NPLs Remain Low at 4.2%, Banking Sector Assets Up 12.68% to N17.98trn 

Nume Ekeghe

Non-performing loans (NPLs) in Nigeria’s banking sector stood at 4.2 per cent in January 2025, remaining well within regulatory limits despite mounting macroeconomic pressures and a slight dip in banks’ capital adequacy. 

This was disclosed by Dr. Bandele A.G. Amoo, a member of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), in his personal statement following the committee’s January meeting.

Amoo noted that the sector has continued to demonstrate resilience, with total banking industry assets rising by 12.68 per cent to N17.98 trillion year-on-year. “Deposits surged by N11.05 trillion, while credit grew by N0.59 trillion over the same period. Liquidity also remained strong, as reflected by a liquid assets-to-third-party funds ratio of 50.6 per cent,” he stated.

However, he pointed to a marginal decline in the Capital Adequacy Ratio (CAR), which slipped to 14.8 per cent in January from 15.2 per cent in December 2024 a signal of rising risk-weighted exposures that could constrain future credit expansion.

He said: “The Nigerian Financial system continues to be resilient and strong. Banking industry assets grew by12.68 per cent to N17.98 trillion in January 2025. Industry credit and deposits increased by N0.59 trillion and N11.05 trillion, respectively as of January 2025 compared with their levels in the preceding year. Bank liquidity remained adequate in January 2025, reflected by a high ratio of liquid assets to third-party funds at 50.6 per cent. 

“The Capital Adequacy Ratio (CAR) declined to 14.8 per cent in January 2025 from 15.2 per cent in December 2024, thereby exposing banks to more risk-weighted assets and under supporting credit growth, even as interest margin to total operating income rose by 8 per cent. Meanwhile, non-performing loans (NPL), as a proxy of credit risk, stood at 4.2 per cent in January 2025.” 

He added that the financial soundness indicators (FSI) trend for other financial institutions also showed strong safety levels. Their savings and domiciliary deposits fell by N 0.17 trillion 0.80 per cent and N 0.96 trillion 2.40 per cent respectively, in January 2025.

He added: “These Fintech-driven MFBs have played a key role in advancing the nation’s financial inclusion drive and the growth of the MFB subsector. Through technological innovation and the use of data analytics, these MFBs have enabled faster and more efficient delivery of financial services to the underbanked and unbanked.”