The 2025 financial year was marked by cautious lending across the banking sector, despite the Central Bank of Nigeria’s (CBN) decision to reduce the Loan-to-Deposit Ratio (LDR) requirement to 50 per cent.
A Pinnacle Daily review of the financial results of major banks shows that while some lenders maintained loans slightly above the regulatory minimum, others fell below the benchmark.
The trend underscores the challenge banks face in balancing regulatory lending expectations with rising credit risks and significant reserve obligations.
In April 2024, the CBN reduced the minimum LDR from 65 per cent to 50 per cent.
The change was meant to reduce pressure on banks to lend aggressively and give them more flexibility to manage their balance sheets in a difficult economic environment.
At the time, the CBN said the adjustment was part of its move toward a tighter monetary policy.
It also stated that all deposit money banks must keep to the new level, which is measured using average daily figures.
“While DMBs are encouraged to maintain strong risk management practices regarding their lending operations, the CBN shall continue to monitor compliance, review market developments, and make alterations in the LDR as it deems appropriate,” the apex bank stated.
FCMB, Stanbic, and Wema hit above the requirement
An examination of banks’ 2025 financial statements shows that most lenders, who have released their 2025 financial results, operated just above the 50 per cent benchmark, while others remained below it.
In many cases, their deposits grew faster than their loans. For FCMB Group, it ended the year with ₦2.41 trillion in loans and ₦4.40 trillion in customer deposits.
This gave the bank an LDR of 54.7 per cent, slightly above the regulatory minimum. However, rising loan losses affected its lending decisions.
Net impairment losses rose sharply to ₦86 billion in 2025, showing increased pressure on the quality of its loan book.
At the same time, FCMB almost doubled its investment in securities to ₦2.06 trillion.
READ ALSO:
- Nigeria’s Economic Outlook Shows Consumer Confidence Rising – Rewane
- Ecobank Posts 30% Profit Growth as Assets Near ₦50trn
- Center Warns Against Premature Export Restrictions on Raw Materials
- NIPCO Stake in Savannah Energy Rises Above 30% Following Share Buyback
This suggests the bank shifted more funds into safer assets, such as government and corporate bonds, rather than lending to the real sector.
Its ability to lend was also limited by ₦1.20 trillion held in restricted reserves at the CBN, including LDR-related cash reserves and other mandatory buffers.
On its part, Stanbic IBTC Holdings recorded one of the strongest lending positions among the banks reviewed.
It had loans of ₦2.46 trillion and deposits of ₦4.37 trillion, resulting in an LDR of 56.3 per cent, which shows a more active lending strategy, supported by strong deposit growth.
The bank also maintained a capital adequacy ratio of 19.2 per cent, which gives it room to increase lending while staying within risk limits.
Wema Bank also posted solid figures, with loans of ₦1.80 trillion and deposits of ₦3.28 trillion, producing an LDR of 54.8 per cent, indicating strong use of deposits for lending.
A further review of its results shows Wema’s lending strategy is partly supported by the Differentiated Cash Reserve Requirement (DCRR) scheme.
Pinnacle Daily reports that this scheme allows banks to use part of their restricted reserves when financing approved real sector projects.
First HoldCo, others fell below the requirement
On the other hand, First HoldCo and Ecobank Transnational Incorporated (ETI) ended the year below the 50 per cent benchmark.
First, HoldCo recorded loans of ₦9.06 trillion and deposits of ₦18.90 trillion, resulting in an LDR of 47.97 per cent, down from 51.06 per cent in 2024.
Its deposits grew by 10 per cent, while loans increased by only 3.4 per cent, reducing the share of deposits used for lending.
The group also kept ₦4.10 trillion in mandatory reserves, which further limited funds available for loans.
ETI, the parent company of Ecobank, reported loans of ₦17.09 trillion and deposits of ₦36.45 trillion, representing an LDR of 46.9 per cent, slightly lower than 48.5 per cent in 2024.
The results show that the drop was mainly due to faster deposit growth compared to loan expansion across its operations.
Sterling Financial Holdings Company also stayed below the benchmark. It recorded loans of ₦1.42 trillion and deposits of ₦2.98 trillion, giving an LDR of 47.8 per cent.
Although both loans and deposits grew during the year, large statutory reserves of ₦718.59 billion and strong liquidity buffers reduced the bank’s effective lending capacity.
The fact that many banks are clustered around the 50 per cent mark shows the impact of the revised policy.
By lowering the lending requirement from 65 per cent, the CBN has reduced the pressure on banks to push out loans aggressively, especially at a time of rising loan losses and economic uncertainty.
Concerns over leading rates
However, deposits alone do not determine how much banks can lend, as mandatory reserves, liquidity buffers, and other regulatory rules, including interest rates, still limit the funds available for credit.
The Manufacturers Association of Nigeria (MAN) has been concerned about the high benchmark interest rate margin, currently at 27 per cent.
In an earlier report, the Director General, Segun Ajayi-Kadir, noted that the high costs of borrowing are hindering production and undermining competitiveness in the real sector.
He lamented that the interest rate remains high and puts an enormous burden on businesses that bear the elevated cost of borrowing.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
