Nigerian banks raised ₦800 billion ($522.9 million) in the first seven months of 2025 and are projected to mobilise an additional ₦900 billion ($588.2 million) before year-end, as the industry accelerates efforts to meet the Central Bank of Nigeria’s recapitalisation directive, according to a new Nigerian banking industry report.
The report released on Tuesday by Agusto & Co. Limited, a pan-African credit rating agency, offers a comprehensive review of Nigeria’s banking sector, covering industry structure, competition, regulatory landscape, financial performance, and outlook.
“Capital raising activities have dominated the Industry following the Central Bank of Nigeria’s minimum paid-up capital directive in March 2024,” the report said.
It added that banks mobilised about ₦1.7 trillion ($1.15 billion) in fresh capital in 2024, largely from existing shareholders, and an additional ₦800 billion ($522.9 million) between January and July 2025. As of July 31, eight banks had complied with the recapitalisation threshold, though some of the proceeds remain under regulatory verification.
CBN directive sparks consolidation drive
The recapitalisation mandate, issued in March 2024, requires all banks to boost their minimum paid-up capital by March 2026. Commercial banks with international licences must raise at least ₦500 billion ($325.8 million).
The rules, aimed at strengthening financial system resilience, have unleashed aggressive fundraising and are expected to trigger further consolidation across the sector.
Agusto & Co. observed that the industry has remained resilient despite macroeconomic headwinds and tight monetary policy. Alpha Morgan Bank Limited joined the market in December 2024, bringing the number of licensed banks to 36 as of July 2025.
“We anticipate the entrance of at least one new operator, given the number of financial institutions with ‘approval in principle’ to operate as banks. However, the ongoing merger between Providus Bank Limited and Unity Bank Plc will moderate the total number of licensed operators,” the report said.
The agency expects another ₦900 billion in capital to be injected before December 2025, as more banks race to comply ahead of the March 2026 deadline.
Rising credit risks
The report warned that the termination of regulatory forbearance could weigh heavily on asset quality. “The downgrade of underperforming loans, previously classified as stage two exposures, will expand the stage three loan portfolio,” Agusto & Co. noted.
It forecasts the impaired loan ratio to rise to 6.9% by end-2025, up from 5.2% in 2024, exceeding the 5% regulatory benchmark.
Revenue outlook vs profitability pressure
Agusto & Co. projects higher industry revenues in 2025 as recapitalisation proceeds are deployed in a high-yield environment, supported by increased transaction volumes.
However, profitability is expected to weaken due to surging impairment charges, tighter funding conditions, and the absence of foreign exchange revaluation gains as the naira stabilises.
The firm projects a 19.2% decline in pre-tax profit in 2025. Pre-tax return on average assets is expected to fall to 2.2% (from 3.7% in 2024), while pre-tax return on equity is projected to drop to 27.3% (from 48.2% in 2024).
Note: Figures were originally reported in naira and converted using the average official exchange rates of ₦1,530/$1 for the first seven months of 2025 and ₦1,478.9/$1 for 2024.
