The Nigerian banking industry is on track to attract an additional N900 billion in fresh capital inflows before the end of 2025, as lenders intensify efforts to meet the recapitalisation requirements set by the Central Bank of Nigeria (CBN).
This projection was contained in the latest Nigerian Banking Industry Report released by Agusto & Co., which also assigned a “stable” outlook to the sector.
The recapitalisation mandate, announced by the CBN in March 2024, requires commercial banks with international authorisation to raise their minimum capital to N500 billion, while those with national licences must meet a N200 billion threshold. Regionally authorised banks are expected to attain N50 billion, while non-interest banks are required to scale up to N20 billion (national) and N10 billion (regional) respectively. The deadline for compliance is March 2026.
Analysts estimate that Nigerian banks will collectively need to raise approximately N4.2 trillion within the stipulated timeframe. As of December 2024, the Securities and Exchange Commission confirmed that around N1.7 trillion had already been mobilised from the capital market.
CBN Governor Olayemi Cardoso recently disclosed that eight banks have already surpassed the recapitalisation benchmark. Others have since launched additional rounds of capital raises to meet the March 2026 deadline.
Agusto & Co. noted that the recapitalisation directive has spurred aggressive fundraising across the industry. “In 2024, about N1.7 trillion was raised by 16 banks. A further N800 billion was mobilised in the first seven months of 2025. Consequently, eight banks had already met the minimum capital requirements by July 31, 2025, though CBN and SEC verifications are still pending on some of these inflows,” the report stated.
The agency projects that another N900 billion will be injected into the industry before the close of 2025, providing banks with a buffer against current business risks and bolstering capacity for future expansion. Domestic investors have accounted for the majority of the capital raised so far, underscoring strong local confidence in the banking system.
However, the report also warned that the termination of regulatory forbearance by the CBN in June 2025 could weigh on industry profitability. As of December 2024, the sector’s non-performing loan (NPL) ratio had risen to 5.2% from 4% the previous year, partly due to the 40.4% depreciation of the naira. With forbearance now withdrawn, all loans are expected to be classified fully under regulatory standards, with appropriate provisions made.
Agusto & Co. further projected that the industry’s NPL ratio could spike to 6.9% in the short term, but should improve before the end of 2026 as impaired loans are resolved and write-offs are executed under transitional reliefs granted by the regulator.
On profitability, the firm expects 2025 to be a challenging year for banks. It forecasts a 19.2% decline in profit before tax, with pre-tax return on average equity likely to fall sharply from 48.2% in 2024 to 27.3% in 2025. The pressures stem largely from higher impairment charges and lower foreign currency revaluation gains. However, profitability is expected to rebound in 2026 once capital-raising proceeds are fully deployed.
The CBN has already moved to tighten oversight, issuing directives in June 2025 that barred certain banks from paying dividends, awarding bonuses, or investing in foreign subsidiaries until recapitalisation milestones are achieved. Banks are now required to submit capital restoration plans, outlining strategies such as cost optimisation, risk reduction, and business model restructuring.
Additionally, lenders must provide quarterly disclosures on critical financial metrics, including loan provisioning, capital adequacy ratio (CAR) with and without transitional reliefs, and details of Additional Tier 1 (AT1) instruments issued. These measures are designed to enhance transparency and regulatory supervision ahead of the 2026 deadline.
