Banking
CBN Stress Test Shows Weak Capital Signs in Banks
By Modupe Gbadeyanka
A Central Bank of Nigeria (CBN) stress test has shown that only large banks will stay above the regulator’s capital adequacy ratio threshold if the non-performing loans levels of the Deposit Money Banks (DMBs) should rise by 50 percent, Punch is reporting.
The results of the stress test were contained in the CBN’s latest Financial Stability Report posted on its website on Thursday.
According to the report, the end-June 2017 banking industry stress test, which covered 20 commercial and four merchant banks, was conducted to evaluate the resilience of the banks to credit, liquidity, interest rate and contagion risks (shocks).
The banking industry was categorised into large banks (those with assets up to N1tn or above); medium banks (those with assets more than N500bn but less than N1tn); and small banks (those with assets up to N500bn or below).
The stress test results stated, “The stress test showed that only large banks could withstand a further deterioration of their NPLs by up to 50 per cent. However, none of the groups withstood the impact of the most severe shock of a 200 per cent increase in the NPLs as their post-shock CARs fell below the 10 per cent minimum prudential requirement.
“The impact of the severe shocks on the banking industry, large, medium and small banks will result in significant solvency shortfall of 15.21, 9.78, 93.42 and 17.53 percentage points from the regulatory minimum of 10 per cent CAR, amounting to N2.77tn, N1.54tn, N0.98tn and N0.25tn, respectively.”
According to the CBN report, the average baseline Capital Adequacy Ratios for the banking industry, large, medium and small banks at the end of June 2017 stood at 11.51, 13.13, -6.71 and 13.54 per cent, respectively.
These represented a decline of 3.27, 2.34 and 19.46 percentage points for the banking industry, large and medium banks, respectively from the position as at end-December 2016.
However, the small banks group grew by 10.40 percentage points from 3.14 to 13.54 per cent
The CBN said the decline in the CARs was attributable to the challenges in the oil and gas sector coupled with the slow recovery in the domestic economy, which resulted to a rise in the NPLs and capital deterioration.
In the sectoral credit concentration risk stress test, the breakdown of banking industry’s total credit by sector showed that, oil and gas sector accounted for 28.83 per cent of the industry credit, while manufacturing, general, information and communications, government and others accounted for 13.76, 8.82, 4.94, 8.53 and 35.12 per cent, respectively at end-December 2016.
The report added, “The results of the stress test of default in exposure to oil and gas sector showed that the banking industry and peered groups, with the exception of medium banks, withstood up to 20 per cent default as their post-shock CARs remained above 10.00 per cent – industry (10.74 per cent), large banks (12.30 per cent) and small banks (13.34 per cent).
“Under a more severe shock of 50 per cent default, only small banks had CARs above 10.00 per cent (12.30 per cent). This showed that banking industry, large and medium banks were more exposed to the credit risk in the oil and gas sector than the small banks.”
The CBN liquidity stress test showed that after a one-day run, the liquidity ratio of the industry declined to 31.5 per cent from the 48.1 per cent pre-shock position, and to 11.8 and 7.9 per cent after a five-day and cumulative 30-day run, respectively.
According to the report, the asset quality of commercial banks declined in the first half of 2017.
The ratio of the NPLs to gross loans increased by 2.2 and 4.3 percentage points to 15.0 per cent at end-June 2017 compared with the levels at end-December 2016 and end-June 2016, respectively.
In his reaction under the Governor’s Statement on the FSR, the CBN Governor, Godwin Emefiele, said, “Reflecting the recession in the first half of 2017, there was noticeable deterioration in banks’ loan portfolios, especially exposures to the oil and gas sector and foreign currency denominated credit.
“To maintain financial system stability, efforts have been intensified to proactively engage operators to effectively manage the associated risks. Also, a framework for the establishment of private asset restructuring companies to acquire non-performing loans from banks and other financial institutions will be released in due course.”
