Eight Nigerian banks recorded a combined ₦156bn in impairment charges on credit and financial assets in the first quarter of 2025, according to an analysis by The PUNCH of unaudited financial statements filed with the Nigerian Exchange Limited.
Impairment charges—also called loan losses—are provisions banks make to cover potential defaults and devaluation of financial assets. The figures highlight the cost of risky lending amid inflation, naira depreciation, and weakened consumer and business liquidity.
Among the banks, Zenith Bank incurred the highest charge, ₦49.38bn, marking an 11.8% drop from ₦55.97bn in Q1 2024. This decline may reflect improved asset quality or aggressive loan recovery. Despite this, the bank grew profit after tax by 20.7% to ₦311.83bn.
First HoldCo followed with ₦37.25bn, an 11.2% fall year-on-year. Provisions were largely on customer loans, though profit fell from ₦208.11bn to ₦171.10bn.
Access Holdings posted a 4.5% reduction in impairment charges to ₦21.77bn, possibly due to fewer provisions on pledged assets. Profit after tax rose 14.7% to ₦182.75bn.
GTCO reported a marginal drop in charges to ₦13.42bn. Although asset quality remained steady, profit fell sharply by 43.6% to ₦258.03bn, attributed to larger macroeconomic headwinds.
UBA recorded a sharp 332.2% rise in provisions to ₦14.18bn, driven by credit losses and exposure to volatile assets. Still, it grew post-tax profit by 33.1% to ₦189.84bn.
FCMB’s impairment dropped 59.9% to ₦9.52bn, aided by recoveries on previously written-off loans. Profit increased to ₦32.23bn.
Fidelity Bank reported a 285.8% surge to ₦8.66bn, linked with asset depreciation and amortisation.
Wema Bank recorded ₦1.82bn, up 64.7% from 2024, reflecting rising credit risk as its loan book expands.
Though the total impairment charges declined by 5.2% from ₦164.53bn in Q1 2024, the figures show divergent strategies and risk exposure across the banks.
Speaking to The PUNCH, Charles Sanni, CEO of Cowry Treasurers Limited, said these impairment trends reveal how banks handle risk. He noted that some banks take an aggressive stance by writing off bad loans early—what he called “biting the bullet.”
According to Sanni, lower non-performing loan ratios suggest better credit monitoring. Since interest rates began to rise in 2024, proactive banks have focused on sectors less sensitive to macroeconomic shifts and more cautious borrowers.
He warned that banks prioritising revenue over credit quality may see unstable earnings, especially those exposed to volatile sectors.
Sanni added that inflation has driven up loan volumes, especially in capital-heavy industries like oil and gas and manufacturing. He expects that as long as inflation persists, earnings from these sectors will likely remain strong.