Economy
Nigerian Commercial Banks Face $1 Billion Loan Losses In First Half Of 2023 Amid Inflation And Rate Hikes
Nigerian Commercial Banks Face $1 Billion Loan Losses In First Half Of 2023 Amid Inflation And Rate Hikes....KINDLY READ THE FULL STORY HERE▶
Nigeria’s leading commercial banks have grappled with a staggering estimated $1 billion in loan losses during the first half of 2023, marking a substantial surge compared to the same period the previous year. This surge is largely attributed to the challenges of rising inflation and interest rate hikes initiated by the Central Bank of Nigeria.
Despite these macroeconomic hurdles, banks like UBA and GTCO have witnessed over 1,000% year-on-year growth in impairment charges, impacting their core lending business and reducing their net interest income.
Nevertheless, banks have managed to maintain non-performing loan ratios within regulatory limits, primarily due to a significant increase in non-interest income generated from forex revaluations.
The figures reveal that Nigeria’s leading commercial banks collectively faced estimated loan losses exceeding $1 billion during the first two quarters of 2023. This information is drawn from the recently released financial statements for the first half of the year.
In local currency terms, these losses surpass N730 billion for the first six months of the year, significantly overshadowing the N163 billion incurred during the same period in the preceding year.
It’s important to note that Access Bank, Nigeria’s largest financial institution by total assets, has yet to release its audited accounts for the first half of the year.
The escalation in impairments is occurring against a backdrop of increasing inflationary pressures and consequent interest rate hikes. To combat soaring inflation, the Central Bank of Nigeria (CBN) has substantially raised its key interest rates, reaching a 15-year peak of 18.75% from 11.5% in December 2021.
Market experts widely anticipate another interest rate hike at the rescheduled Monetary Policy Committee (MPC) meeting, originally slated for September 25 and 26, 2023.
As the CBN continues its proactive measures to combat inflation, the cost of borrowing has surged. This inflationary environment has made servicing loans more expensive, raising the likelihood of borrower defaults.
In response to the heightened risk of customer defaults, banks have had to increase their impairment charges as a buffer against potential future losses. During the first half of 2023, impairment charges on loans and advances across banks saw a substantial year-on-year surge. UBA and GTCO both recorded over 1,000% year-on-year growth in impairment charges for the same period, with loan impairments of N164.2 billion and N153.9 billion, respectively.
GTB attributed these mounting losses to “weakening macroeconomic conditions” and losses incurred from investments in Ghana’s Eurobonds.
The substantial increase in impairment charges on loans and advances underscores a significant concern: banks are bracing themselves for more substantial losses from their core revenue stream, which is lending to customers. These provisions have cast a shadow over the banks’ income generated from their core business line, reducing their net interest income after impairment charges.
Zenith Bank, for instance, outlined the challenge, indicating that high impairment levels and elevated interest expenses due to inflation have impacted its net interest margin (NIM), which dropped from 7.1% to 5.9% year-on-year.
Nonetheless, commercial banks have maintained non-performing loan ratios within regulatory limits. GTB, Zenith Bank, UBA, and FBN Holdings reported NPL ratios of 4.6%, 3.9%, 3.3%, and 4.3%, respectively.
These more favorable ratios have been bolstered by a substantial increase in non-interest income, particularly from forex positions. Four banks within the FUGAZ group (excluding Access Bank) reported a combined N1.3 trillion from forex revaluation gains, primarily from swaps and non-deliverable forwards, a significant leap from just N16 billion during the same period in 2022.
Some financial analysts have suggested that the surge in loan impairments may be a strategic move by banks to fast-track loan provisioning, which can now be offset by the gains from forex revaluations.
According to Nivo News, the World Bank has projected that Nigeria’s economy will grow by 4.4 percent in 2026 and 2027, driven by new tax legislation, prudent monetary policies, and ongoing economic reforms. The announcement was made in the bank’s January 2026 Global Economic Prospects report, which described the anticipated growth rate as the fastest for Nigeria in over a decade.....KINDLY READ THE FULL STORY HERE▶
This latest projection represents an upgrade from the World Bank’s previous forecast of 3.7 percent published in June 2025. The bank highlighted that reforms in the tax system, combined with continued monetary prudence, are expected to stimulate economic activity, improve investor confidence, and reduce inflation. It also noted that increased oil production is likely to offset lower global oil prices, boosting fiscal revenue and strengthening Nigeria’s external balance.
The projection comes against the backdrop of Nigeria’s Gross Domestic Product (GDP) growth of 3.98 percent year-on-year in real terms during the third quarter of 2025, as reported by the National Bureau of Statistics.