The Deputy CBN Governor, Financial System Stability, Dr. Joseph Nnanna, stated that the regulatory attention was currently focused on ensuring an improvement in the quality of banks’ assets as well as ensuring that the banks contribute effectively to the real sector.
“The disruptions experienced in the economy with declining oil prices and government revenue resulted in an increase in the non-performing loans in the banking industry. The CBN will continue to monitor developments and initiate measures to limit contagion and ensure that financial institutions remain safe and sound,” he added.
The results of the CBN’s stress test were in line with the Article IV Consultation report by the International Monetary Fund, which highlighted the risks the banking sector faced, particularly with regards to solvency ratios of “four small and medium-sized undercapitalised banks,” Afrinvest, a Nigeria-based investment and research firm, said in a research note.
It noted that some of the “small and medium-sized banks are kept afloat through continuous recourse to the CBN’s lending facilities”
The IMF report stated that banks needed to raise their capital buffers hence, the CBN’s directive on dividend payment was a welcome development, while also calling for a broad review of asset quality to unmask potential capital needs.
By Adedapo Adesanya
The African Energy Bank (AEB) will now officially launch in September in Abuja after failing to meet its targeted first-half 2026 commencement date, marking a fresh timeline for the continent’s energy financing institution.
The Secretary General of the African Petroleum Producers’ Organisation (APPO), Mr Farid Ghezali, as per Argus Media, acknowledged “several postponements” but said the new deadline is “to make the bank operational in September 2026 in view of the incompressible deadlines from an administrative point of view”.
A planned April start was pushed back to June before APPO members were again mobilised around a third-quarter deadline. At a recent meeting, the Nigerian government reiterated the country’s commitment to the African Energy Bank’s formal commencement of operations.
The bank was established by the APPO and the African Export-Import Bank (Afreximbank) to address the critical financing needs of Africa’s oil, gas and broader energy sectors and mitigate the global funding pressure against hydrocarbon investments in Africa.
The APPO scribe said funding has remained a major challenge even when the Nigerian government said the headquarters of the bank was ready since 2025.
Mr Ghezali called on APPO members to redeem their pledges towards the $500 million start-up capital before the end of June.
Argus quoted sources as saying that 91 per cent of the capital had been raised and that the Nigerian National Petroleum Company (NNPC) Limited and the Nigerian Content Development and Monitoring Board (NCDMB) would make up the balance.
Mr Ghezali said AEB aims to reverse the situation that sees Africa importing more than 60 per cent of its oil products consumption and producing only 12 per cent of global upstream liquids while being home to many of the world’s largest national oil and gas reserves.
He stated that the bank will target the financing of 20–30 LNG, petroleum products pipeline, terminals and refining projects by 2030. Projects that monetise natural gas as a transition fuel will take up 40 per cent of AEB’s loan book, and priority will be given to projects that contribute towards the creation of “500,000 to 1 million direct and indirect jobs in the energy value chain”.
Speaking at a Nigerian energy summit in February, Mr Ghezali said the bank plans to raise $15 billion in its first three years of operations to fund strategic energy projects.
He also unveiled the three-phase road map for the AEB, including “Phase one, which, as I said in the first half of 2026, launches the African Energy Bank platform with 10-pillar projects involving countries such as Nigeria, Angola, and Libya. APPO certification and integration of IOCs such as Shell or ENI.”
“Phase two, in 2027, we plan to start a regional gas-oil trade, integrating the principles of the Bassari Declaration for 15 per cent local content.”
Phase three, reaching 2030, the African Energy Bank will be a true African financial hub, with $200 billion mobilised.”
By Modupe Gbadeyanka
Zenith Bank Plc has joined other global corporations to commemorate the 2026 World Environment Day with a two-phase environmental clean-up initiative in Lagos State.
The financial institution participated in the commemoration under the global theme Inspired by Nature. For Climate. For Our Future through a two-day event.
