March 9, 2026/CSL Update
The Central Bank of Nigeria (CBN) has announced that 30 banks have already met the new minimum capital requirements under its ongoing banking sector recapitalisation programme, indicating strong early compliance ahead of the March deadline and marking an improvement from the previous update.
Recall that at the last Monetary Policy Committee (MPC) meeting, the CBN Governor disclosed that out of the 33 banks that had raised additional capital, only 20 had met the new minimum capital threshold. In the coming weeks, we expect banks that have recently secured regulatory approval for their recapitalisation programmes to begin formally disclosing the details of these exercises to the investing public.
We remain constructive on the earnings outlook for Nigerian banks in the postrecapitalisation phase, as stronger capital buffers are expected to enhance their capacity to expand balance sheets and pursue larger, higher-value lending opportunities (see CSL 2026 Equities and Fixed Income Outlook, 21 January). In addition, the relatively elevated interest rate environment and attractive yields on government debt instruments should continue to support earnings through robust income from investment securities, further strengthening profitability in the near to medium term. In this context, Net Interest Margins (NIMs) are expected to remain robust, even if they ease slightly from recent highs. Larger Tier 1 banks with diversified funding bases and a strong mix of current and savings deposits are likely to outperform their peers, while smaller banks may face greater pressure amid intensifying competition for deposits.
That said, certain risks remain. We believe that asset quality is likely to remain sensitive to macroeconomic shocks, particularly in sectors with significant foreign currency exposure where exchange rate volatility could weaken repayment capacity. In this context, banks will need to strike a careful balance between expanding their loan books and maintaining disciplined credit underwriting standards, in a bid to avoid a rise in non-performing loans. We also expect increased regulatory oversight post-recapitalisation. The apex bank is likely to maintain heightened supervisory scrutiny to ensure that newly strengthened capital positions are complemented by improved governance practices and stronger risk management frameworks.
Overall, while the ongoing recapitalisation exercise may lead to some degree of earnings dilution in the banking sector in the short term, particularly through an increase in the number of outstanding shares and the resulting moderation in earnings per share (EPS), we expect the long-term implications to be broadly positive for profitability and shareholder value.
Click here to download full report: CSL Nigeria Daily – 09 March 2026 – Banking.pd
