The Key Bank of Nigeria (CBN) has warned banks against excessive concentration of loans in distinctive borrowers, sectors, geographic regions and property classes, saying such exposures could undermine the resilience of institutions despite the N4.65 trillion raised by manner of the banking sector recapitalisation.
CBN manager, Banking Supervision, Dr Olubukola Akinwunmi, stressed the demand for banks to protect their capacity to determine, review, monitor and regulation concentration risks as they enter the article recapitalisation era, noting that a diversified loan portfolio remains a essential defence against financial shocks.
He explained that the Management on Huge Exposures and Guidelines on Orientation of Credit Concentration Danger were designed to cap excessive dependence on individual obligors, relevant counterparties and economic sectors whose distress could materially weaken a bank.
“Although assets serves as an key buffer against losses, the opening line of defence remains a well diversified and prudently managed loan portfolio,” the Akinwunmi stated.
According to the Nigeria Economic Summit Group (NESG) services sector continued to dominate bank lending, accounting for 58.4 percent of the overall bank credit in the primary half of 2026, up from 55.7 percent in the opening half of 2025.
The NESG noted that Oil & Gas and Non-Oil Industrial sectors accounted for 27.8 percent and 6.7 percent, respectively, whilst Agriculture received 7.1 percent. Indoors the effective sectors, relatively lesser shares went to Manufacturing which got 8.3 percent, whereas construction and appraisal status got 4.6 and 1.6 percents respectively.
Akinwumi furthered that banks are required to establish internal exposure limits, conduct periodic stress tests and incorporate concentration uncertainty assessments into their Internal Investment Adequacy Assessment Procedure (ICAAP).
He warned that heavy exposure to sectors such as oil and gas, agriculture, manufacturing, appraisal announce and foreign swap could leave banks vulnerable to sector particular shocks, potentially resulting in rising non performing loans, increased provisioning, resources erosion and liquidity pressures.
The fresh hazard based supervisory framework, he added, would greater connect the degree of investment required by a bank to the risks it assumes, meaning institutions alongside excessive concentration risks could be required to sustain additional investment.
The warning comes as the banking field completes the recapitalisation programme launched in March 2024, which resulted in roughly N4.65 trillion in original money being mobilised, alongside 33 licensed banks meeting the revised minimum capital requirements.
He still noted that the recapitalization should not be seen as the finish of banking sector reform, saying “recapitalisation provides a stronger base, but lasting financial stability depends on how effectively banks combine resilient cash positions together with sound governance, prudent danger command, and sturdy regulatory oversight.”
