s substantial gains despite intermittent periods of profit-taking and volatility.
The recovery was largely driven by buying interest in oil and gas and banking stocks, with Seplat Energy among the notable gainers during the week.
Market sentiment also received a boost from developments in Nigeria’s international financial-market standing. FTSE Russell confirmed the country’s reclassification to Frontier Market status, effective September 21, 2026, a move expected to influence international investor positioning toward Nigerian equities.
Further support came from Moody’s decision to revise Nigeria’s outlook to positive, reinforcing expectations that ongoing economic and fiscal reforms could improve the country’s credit profile.
Despite the positive performance, trading activity was relatively subdued, partly reflecting the shortened trading week. Market volume declined as investors adopted a more cautious approach amid prevailing economic uncertainties and profit-taking pressures.
Analysts said the latest rebound highlights continued investor appetite for fundamentally strong sectors, although the sustainability of the market’s upward trajectory will depend on macroeconomic conditions, corporate earnings, foreign investor participation and policy developments.
As investors enter a new trading week, attention is expected to remain on the performance of banking and energy stocks, while the implications of Nigeria’s forthcoming Frontier Market reclassification could further shape sentiment and capital flows into the equities market.
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