By Newsshelve
Nigeria’s banks may have raised a record ₦4.65 trillion in fresh capital, but rating agency DataPro says the real test in 2027 will be whether lenders can turn that financial muscle into stronger earnings and more credit for the economy.
DataPro, in its inaugural Risk Quarterly® magazine, said the banking industry enters 2027 with an average Capital Adequacy Ratio (CAR) of 25.5 per cent, signalling a significantly stronger capital position.
But beneath the stronger balance sheets lies a major warning: banks have already written off about ₦2.9 trillion in loans, effectively swallowing 63 per cent of the capital raised during the recapitalisation exercise.
According to DataPro, the era of simply raising capital is giving way to a tougher “capital productivity” test.
₦4.65trn raised, ₦2.9trn loans written off
The rating agency said the cleanup of banks’ balance sheets following the withdrawal of pandemic-era regulatory forbearance triggered massive loan write-offs.
The development, it said, has left banks entering 2027 with stronger capital buffers but under pressure to demonstrate that the new capital can generate sustainable returns.
CBN rules could lock up billions
DataPro also warned that proposed regulatory requirements could create another squeeze on banks’ capital.
It specifically highlighted the proposed 20 per cent HoldCo capital buffer, saying the requirement could trap funds at holding-company level and weaken returns on average equity.
Internationally licensed banking groups could face the biggest impact, with DataPro estimating additional requirements of ₦656 billion for Access Holdings and ₦416 billion for UBA.
₦180trn assets, but credit remains tight
Despite banks controlling about ₦180 trillion in assets, DataPro said lending to the productive economy remains constrained.
The agency identified the combination of a 45 per cent Cash Reserve Ratio (CRR) and Treasury bill yields of around 21 per cent as a major factor encouraging banks to place funds in relatively low-risk government securities.
The result, it said, is a difficult credit environment for businesses.
MSMEs, which DataPro says account for 96 per cent of Nigerian businesses, receive less than 5 per cent of formal bank credit.
2027 election cycle adds fresh risk
DataPro also expects the 2027 election cycle to create additional volatility for banks.
The agency said increased liquidity during the pre-election period could collide with the CBN’s recent 350-basis-point cut in the Monetary Policy Rate to 23 per cent.
Although the rate cut signals a shift in monetary policy, DataPro said the unchanged CRR could continue to restrict meaningful private-sector credit expansion until election-related uncertainties ease.
The new banking battle
For DataPro, the banking sector’s next battle is no longer about who can raise the most capital.
It is about who can deploy that capital efficiently, grow quality loans and protect earnings without creating another mountain of bad debt.
The rating agency said banks will increasingly be judged by indicators including a cost-to-income ratio below 50 per cent, a loan-to-deposit ratio above 65 per cent and the ability of their post-recapitalisation lending models to withstand the pressures of an election year.
The message from DataPro is clear: 2027 will test not the size of Nigerian banks’ capital, but what they can do with it.
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