The Nigerian banking sector is facing a critical stability test as a $2 billion (approximately ₦2.9 trillion) distressed loan from indigenous energy giant Nestoil Limited forces a significant balance sheet reset and a halt in dividend payments for affected institutions.
United Bank for Africa (UBA) Plc and Access Holdings Plc are among the latest banks to be impacted, with neither declaring dividends for shareholders in their 2025 Full Year financial results.
UBA's full-year 2025 results revealed loan loss provisions of N331 billion on its books. Concurrently, Access Holdings' charge for impairment on loans and advances to customers surged by 209% to ₦287.3 billion.
Data indicates that Nigerian banks' exposure to the oil and gas sector amounted to N21 trillion at the close of 2024. The major banks exposed to Nestoil include United Bank for Africa (UBA) Plc, First Bank of Nigeria (FBN), Access Bank Plc, FCMB Group, Union Bank, Ecobank, and Afrexim Bank.
Under the leadership of CBN Governor Olayemi Cardoso, the regulator has prohibited affected banks from paying dividends for the 2025 financial year until they fully provision for these non-performing loans (NPLs).
This stringent regulatory stance has resulted in a ₦2.16 trillion impairment charge across five tier-one and tier-two lenders, including Access Holdings, UBA Plc, Ecobank Transnational Incorporated (ETI), First HoldCo, and FCMB Group, based on their 2025 financial statements.
These charges have directly reduced the banks’ net income for the fiscal year, preventing the distribution of expected dividends to shareholders.
The current crisis stems from Nestoil’s inability to service syndicated loans, which were secured during periods of higher oil production expectations. Nestoil is a prominent indigenous operator in the energy sector.
In a separate development, Access Holdings Plc is reinforcing its strategic focus on efficiency, positioning cost discipline as a key driver of long-term value creation. The Group's 2025 financial results showed gross earnings of N5.53 trillion and profit before tax exceeding N1 trillion, alongside an improvement in the cost-to-income ratio to 51.7 percent from 56.7 percent in the prior year.
According to Innocent C. Ike, Group Chief Executive Officer of Access Holdings Plc, this marks a critical shift in how the organisation defines and delivers growth, emphasizing that efficiency is now a core driver of value.