In the first phase, which was a morning clean-up conducted by staff of the Bank on Wednesday, 3 June 2026, along Ajose Adeogun Street, Victoria Island, Lagos, employees of the lender cleared waste, sensitised residents on proper disposal practices, and reinforced the bank’s culture of community service and environmental stewardship.
The second day, participants engaged in a waterways clean-up at the Falomo Waterways, Ikoyi, Lagos. This was in collaboration with the Lagos Waste Management Authority (LAWMA) and the Lagos State Waterways Authority (LASWA). The joint effort focused on removing marine debris, promoting cleaner waterways, and supporting the state’s broader climate-resilience agenda.
“At Zenith Bank, sustainability is integral to how we operate. Clearing our streets and our waterways is a practical reminder that protecting the environment is a shared responsibility – and one we are proud to take up alongside LAWMA and LASWA.
“Through these exercises, we are taking deliberate action to preserve our communities, support climate action, and inspire others to act. Our operations will continue to align with global environmental standards as we build a more sustainable future for Nigeria and Africa,” the chief executive of Zenith Bank, Ms Adaora Umeoji, stated.
Zenith Bank says it remains committed to embedding Environmental, Social and Governance (ESG) principles across its operations, investing in green initiatives, energy efficiency, and community-focused programmes, in line with its commitment to environmental sustainability and responsible business practices.
These efforts advance the United Nations Sustainable Development Goals – particularly SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action). Sustainability remains an operational imperative across the Bank’s Nigerian base and its broader African, UK and European footprints.
By Modupe Gbadeyanka
The need to consider the usage of transaction data to design credit products for millions of small businesses in Nigeria has been emphasised by the chief executive of Moniepoint Incorporated, Mr Tosin Eniolorunda.
Speaking at a panel session at the launch of the Nigeria Payments System Vision 2028 (PSV 2028) by the Central Bank of Nigeria (CBN) recently, the Moniepoint chief said transactions from the payments ecosystem could be tracked to unlock economic survival for millions of underserved businesses that have been historically shut out of formal credit markets.
PSV 2028 is a framework aimed at setting priorities and direction for the country’s payments infrastructure over the coming years, with financial inclusion, resilience, and innovation among its core pillars.
According to the CBN governor, Mr Yemi Cardoso, the new framework builds on Nigeria’s progress in digital payments and seeks to accelerate the country’s transition towards a more inclusive, technology-driven ecosystem as it continues to lead Africa’s digital payments ecosystem.
At the panel, Eniolorunda noted that “I believe the next phase of growth will come from layering services like credit onto existing payment flows, using the visibility and trust already built through financial transactions.”
Speaking on the power of payment infrastructure as a foundation for broader financial services, he argued that the data generated by payment systems, when used responsibly, holds the key to making credit faster and more accessible for underserved businesses.
“One of the most powerful things about payment infrastructure is the data it creates. When used responsibly, it can help unlock quicker and more accessible credit for businesses that have historically been underserved. For many small businesses, access has always been the real barrier,” he said.
“Achieving the ambitions of PSV 2028 will require regulators, banks, fintechs, and ecosystem players working together with a shared long-term vision,” Mr Eniolorunda added, echoing Governor Cardoso’s warning against the country’s historic “start-stop” policy cycles.
“Over the past two decades, Nigeria’s payments ecosystem has evolved into one of the most dynamic and innovative in the world. From instant payments and digital adoption to fintech-led innovation, our progress has often set the pace on the continent. While this progress has not always been fully reflected in global narratives, its impact on economic activities, financial inclusion, and system resilience is evident across our economy,” he said.
Business Post learned that the panel was moderated by the chief executive of Sterling Bank, Mr Abubakar Suleiman, and also featured the chief executive of the Nigeria Inter-Bank Settlement System (NIBSS) Plc, Mr Premier Oiwoh; his counterparts at Remita Payment Services Limited (RPSL), Mr Deremi Atanda; and Shared Agent Network Expansion Facilities (SANEF) Limited, Mrs Uche Uzoebo, among others.
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