What ₦4trn Loan Write-Offs Mean for Nigerian Banks

In 2025, Nigerian banks sharply increased the volume of bad loans written off compared with 2024, particularly among Tier-1 lenders, according to an analysis by Pinnacle Daily.

Shareholders have described the rising bad loans as evidence of a long-standing weakness in credit discipline within the banking sector, warning that it must be urgently addressed.

Pinnacle’s daily review of eight banks’ 2025 audited results shows that Zenith Bank wrote off ₦1.24 trillion in loans in 2025, up from ₦94.40 billion in 2024, followed by First HoldCo, which wrote off ₦1.024 trillion, compared with ₦191.50 billion in 2024.

Access Holdings also recorded write-offs of ₦321.69 billion in 2025, up from ₦81.09 billion in 2024, and Stanbic IBTC increased to ₦48.04 billion from ₦14.08 billion.

For United Bank for Africa (UBA), it reduced its write-offs to ₦79.87 billion in 2025, down from ₦208.05 billion in 2024, even as Wema Bank also reduced its write-offs to ₦2.33 billion in 2025 from ₦6.05 billion in 2024.

While these six bank loan write-offs amount to ₦2.72 trillion in 2025, compared to ₦595.16 billion in 2024, figures for Ecobank and Guarantee Trust Holding Company (GTCO) were not provided in the available data.

Breakdown on Banks’ Operations, Earnings

As of December 31, 2025, total gross bad loans across the eight banks stood at approximately ₦4.435 trillion.

Ecobank recorded ₦1.733 trillion, First HoldCo had ₦1.129 trillion, Access Bank reported ₦468.04 billion, Zenith Bank had ₦422.41 billion, UBA recorded ₦350.67 billion, GTCO reported ₦160.47 billion, Wema Bank had ₦88.06 billion, and Stanbic IBTC recorded ₦83.64 billion.

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The high level of impaired loans increased management costs and reduced efficiency, even as Wema Bank noted that managing delinquent loans requires more than ten times the effort of performing loans.

Interest income was also affected because non-performing loans (NPLs) are placed on a non-accrual basis.

For instance, Zenith Bank reported a direct reduction in interest income and recorded ₦48.04 billion in accrued interest on impaired assets, while UBA reported ₦56.29 billion in accrued interest from impaired loans.

Despite this, the banks collectively earned about ₦19.07 trillion in total interest income in 2025.

Zenith Bank led with ₦3.67 trillion, followed by Access with ₦3.55 trillion, Ecobank with ₦3.19 trillion, First HoldCo with ₦2.99 trillion, UBA with ₦2.65 trillion, GTCO with ₦1.65 trillion, Stanbic IBTC with ₦787.05 billion, and Wema Bank with ₦576.07 billion.

The total profit after tax for seven banks was ₦4.53 trillion, as Zenith reported ₦1.04 trillion, Ecobank ₦904.71 billion, GTCO ₦865.75 billion, Access ₦743.05 billion, UBA ₦404.70 billion, Stanbic IBTC ₦380.80 billion, and Wema Bank ₦194.48 billion.

First, HoldCo’s total profit after tax was not provided in the excerpts.

Forces Capital Pressure on Bank amid Recovery Efforts

Write-offs reduced retained earnings, which form part of Tier 1 capital, affecting capital adequacy ratios in some banks.

First HoldCo’s capital adequacy ratio fell to 10.95 per cent in 2025 from 17.32 per cent in 2024, breaching regulatory requirements and prompting a remediation plan that includes a planned capital injection, while Ecobank Nigeria also faced capital pressure.

Other banks remained above regulatory minimums, including GTCO at 43.82 per cent, Wema at 28.05 per cent, Zenith at 25.00 per cent, UBA at 23.20 per cent, Stanbic IBTC at 18.50 per cent, Access at 18.12 per cent, and Ecobank Group at 16.70 per cent.

While recoveries from written-off loans are recognised as income only when cash is received, the banks’ commitment to recovery efforts includes enforcement actions, collateral sales, legal processes, and structured workout programmes.

Pinnacle Daily earlier reported that the Central Bank of Nigeria’s (CBN) stricter stance on forbearance and loan classification forced banks to clean up long-standing credit risks.

Shareholders Demand Stricter Lending Discipline

Speaking with Pinnacle Daily on shareholders’ concern over the significant loan write-off by the banks, the National Chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said banks should not be solely blamed for bad loans because major lending decisions, especially in sectors such as oil and gas, involve regulatory approval and often syndicated financing.

“I am not holding brief for the banks. The CBN, in all of this, should not be a minority player,” Okezie said.

He believes that the responsibility should be shared, stressing that stronger enforcement is needed to ensure companies do not take new loans while still owing existing ones.

He also stresses that corporate borrowers must behave responsibly and focus on running profitable businesses so they can repay their debts. In his view,

“If you have not settled your debt with one bank, you should not have access to another loan. That is how it should be, and the CBN must enforce it,” Okezie said.

He maintains that clearer and more proactive regulation would strengthen discipline in the banking system.

Despite concerns about loan provisions, Okezie said banks performed well in 2025 and recorded strong profits, noting that dividend restrictions were largely driven by regulatory requirements rather than poor performance.

He explains that “the banks have not performed badly; if you look at their accounts, they have performed very well.”

Okezie added that even with capital raising and provisions for non-performing loans, “Shareholders should still receive dividends, even if the amount is small.”

His counterpart, Moses Igbrude, the National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), explained that the recent loan write-offs and impairments in the banking sector were largely driven by regulatory requirements from the CBN aimed at cleaning up banks’ books.

“The write-offs and impairments are a regulatory-induced exercise meant to clean up banks’ books. It is a policy decision by the CBN, and it cuts across the sector,” Igbrude said.

He adds that while this may affect dividend payments in the short term, it does not mean the loans are lost permanently.

He further noted that even after regulatory provisions are made, banks still have a duty to pursue recovery from borrowers, insisting that “after the regulatory provisions, it is still the responsibility of bank management to pursue recovery from debtors. Any money recovered will improve future performance.”

Igbrude explained that recovered funds are eventually reflected in earnings and help strengthen the banks over time.

He stressed the need for stricter lending discipline, better collateralisation, and stronger regulatory monitoring of borrowers.

He warns that “going forward, banks must be very prudent in their lending.” Loans should be properly collateralised, and regulators must track serial debtors and scrutinise related-party transactions.”

Igbrude added that persistent defaulters should be blacklisted to enforce discipline and protect depositors’ funds.