Banks’ N55.7trn loan book awaits recapitalisation lift – Businessday NG

Nigeria’s banking sector is yet to record a significant increase in customer lending despite completing its recapitalisation exercise, with loans and advances across eight major lenders rising by just 2.4 percent to N55.66 trillion in the nine months to September 2026.

The figure, up from N54.36 trillion in the corresponding period of 2025 and N52 trillion in nine months of 2024, highlights the cautious approach banks are taking towards credit creation even as the Central Bank of Nigeria’s recapitalisation programme strengthens their capacity to finance larger transactions and absorb economic shocks.

The modest expansion raises questions about how quickly the fresh capital mobilised by lenders will translate into increased private-sector credit, particularly as businesses and households continue to face elevated borrowing costs and economic uncertainty.

Olumide Sole, head of Financial Institutions Research at Renaissance Capital Africa, said banks’ preference for government securities over lending reflects their relatively attractive risk-adjusted returns, although the difference in returns is not substantial. “Government securities have been more attractive than loans,” he said.

He added that lending has continued to grow, suggesting improved confidence in borrowers’ repayment capacity and the economy’s outlook.

“The 2.4 percent increase shows that recapitalisation process is yet to reflect in the banks’ loan book, as they are still not willing to lend above their threshold,” he added.

For Samuel Oyekanmi, the head of research and insights associate at Norrenberger, the modest growth in banks’ loan books may not necessarily be linked to the recapitalisation exercise but rather to the difficulty of generating quality risk assets in a high-interest-rate environment.

“Banks’ ability to generate quality risk assets in a high-interest-rate environment remains a major challenge, which explains their cautious approach to lending,” he said.

Looking ahead to the fourth quarter, Oyekanmi expects credit creation to remain subdued as businesses anticipate further interest rate cuts.

“I would still expect credit generation to remain cautious in Q4, as the market anticipates a further decline in interest rates. Businesses would likely delay borrowing, where possible, in anticipation of a potential further rate cut,” he said.

The recapitalisation exercise, which ended on March 31, 2026, required banks to raise their minimum capital in line with their licence categories. The CBN subsequently announced that 33 banks had met the revised requirements, with lenders collectively raising N4.65 trillion.

The policy was designed to strengthen banks’ capacity to absorb economic shocks, finance larger transactions, and support productive investments as Nigeria pursues its ambition of building a $1 trillion economy.

In countries where inflation is high, or the local currency keeps losing value, central banks often respond by raising interest rates. This makes borrowing more expensive but is seen as a way to protect the economy. However, this approach also comes with downsides: it slows down growth and limits job creation. However, the CBN at its last MPC meeting reduced MPR to 23 percent amid easing inflation and stability of the Naira in the foreign exchange market.

Despite the cut in MPR, the Nigerian banking sector’s average maximum lending rate increased to 32.62 percent in September 2026 from 29.84 percent reported in September 2025, while the average prime lending rate moved from 11.90 percent in September 2025 to 19.04 percent as of September 2026.

Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN) disclosed that with the capital raised, banks would then be better positioned to expand lending to businesses, although this would require stronger expertise in assessing and managing risks.

“The environment has changed, and it is going to be an opportunity for those who have the capacity,” Cardoso said.

Read also: Nigeria’s industrial goods firms income tax payments surge 98.9% as profits rise 43.1%

Access Holdings, Ecobank increased loan book

Among the eight lenders, Access Holdings recorded the largest increase in loans and advances, with its customer loan book rising 11.2 percent to N14.34 trillion in September 2026, from N12.89 trillion a year earlier.

Ecobank followed, with loans increasing 5.5 percent to N11.97 trillion from N11.34 trillion, while Stanbic IBTC recorded a 14 percent increase to N2.61 trillion from N2.29 trillion.

Wema Bank and Sterling Financial Holdings recorded some of the strongest growth rates, with their loan books rising 60.7 percent and 49.5 percent to N2.51 trillion and N1.82 trillion, respectively.

In contrast, Zenith Bank’s loans declined 18.3 percent to N10.01 trillion from N12.26 trillion, while First HoldCo recorded a 1.7 percent contraction to N9.39 trillion. GTCO also reported a 7.4 percent decline to N3 trillion.

According to Segun Agbaje, GTCO’s group chief executive officer, in a TV interview, bank is cautious about expanding consumer lending because borrowers must understand the implications of taking on debt and demonstrate the capacity to repay.

He noted that GTCO has extended credit to about 8.3 million customers, with N130 billion in loans, and expects the portfolio to grow. Among the top 5 banks in Nigeria, GuarantyTrust Bank is adjudged to be the financial institution that has the lowest number of loan defaulters in the country.

Deposits outpace lending as banks strengthen liquidity

While lending expanded modestly, customer deposits grew considerably faster, increasing 13.4 percent to N149.67 trillion in September 2026 from N131.99 trillion in the corresponding period of 2025.

Access Holdings maintained its position as one of the largest deposit mobilisers among the lenders, with customer deposits increasing 11.2 percent to N36.8 trillion from N33.1 trillion.

Ecobank recorded deposits of N36.7 trillion, up 2.8 percent from N35.7 trillion, while Zenith Bank’s deposits increased 14.3 percent to N27.1 trillion from N23.7 trillion.

First HoldCo recorded a stronger 27.9 percent increase in deposits to N22.9 trillion, while GTCO’s deposits rose 17.8 percent to N13.9 trillion.

The faster growth in deposits relative to loans suggests that banks are accumulating funding faster than they are extending credit, potentially reflecting cautious lending decisions, liquidity management considerations, and the need to maintain adequate buffers against economic uncertainty.

Across the eight lenders, the aggregate loans-to-deposits ratio declined from approximately 41.2 percent in September 2025 to 37.2 percent in September 2026.

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