Nigeria’s headline inflation rate eased to 14.45 per cent year on year in November 2025, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS). The report showed that while consumer prices continued to rise on a monthly basis, annual inflation moderated significantly under the revised base year.....KINDLY READ THE FULL STORY HERE▶
The CPI increased to 130.5 points in November from 128.9 points in October, marking a 1.6-point month-on-month rise. Despite this, the headline inflation rate declined from 16.05 per cent recorded in October. The NBS highlighted that the November 2025 figure represents a 1.6 percentage point decrease compared with the previous month.
Monthly inflation, however, rose to 1.22 per cent in November from 0.93 per cent in October, indicating that average prices increased at a faster pace during the month despite the moderation in annual inflation. Headline inflation for November 2025 was 20.15 percentage points lower than the 34.60 per cent recorded in November 2024, reflecting the impact of the rebasing exercise that reset the base year to 2024 from 2009.
Over the twelve months ending November 2025, the average CPI increased by 20.41 per cent, down sharply from 32.77 per cent in the corresponding period of 2024. Food and non-alcoholic beverages remained the largest contributor to annual headline inflation at 5.78 percentage points, followed by restaurants and accommodation services at 1.87 percentage points, and transport at 1.54 percentage points. Housing, water, electricity, gas and other fuels added 1.22 percentage points, while education and health contributed 0.90 and 0.88 percentage points, respectively. On a month-on-month basis, food and non-alcoholic beverages drove price increases with a contribution of 0.49 percentage points.
Urban inflation declined sharply to 13.61 per cent year on year in November, down 23.49 percentage points from November 2024, while rural inflation remained higher at 15.15 per cent but fell 17.12 percentage points from the previous year. Month-on-month, urban inflation slowed to 0.95 per cent, while rural inflation accelerated to 1.88 per cent.
Food inflation moderated annually to 11.08 per cent in November 2025 from 39.93 per cent in November 2024. Monthly food inflation rose to 1.13 per cent, driven by price increases in items such as dried tomatoes, cassava tubers, ground pepper, eggs, crayfish, egusi, oxtail, and fresh onions. Core inflation, which excludes volatile agricultural and energy prices, stood at 18.04 per cent year on year, down from 28.75 per cent in November 2024.
State-level data showed Rivers recorded the highest year-on-year inflation at 17.78 per cent, followed by Ogun at 17.65 per cent and Ekiti at 16.77 per cent. Plateau had the lowest at 9.13 per cent, alongside Kebbi at 10.32 per cent and Katsina at 10.60 per cent. The NBS cautioned that interstate comparisons should be interpreted carefully due to differing consumption patterns and CPI weights across states.
The Nigerian National Petroleum Company Limited (NNPCL) has set a crude oil production target of more than two million barrels per day for 2026, citing strong collaboration with pipeline host communities as a key factor in sustaining increased output.....KINDLY READ THE FULL STORY HERE▶
Akponime Omojevwhe, Head of Field Operations, Eastern Corridor, Project Monitoring Office (PMO), disclosed the projection during a monthly stakeholders’ meeting with host communities along the Trans Niger Pipeline in Port Harcourt. The meeting was organized by Pipeline Infrastructure Nigeria Limited (PINL).
Omojevwhe revealed that the 2026 national production budget is pegged at 2.80 million barrels per day (mbpd), with a starting benchmark of 1.84 mbpd and a targeted achievable output of 2.06 mbpd. He affirmed that the Trans Niger Pipeline is currently operating efficiently, attributing its success to the active cooperation between local communities, stakeholders, and PINL.
He emphasized that community participation is critical to pipeline protection, stating, “No private security structure can succeed without grassroots involvement. The communities are a vital part of this job. Their continued support ensures uninterrupted flow along the pipeline.”
Edi Julius, representing the Minister of State for Petroleum (Oil), Heineken Lokpobiri, lauded the partnership between PINL and the communities, noting that local peace is essential for boosting national oil production. “We are confident that by 2026, Nigeria will exceed two million barrels per day, generating additional revenue and enabling greater support for host communities,” he added.
Dr. Akpos Mezeh, General Manager of Community and Stakeholders’ Relations at PINL, reviewed the year’s progress, highlighting achievements such as strengthened security along the TNP corridor, expanded stakeholder engagement, empowerment programs for women and students, zero incidence of illegal bunkering, and improved community-company trust. He also announced Christmas palliatives for the 215 TNP host communities.
Responding on behalf of the host communities, His Majesty King Philip Osaro Obele urged the federal government to channel more development projects into the region. He praised PINL for its transparency and consistent engagement, emphasizing that ongoing dialogue is essential to maintaining peace along the pipeline.
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