Nigeria’s five Tier-1 lenders, collectively known as FUGAZ banks, recorded a sharp rise in loan impairment charges in 2025 as worsening macroeconomic conditions and mounting repayment pressures weighed on borrowers.
The banks are First HoldCo Plc, United Bank for Africa Plc, Guaranty Trust Holding Company Plc, Access Holdings Plc, and Zenith Bank Plc. They posted combined impairment charges on loans and advances of N2.365 trillion for the year ended December 2025, compared with N1.44 trillion in 2024, representing a 64 percent year-on-year increase and the highest level in at least three years. .
In 2023, the banks had reported combined provisions of N916.5 billion.
Despite the spike in impairments, the lenders expanded their combined loan books to N43 trillion from N39.96 trillion in 2024.
Interest income from customer loans also rose to N7.1 trillion out of total interest income of N14.5 trillion during the year.
Zenith Bank recorded the highest impairment charge at N843.4 billion, driven largely by significant Stage 2 and Stage 3 exposures within its N10.45 trillion loan portfolio.
First HoldCo followed with impairment charges of N786.8 billion, more than double the N371 billion recorded in 2024, largely linked to impaired corporate loans.
UBA reported impairment charges of N381 billion, up from N246.9 billion, as stage 3 credit-impaired loans climbed to N350.7 billion. Access Holdings posted N287 billion in impairments and also wrote off N309.5 billion during the year.
GTCO emerged as the only lender to record an improvement in asset quality, with impairment charges declining by 51 percent to N66.4 billion despite growth in its loan book.
The lender also maintained the strongest capital position among the FUGAZ banks, with its capital adequacy ratio rising to 43.82 percent.
Analysts said the sharp rise in provisions reflects increasing borrower stress amid high interest rates, inflationary pressures, and exchange rate volatility.
The industry’s gradual exit from the Central Bank of Nigeria’s regulatory forbearance framework also contributed to the increase, forcing banks to fully recognise previously restructured loans.
Although the banks continued to benefit from elevated yields on loans and government securities, the results indicate a more challenging operating environment.
Early first-quarter 2026 results suggest the pressure has persisted, with most of the lenders reporting further increases in impairment charges.
