The Central Bank of Nigeria (CBN) reported that the banking sector’s Capital Adequacy Ratio (CAR) fell to 12% in the first quarter (Q1) of 2025, following the earlier removal of regulatory forbearance granted to banks.
The CAR, which measures a bank’s ability to absorb losses and protect depositors, dropped by 1.43 percentage points from the previous month.
Despite the decrease, it remains above the 10% minimum required by regulators, showing that banks are still financially strong enough to handle credit and market risks.
This decline followed the end of temporary relief measures that had helped banks cope with economic challenges.
The CBN also reported that banks’ liquidity ratio, which shows their ability to meet short term obligations, remained strong at 62.86%, well above the 30% regulatory minimum.
However, Non Performing Loans (NPLs) rose to 7.8%, higher than the 5% allowed limit.
Overall, the CBN said the banking sector remains stable, with key financial indicators within safe levels, thanks to careful supervision and risk management.
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