Nine banks raise N2.3trn as recapitalisation deadline nears

Nine Nigerian banks have raised a combined N2.3 trillion in fresh capital as the March 31, 2026 recapitalisation deadline set by the Central Bank of Nigeria (CBN) draws closer, underscoring the sector’s accelerating push to meet stricter regulatory capital thresholds.

According to a new report by S&P Global Ratings, rated Nigerian banks have so far collectively raised about N2.3 trillion (approximately $1.5 billion), although this still falls slightly short of its estimated aggregate capital requirement of N2.5 trillion (about $1.7 billion).

Read also: UAE’s largest bank plans Nigeria entry with Lagos office

The report noted that out of the 10 rated commercial banks, which together account for roughly 80% of total banking system assets, nine already meet the new capital requirements for their respective banking licences. S&P said it expects some smaller banks to explore alternatives such as mergers, acquisitions or adjustments to their business models to ensure compliance with the new rules.

“We expect overall capitalisation for the banking sector to improve as banks complete their capital strengthening initiatives to meet the new capital requirements,” S&P said, adding that most rated banks concluded their capital raising exercises in 2025, with only a few still in the market to complete final tranches.

Under the CBN’s revised capital framework, which takes effect on March 31, 2026, banks with international licences are required to maintain a minimum paid-up capital of N500 billion, while national banks must meet a N200 billion threshold. This represents a sharp increase from the previous minimum capital requirement of N25 billion.

For non-interest banks, the CBN requires those with national licences to maintain a minimum paid-up capital of N20 billion, while non-interest banks with regional licences are required to hold at least N10 billion.

Nigeria’s largest banks have largely cleared the recapitalisation hurdle months ahead of the deadline, deploying a mix of speed, scale and strategic capital market activity to meet the CBN’s tougher standards and, in some cases, position themselves more competitively in anticipation of a more demanding regulatory environment.

Yemi Cardoso, Governor of the Central Bank of Nigeria, disclosed in November 2025 that 27 banks had raised fresh capital under the ongoing recapitalisation exercise, with 16 institutions having completed the process at the time.

Despite the progress, S&P warned that the Nigerian banking sector would continue to face challenges in 2026. The end of regulatory forbearance is expected to pressure asset quality, while higher capital requirements and anticipated interest rate cuts could weigh on net interest margins.

Nonetheless, the ratings agency said it expects Nigerian banks to remain resilient and capable of preserving profitability. The outlook is supported by growth in net interest income, driven largely by transaction fees and commission income, as well as a declining, though still elevated, cost of risk.

Cost of risk is expected to remain high following the CBN’s removal of regulatory forbearance measures, particularly as the creditworthiness of some restructured exposures remains weak. These factors could continue to weigh on asset quality in 2026 and beyond, especially if oil prices fall significantly below expectations. Banks, however, have strengthened their capital buffers at the CBN’s request, providing some insulation against these pressures.

S&P analysts forecast Nigeria’s real gross domestic product growth will average 3.7% over 2025 and 2026, supported by both the oil and non-oil sectors. Inflation is expected to gradually ease to around 21% in 2026, paving the way for further monetary easing following the 50 basis points rate cut in September 2025 and helping to support consumer demand.

Read also: Ethiopia to open gold market to banks, phase out miner premiums

Within this macroeconomic context, nominal lending growth is expected to remain strong at around 25%, driven largely by investments in oil and gas, agriculture and manufacturing. Oil and gas lending is expected to benefit from improved production following efforts to curb militancy and crude oil theft. Retail lending, however, is projected to contribute only marginally to overall loan growth due to its relatively small share of banks’ loan portfolios.

Non-performing loan ratios rose sharply in 2025 to about 7.0% from 4.9% in 2024, reflecting the end of regulatory forbearance on oil and gas exposures. Forbearance measures introduced in 2020 allowed banks to keep some oil and gas exposures in Stage 2, limiting provisioning requirements.

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks.

She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.

Join BusinessDay whatsapp Channel, to stay up to date