Nigerian banks are likely to face lower profitability, tighter capital buffers, and a potential uptick in non-performing loans (NPLs) as the country’s central bank begins a gradual withdrawal of the regulatory forbearance measures introduced at the height of the COVID-19 crisis.
In a circular released on Friday, the Central Bank of Nigeria (CBN) ordered all banks benefiting from forbearance on credit exposures or breaches of Single Obligor Limits to suspend dividend payments, defer executive bonuses, and halt new investments in foreign subsidiaries or offshore ventures.
The policy shift comes at a time when banks are already absorbing significant credit losses linked to Nigeria’s fragile economic recovery and foreign exchange instability.
