Banks Keep Robust Capital Levels, Most CARs Stay Above Regulatory Minimum

GTCO leads with a 43.82% adequacy ratio

First Holdco remains below regulatory standard

Kayode Tokede

The Nigerian banking sector has continued to maintain robust capital positions, with the average Capital Adequacy Ratio (CAR) for the 2025 financial year remaining above regulatory requirements.

This is true except for Guaranty Trust Holding Company Plc (GTCO), which closed 2025 with a CAR of 43.82% compared with 39.31% in 2024.

CAR measures a bank’s financial soundness and shock‑absorbing capacity by comparing its capital to risk‑weighted assets. A higher ratio indicates a greater ability to absorb potential losses and protect depositors’ funds.

Recently, the Central Bank of Nigeria (CBN) disclosed that the Nigerian banking industry remained resilient, with most financial soundness indicators staying within prudential regulatory thresholds, affirming financial stability and institutional soundness.

According to the report, the industry’s Liquidity Ratio (LR) stood at 63.38%, compared with 57.22% in the preceding period, and was well above the 30.00% prudential threshold.

“The development highlighted the strong capacity of the industry to meet near‑term obligations and an enhanced financial intermediation. The CAR at 12.05% remained above the 10.00% regulatory minimum, underscoring robust solvency and resilience against credit and market risks,” the report added.

“Overall, the financial soundness indicators reaffirmed the sector’s resilience, robust capital adequacy, and sustained stability, strengthening confidence in its capacity to uphold financial system stability,” the report concluded.

THISDAY investigation revealed that although most listed Tier 1 banks recorded a decline in CAR in 2025, their adequacy ratios were well above the 15% CBN requirement.

For example, GTCO reported a CAR of 43.8%, 2800 basis points above the regulatory minimum of 15% and 2700 basis points if adjusted for a 1% loss absorbency ratio.

“Tier 1 capital remained a very significant component of the Group’s CAR, closing at 39.5% and representing 90.1% of the Group’s CAR of 43.8%. Strong capital generation and a robust capital position provide the Group with the headroom required for future expansion and risk‑taking,” GTCO explained in a presentation to investors and analysts.

However, First Holdco reported a CAR below the industry regulatory threshold. The company closed 2025 with a CAR of 8.21% from 12.99% in 2024.

The firm, in its audited results for the full year ended December 31, 2025, said, “As at December 31, 2025, the group’s CAR was below the applicable regulatory minimum, stemming from our banking subsidiary. The group’s CAR had been restored subsequently as at March 2026 through a capital remediation plan that included improved earnings from continuing operations for Quarter 1 2026 and a capital injection. This will further improve with the planned injection of additional Tier 1 capital of N200 billion into the banking subsidiary, and ongoing recoveries.”

The group had secured shareholders’ approval for a multi‑tranche capital‑raising programme of up to N253.099 billion. This initiative aimed to complement existing capital and accelerate the group’s pathway to a N1 trillion paid‑up capital base, comprising share capital and share premium. The group had a successful capital raise of N83.7 billion and N45.0 billion through private placement completed in December 2025 and March 2026, respectively, alongside prior N149.6 billion rights issues and capital optimisation initiatives.

Further investigation showed that Wema Bank Plc came close to GTCO with the highest CAR, closing 2025 at 28.05% (above the 10% requirement of CBN) from 19.67% reported in 2024.

The management stated that its capital has been sensitised for Basel III compliance and found robust enough to meet the requirements for additional capital for conservation and counter‑cyclical buffers.

“Enhancing the capital position remains in focus as we expect to meet the new CBN capital requirement before the stipulated deadline,” the management explained.

Zenith Bank was among other Tier 1 DMBs that declared a decline in CAR last year.

Zenith Bank Plc reported a CAR of 25.30% in 2025 from 25.60% in 2024 while United Bank for Africa Plc posted 23.20% CAR in 2025 from 31% in 2024.

Another Tier 1 bank, Access Holdings, announced 18.78% CAR in 2025 from 20.46% reported in 2024.