Agusto & Co. Limited, the foremost business information provider and pan-African credit rating agency, has released its 2025 Nigerian Banking Industry Report. The 2025 edition of the annual report provides a comprehensive review of Nigeria’s banking industry (“the Industry”), detailing the Industry’s structure, competitive environment, regulatory landscape, financial condition, trends, near-term expectations and outlook.
The Nigerian banking industry has remained resilient despite the prevailing macroeconomic and regulatory headwinds, particularly the contractionary stance of the monetary authority. Alpha Morgan Bank Limited joined the Industry in December 2024. Thus, 36 licensed banks operate in the Industry as at 31 July 2025. We anticipate the entrance of at least a new operator based on the number of financial institutions with “approval in principle” to operate as a bank. However, the ongoing merger between Providus Bank Limited and Unity Bank Plc will moderate the number of licensed banks operating in Nigeria.
Capital raising activities have dominated the Industry following the Central Bank of Nigeria’s minimum paid-up capital directive in March 2024. The Industry raised approximately ₦1.7 trillion in additional capital, primarily from existing shareholders, during the financial year ended December 31, 2024. Another ₦800 billion was raised in the first seven months of 2025. Thus, eight banks have complied with the minimum paid-up capital directive as at 31 July 2025, although some of the capital raising proceeds are still undergoing the mandatory regulatory verification. We anticipate the injection of an additional ₦900 billion before 31 December 2025 as more banks strive to comply with the directive ahead of the 31 March 2026 effective date.
Agusto & Co. believes the regulatory forbearance termination will impact the quality of the Industry’s asset portfolio. The downgrade of underperforming loans, hitherto classified as stage 2 exposures, based on the regulatory forbearance, will expand the stage 3 loan portfolio. Thus, we expect the impaired loan ratio to further increase to 6.9% (FYE 2024: 5.2%) by 31 December 2025, higher than the 5% regulatory guidance.
Agusto & Co. anticipates an uptick in the Industry’s revenue in FY 2025 as the proceeds of the capital raising exercise are deployed in a high-yield environment. Higher transaction volumes will also support the revenue base. However, in our view, the surge in impairment charges as the provisions on the underperforming forbearance loans are accelerated will significantly impact profitability. The funding pressure emanating from the contractionary stance of the monetary authority and the absence of foreign currency revaluation gains as the exchange rate stabilises will also moderate the Industry’s performance. Thus, we anticipate a 19.2% decline in the profit before taxation in FY 2025. We also believe the pre-tax return on average assets will decline to 2.2% (FY 2024: 3.7%) and the pre-tax return on equity will dip to 27.3% (FY 2024: 48.2%) in FY 2025.
Agusto & Co.’s 2025 Banking Industry Report includes analysis of the following;
Some of the benefits of the report are outlined below;
