Nigeria’s tier-2 lenders are moving past the recapitalisation era and back into growth mode. Half-year financial statements for 2026 show that FCMB, Wema Bank, Sterling Bank, and Ecobank Transnational Incorporated (ETI) collectively grew their loan portfolios by 6.5 per cent to N6.23 trillion, up from N5.85 trillion at the end of 2025.
The increase signals a deliberate pivot from balance-sheet consolidation to active capital deployment, following the Central Bank of Nigeria’s (CBN) directive requiring banks to meet higher minimum capital thresholds by Q1 2026. With that compliance hurdle cleared, the focus has shifted to putting the fresh capital to work.
Wema and Sterling Lead the Charge
Wema Bank posted the most aggressive expansion, with loans surging 21.7 per cent to N2.12 trillion. The growth was driven by a push into retail, SME, and consumer lending. The strategy paid off in revenue terms: interest income jumped 42.7 per cent to N342.64 billion, tracking the loan-book growth almost one-for-one.
Sterling Bank followed with a 13.6 per cent increase in loans to N1.61 trillion. The bank’s lending capacity was supported by a 21.1 per cent rise in customer deposits to N3.62 trillion and a N96.6 billion public offer that lifted shareholders’ funds by 27.8 per cent. Gross earnings grew 31.5 per cent, while profit after tax rose 20.4 per cent to N50.3 billion.
FCMB and ETI Take a More Cautious Path
FCMB grew loans by a more modest 5.2 per cent to N2.49 trillion, prioritising asset quality over volume. The bank front-loaded N85.9 billion in impairment charges, including N63.4 billion in write-offs, bringing its non-performing loan ratio down to 5.2 per cent—closer to regulatory limits. The clean-up, combined with a 71.8 per cent surge in net interest income, drove profit before tax up 99 per cent to N157.3 billion.
ETI, the pan-African group, took a different tack entirely, trimming its loan book by 6 per cent to N15.90 billion. The reduction reflects portfolio rebalancing across its African markets amid currency volatility. While dollar-denominated profit before tax rose 6 per cent to $423 million, naira translation effects masked the performance locally, with profit after tax declining 6 per cent in naira terms.
Executives Frame the Results
Bank leaders struck a measured but optimistic tone in their half-year commentaries.
Ladi Balogun, Group Chief Executive Officer of FCMB, said the first-half performance demonstrated the strength of the bank’s recapitalised and diversified business model. He noted record profitability despite accelerating the normalisation of asset quality towards regulatory thresholds, and pointed to expanding net interest margins, an improved low-cost deposit mix, and growing contributions from non-banking businesses. Balogun said the bank remains on track to deliver a Return on Equity (RoE) of over 25 per cent for the 2026 financial year.
Jeremy Awori, CEO of Ecobank Group, highlighted the benefits of diversification and disciplined execution of the bank’s GTR strategy. He reported net revenue growth of 15 per cent to $1.3 billion, with strong performance across both Corporate and Investment Banking (CIB) and Commercial and Consumer Banking (CCB), driven by treasury solutions, trade finance, and payments. Awori also noted growth in low-cost current and savings account (CASA) deposits, which improved the deposit mix and lowered funding costs.
Awori acknowledged external pressures, citing global political tensions pushing up energy prices and driving inflation in many of the group’s markets. He said the bank remained focused on strategic efficiency measures and customer service during the implementation of its transformation agenda.
Sectoral Demand and Macro Tailwinds
Beyond the capital injection, demand from key economic sectors played a critical role. The oil and gas, agriculture, and manufacturing sectors—major contributors to Nigeria’s GDP—showed renewed appetite for bank financing as FX liquidity improved and the naira stabilised following the CBN’s liberalisation measures in 2025.
The broader credit environment has also shifted. Private-sector credit hit a record N94.6 trillion in early 2026, with banks redirecting liquidity from government securities to corporate and retail lending as the crowding-out effect eased. Credit to the public sector dropped 33 per cent year-on-year in 2025, freeing up capital for private borrowers.
Fitch Ratings projected in June 2026 that Nigerian bank loan growth would accelerate to above 20 per cent for the full year, citing improved capital buffers and easing monetary conditions. The agency noted that the transition from recapitalisation compliance to “capital productivity” would define the sector’s performance in 2026.
Easing Conditions and Capital Strength
The CBN’s gradual monetary easing in early 2026, as inflation showed signs of moderating, created room for banks to expand credit at attractive margins. Foreign-currency inflows, including $10.37 billion in capital importation in Q1 2026, improved FX market turnover and reduced the foreign-exchange shortages that had previously constrained lending.
With regulatory forbearance withdrawn, banks have been able to lend selectively to higher-quality borrowers while maintaining healthy capital adequacy ratios. FCMB’s CAR stood at 23.5 per cent, ETI’s at 17.4 per cent, and Sterling’s equity grew 27.8 per cent—all well above the 15 per cent minimum for internationally authorised banks.
Emerging Risks and Divergent Strategies
Despite the positive momentum, challenges persist. Asset quality stress is emerging as regulatory forbearance measures expire, with some restructured Stage 2 loans being reclassified as impaired. Banks are also navigating elevated operating costs, particularly in technology and compliance, as they scale digital transformation initiatives.
The concentration of loan growth in tier-2 banks also highlights a divergence in strategy. Wema and Sterling are chasing market share through credit expansion, while FCMB and ETI are prioritising balance-sheet optimisation and pan-African diversification, respectively.
Outlook for the Rest of 2026
Analysts expect the 6.5 per cent H1 growth to be a precursor to stronger full-year performance. Fitch’s 20 per cent loan-growth projection hinges on sustained macroeconomic stability and continued capital deployment into productive sectors.
The open question is whether the recapitalisation will translate into transformational lending to manufacturers, MSMEs, and infrastructure developers, or flow primarily into FX-linked assets and government securities. For now, tier-2 banks appear to be striking a balance: leveraging fresh capital and sectoral demand to grow loans while maintaining disciplined risk management—a strategy that could define Nigeria’s banking narrative for the rest of 2026.