An in-depth review of the first three months of 2025 shows that eight prominent Nigerian banks have collectively registered N156 billion in impairment charges against their credit and financial assets, according to recently filed financial disclosures. This represents banks’ provisioning against anticipated loan defaults and the diminishing value of their exposures, as economic headwinds continue to affect credit quality.
The impairment provisions, which help cushion the impact of non-performing loans and investment losses, are indicative of ongoing inflationary challenges, currency depreciation, and liquidity constraints affecting the banking sector. The data reveals varied approaches by banks: some have aggressively reduced loan loss charges, while others have seen sharp increases, underscoring different operational realities and credit risk appetites.
Zenith Bank takes the lead with an impairment figure of N49.38 billion, down close to 12 percent from a year earlier, which could signal successful asset recovery initiatives or improved loan portfolio health. Their impairment is majorly linked to loans and advances, with sizable amounts also allocated to treasury bills and securities. Impressively, Zenith’s profitability surged by over 20 percent despite these charges.
In contrast, First HoldCo’s impairment fell to N37.25 billion, driven chiefly by loan provisions, supported by some write-offs and asset reversals. However, its profit declined, reflecting possible pressure on revenue streams.
Access Holdings and Guaranty Trust Holding Company also exhibited lower impairment charges, suggesting enhanced credit risk frameworks and more cautious lending. While Access Holdings improved profitability by nearly 15 percent, Guaranty Trust encountered a drastic drop in earnings, alongside a marginal reduction in impairment, pointing to challenges beyond credit losses.
United Bank for Africa’s impairment skyrocketed, tripling from the previous year, signifying increased exposure to risky credits and possibly unstable macroeconomic conditions. Despite this, UBA posted increased profits, revealing complex dynamics within its credit and investment portfolios.
Meanwhile, First City Monument Bank (FCMB) achieved the most substantial reduction in impairment—nearly 60 percent—through recoveries and adjustments, helping to boost its profitability.
Fidelity Bank and Wema Bank reported significant rises in impairment charges, reflecting increased provisioning needs as they expand lending and adjust portfolios to current risk levels.
Collectively, the overall decline in impairment by 5.2 percent masks the divergent experiences within the sector. These disparities, industry analyst Charles Sanni of Cowry Treasurers Limited explains, highlight variations in how banks perceive and manage credit risk, with some “biting the bullet” on non-performing loans and others potentially opting for riskier short-term earnings strategies.
“Increased interest rates since 2024 have made it essential for banks to scrutinize borrowers’ leverage and sectoral vulnerabilities,” Sanni stated, noting that proactive management and early recoveries can mitigate impairment burdens but will differ by institution.
He also attributed growing loan volumes, particularly in capital-intensive sectors such as oil and manufacturing, to ongoing inflation, which supports continued earnings growth for banks able to navigate the risks.