Profitability, Asset Quality and Capital Resilience in Nigeria's Banking Sector: Evidence From the 2023–2025 Recapitalisation Period

Abstract:

This study examines the profitability, asset quality and capital resilience in Nigerian banking sector between June 2023 and June 2025. It is a descriptive policy analysis on a sector basis. The secondary data sources relied were official Nigerian banking reports and CBN-reported financial soundness indicators and verified peer-reviewed studies which were analysed with descriptive statistical tools. The results show that in December 2024, the percentage of bad debts ranged from 3.90 to 5.76, while the company's return on assets rose quite a bit - first, from 1.61% in February 2023 to 3.44% by the end of the year 2024, then slightly declined to 3.20% in June 2025. Capital reserves reached an impressive level of 15.25% at the end of 2024 while the extension of credit eased in the spring of 2024. The data presented is mainly for illustration, not for establishing causal linkages. It indicates that stronger nominal profitability coexisted with asset-quality pressure because earnings were also supported by repricing, trading and other non-interest income, recoveries, balance-sheet expansion and inflation. The study recommends joint supervision of asset quality, capital adequacy, IFRS 9 provisioning, credit deployment and sectoral concentration risk.