Rising NPL crisis: Ecobank’s bad loan nightmare deepens.

Ecobank Nigeria, a subsidiary of Ecobank Bank Transnational Incorporation (ETI) Plc, is reeling from elevated nonperforming loans (NPL) attributed to the reclassification of loans previously under the Central bank’s COVID-era regulatory forbearance.

Ecobank Nigeria reported NPLs-a measure that tracks borrowers that are behind on their payments- of 9.50 percent as at the Half Year (H1) period that ended June 2025, which compares to 9.40 percent  2.6 percent, and 1.4 percent for the Anglophone West Africa (AWA), Central, Eastern and Southern Africa (CESA), and Francophone West Africa (UEMOA) regions, respectively.

Nigerian lenders have begun to reclassify current loans that are under forbearance in line with a recent regulatory directive by the Central Bank of Nigeria (CBN).

While the ratio is above the regulatory threshold of 5 percent, it will not derail the Group’s (ETI) FY-25E NPL guidance of 6.0–7.0 percent.

It is important to note that the Group’s NPLs decreased by 6.10 percent to $659.58 million from $702.51 million in the first six months of 2024.

The Nigeria operations lags peers in the Group on all financial metrics.

For instance, Ecobank Nigeria reported return on average equity (ROE) of 6.50 percent, which compares with CESA, (36.90 percent); AWA, (30.20 percent), and UEMOA, (26.70 percent).

It seems Ecobank Nigeria is struggling from deteriorating operating inefficiency due to inflationary pressures and regulatory induced costs as it reported cost-to-income (CIR) of 66.90 percent as at June 2025.

That compares with UEMOA, (46.90 percent); CESA, (43.40 percent), and AWA, (39.30 percent).