Agusto & Co: 16 Banks Raised N1.7trn in 2024, N800bn Added in 2025

Sunday Ehigiator

The ‘2025 Nigerian Banking Industry Report’ released by Agusto & Co has revealed that a total of N1.7 million was raised by 16 banks in 2024, with an additional N800 billion raised already as of August 2025, in intensified efforts to comply with the Central Bank of Nigeria’s (CBN) recapitalisation directive.

According to the report, an additional N900 billion is expected to flow into the sector before the end of the year, adding to the over N2.5 trillion already mobilised in the last 19 months.

The report, which comprehensively reviews the industry’s financial health, regulatory environment, and growth trajectory, revealed that eight banks have already met the CBN’s minimum paid-up capital requirement, well ahead of the March 2026 compliance deadline.

Agusto & Co. praised Nigerian banks’ resilience in the face of global and domestic headwinds, particularly the high interest rate environment and contractionary stance of the monetary authorities. Despite these pressures, the industry has remained highly liquid.

The report also revealed that, as of December 2024, banks posted a liquidity ratio of 59.4 per cent, up from 43.5 per cent a year earlier. The ratio is projected to surpass 60 per cent in 2025, driven largely by favourable yields on government securities and innovative funding strategies such as commercial paper issuances. Already, about N750 billion worth of commercial papers were floated by banks in the first half of the year alone.

“The strong liquidity position reflects the industry’s adaptability and innovative funding mechanisms despite challenging macroeconomic conditions,” the report noted.

However, the outlook for profitability is less optimistic as Agusto & Co. projected a 19.2 per cent decline in profit before taxation in 2025, with the sector’s pre-tax return on average equity expected to fall to 27.3 per cent, compared to 48.2 per cent in 2024.

This anticipated dip is linked to higher impairment charges following the CBN’s termination of regulatory forbearance in June 2025. The policy shift requires banks to classify loans more strictly and make full provisions for non-performing exposures that had previously enjoyed temporary relief.

“Some banks are expected to accelerate provisioning and write-offs, taking advantage of transitional reliefs to clean up their balance sheets. This will, however, inflate impairment costs in the short term.Additionally, reduced foreign currency revaluation gains, previously boosted by naira depreciation, are expected to weigh on earnings in 2025,” the report stated.

The report also flagged an increase in impaired loans, with the industry’s non-performing loan (NPL) ratio projected to hit 6.9 per cent in 2025, up from 5.2 per cent in 2024 and 4 per cent in 2023. Much of this rise is linked to the proper classification of previously forbearance-protected loans.

Despite this, Agusto & Co. maintains a stable outlook for the sector, forecasting improvement from 2026 onwards as banks fully deploy recapitalisation proceeds and resolve a portion of their bad loans.

“We expect the industry’s profitability to rebound in 2026 as impairment costs moderate and fresh capital buffers support business expansion,” the agency added.

One of the more positive signals from the recapitalisation wave is the strong participation of local investors. Agusto & Co. noted that the bulk of the capital raised over the last 19 months came from Nigerian investors, reflecting growing confidence in the resilience of the sector despite macroeconomic volatility.

“This development underscores Nigerians’ trust in the stability and growth prospects of the banking industry,” the report highlighted.

The CBN’s recapitalisation policy, introduced in March 2024, mandates banks to significantly increase their minimum paid-up capital by March 2026. The directive was designed to strengthen the resilience of the financial system against shocks, improve banks’ capacity to support economic growth, and align the sector with global best practices.

Analysts note that while the policy has sparked an aggressive wave of fundraising and mergers, it has also raised concerns about smaller banks’ ability to comply within the stipulated time frame.

“The pace of capital raising suggests that many banks are on track, but regulatory verification of the raised capital by both the CBN and the Securities and Exchange Commission (SEC) remains crucial,” Agusto & Co. cautioned.

Looking ahead, Agusto & Co. believes the Nigerian banking industry will remain a central pillar of the economy, supported by stronger balance sheets, technological adoption, and deepening investor participation. However, the immediate outlook for 2025 remains challenging, with profitability expected to be squeezed by higher costs of risk and subdued revaluation gains.

Still, the report emphasised that recapitalisation will ultimately position Nigerian banks for stronger growth, enabling them to better support credit expansion, infrastructure financing, and broader economic development.

“The Nigerian banking industry has demonstrated remarkable resilience in navigating macroeconomic challenges. With recapitalisation well underway and liquidity buffers intact, we expect the sector to emerge stronger in the medium term,” the report concluded.