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Tier-2 lenders recorded a 6.5 per cent expansion in their combined loan books during the first half of 2026, as fresh capital from the sector-wide recapitalisation exercise and robust demand from key economic sectors underpinned credit growth despite lingering macroeconomic headwinds.
Data from half-year financial statements show that the four banks, FCMB, Wema Bank, Sterling Bank, and ETI, collectively increased loans and advances to N6.23 trillion in June 2026 from N5.85 trillion at end-2025.
The growth reflects a strategic pivot from balance-sheet consolidation to capital deployment, following the Central Bank of Nigeria’s (CBN) directive that all banks meet higher minimum capital thresholds by Q1 2026.
Wema Bank led the charge with a 21.7 per cent surge in loans to N2.12 trillion, driven by aggressive expansion in retail, SME, and consumer lending. The bank’s interest income jumped 42.7 per cent to N342.64 billion, directly correlating with the 21.7 per cent loan-book growth, underscoring Wema’s strategy of leveraging its recapitalised balance sheet to capture market share in higher-yield segments.
Sterling Bank followed with a 13.6 per cent increase to N1.61 trillion, supported by a 21.1 per cent rise in customer deposits to N3.62 trillion and a successful N96.6 billion public offer that bolstered shareholders’ funds by 27.8 per cent. The bank’s disciplined approach to credit expansion, paired with improved fee income, delivered a 31.5 per cent growth in gross earnings and a 20.4 per cent rise in profit after tax to N50.3 billion.
FCMB adopted a more conservative stance, growing loans by 5.2 per cent to N2.49 trillion while prioritising asset quality. The bank front-loaded N85.9 billion in impairment charges, including N63.4 billion in write-offs, to reduce its non-performing loan ratio to 5.2 per cent, closer to regulatory limits. This clean-up, combined with a 71.8 per cent surge in net interest income, drove a 99 per cent jump in profit before tax to N157.3 billion.
In contrast, ETI trimmed its loan book by 6 per cent to N15.90 billion, reflecting pan-African portfolio rebalancing amid currency volatility. While the bank’s dollar-denominated profit before tax rose 6 per cent to $423 million, naira translation effects masked performance locally, with profit after tax declining 6 per cent in naira terms.
Bank chiefs struck optimistic but measured tones in their half-year commentaries, underscoring the strategic shifts underpinning their respective results.
Group Chief Executive Officer of FCMB, Ladi Balogun said: “Our first-half performance demonstrates the strength of our recapitalised and diversified business model. We delivered record profitability despite accelerating the normalisation of asset quality towards regulatory thresholds, reflecting our commitment to building a stronger balance sheet for long-term growth. Expanding net interest margins, an improved low-cost deposit mix, disciplined cost management, and growing contributions from our non-banking businesses continue to enhance the quality and sustainability of our earnings. We remain firmly 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 (ETI), highlighted the bank’s diversified resilience: “Ecobank’s half-year results reflect continued execution of our GTR strategy, disciplined operational efficiency, benefits of diversification, and a relentless focus on serving our customers. Net revenue grew 15 per cent to $1.3 billion, with strong performance across both our Corporate and Investment Banking (CIB) and Commercial and Consumer Banking (CCB) businesses, driven by treasury solutions, trade finance, and payments.
We also grew low-cost current and savings account (CASA) deposits, improving our deposit mix, lowering our cost of funding, and supporting our net interest margin.”
Awori added: “Despite global political tensions pushing up energy prices and driving increases in inflation in many of our markets, we remained focused on strategic efficiency measures and putting our customers first as we implemented our transformation agenda, and this helped drive our overall performance.”
Beyond recapitalisation, sectoral demand played a critical role in driving credit growth.
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The oil and gas, agriculture, and manufacturing sectors, key 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.
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.
According to industry experts, 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, reducing the foreign-exchange shortages that had previously constrained lending.
Combined with improved risk appetite following the withdrawal of regulatory forbearance, these factors enabled banks 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.
Despite the positive momentum, challenges persist. Asset quality stress is emerging as regulatory forbearance measures expire, with some restructured Stage 2 loans reclassified as impaired. Banks are also navigating elevated operating costs, particularly in technology and compliance, as they scale digital transformation initiatives.
Moreover, the concentration of loan growth in tier-2 banks highlights a divergence in strategy: while Wema and Sterling chase market share through credit expansion, FCMB and ETI prioritise balance-sheet optimisation and pan-African diversification, respectively.
Commenting on the outlook, analysts said they expect the 6.5 per cent H1 growth to be a precursor to stronger full-year performance, with Fitch’s 20 per cent loan-growth projection hinging on sustained macroeconomic stability and continued capital deployment into productive sectors.
The question now 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.
