The country’s capital importation rose to $10.37 billion in the first quarter of the year (Q1 2026) compared to the $6.44 billion recorded the preceding quarter, the National Bureau of Statistics (NBS) disclosed on Wednesday.
The 61 per cent increase in the review period was driven largely by a surge in portfolio investments as foreign investors continued to take advantage of improved market conditions and attractive yields in the domestic financial markets.
This comes as global ratings agency, Fitch Ratings has stated that Nigeria’s banking sector is benefiting from the liberalisation of the naira, with stronger foreign-currency inflows, increased foreign exchange market turnover and improved foreign-currency liquidity across the industry.
Fitch in its June 2026 Credit Outlook on Nigerian Banks, also said the withdrawal of long-standing regulatory forbearance measures for banks has exposed their asset quality as impaired loan ratios have risen. Some restructured Stage 2 loans had also been reclassified as impaired, according to new assessment by the ratings institution.
According to the Nigeria Capital Importation (Q1 2026) report by the statistical agency, total capital inflows increased by 83.8 per cent compared with the $5.64 billion recorded in the corresponding period of 2025.
According to the NBS, portfolio investment dominated inflows, amounting to $9.86 billion or 95.1 per cent of total capital imported into the country.
Despite the strong growth in overall capital inflows, Foreign Direct Investment (FDI) remained subdued, accounting for just 1.3 per cent or $135.08 million of total capital imported during the review period.
The trend underscored the growing reliance on short-term foreign capital inflows, particularly into financial assets, amid ongoing efforts by the Central Bank of Nigeria (CBN) to stabilise the Foreign Exchange (FX) market and sustain investor confidence.
Other investments contributed $374.48 million or 3.6 per cent of total inflows. FDI stood the lowest among the three investment categories.
Sectoral analysis showed that the banking industry remained the biggest beneficiary of foreign capital, attracting $7.55 billion, about 72.8 per cent of total capital imported during the period.
The financing sector followed with inflows of $2.43 billion or 23.4 per cent, while the production and manufacturing sector accounted for $152.27 million, representing 1.5 per cent of total inflows.
The report further revealed that the United Kingdom maintained its position as the country’s largest source of foreign capital, accounting for $5.08 billion or 49 per cent of total inflows in the quarter.
The United States ranked second with $3.18 billion, representing 30.7 per cent, while South Africa contributed $983.83 million or 9.5 per cent of total capital imported during the period.
Among financial institutions, Standard Chartered Bank Nigeria Limited emerged as the leading channel for capital inflows, receiving $4.41 billion or 42.6 per cent of total capital imported into the country.
Stanbic IBTC Bank Plc followed with $2.78 billion, accounting for 26.8 per cent, while Rand Merchant Bank handled inflows valued at $930.82 million or nine per cent of the total.
Nevertheless, the performance represented one of the highest quarterly capital importation data in recent years amid renewed foreign investor appetite for Nigerian financial assets.
However, Fitch noted that the forbearance regime had previously allowed banks to defer full recognition of non-performing exposures, particularly in the oil and gas sector, where stress had been concentrated.
It affirmed that the banking sector remained stronger, more capitalised, and more liquid than in previous cycles—but also more exposed to the consequences of regulatory normalisation.
Specifically, the report stressed that the withdrawal of forbearance had effectively revealed underlying asset-quality stress, even as macro reforms by the Central Bank of Nigeria (CBN) improved FX stability and external buffers.
Downstream exposures linked to unsettled FX forwards were also affected, pushing problem loan ratios to a peak.
Despite this, Fitch said it expects the worst of the reclassification cycle may be over, noting that remaining Stage 2 exposures are unlikely to deteriorate further – due to higher oil prices providing a partial credit-quality buffer.
Fitch further predicted credit growth rebound following a sharp deceleration in 2025—when nominal loan growth fell to two per cent—now expects lending to accelerate to about 20 per cent in 2026.
It noted that earlier slowdown in credit had been caused by economic constraints, regulatory tightening, and lower credit demand in a pre-election environment,adding that the expected rebound was linked to improving macro conditions, higher oil revenues, and easing FX pressures.
The report further observed that despite stronger liquidity and capitalisation, continued high sovereign exposure across Nigerian banks, driven by large holdings of government securities and elevated cash reserves held at the central bank raises some concerns.
It noted that the structure, while stabilising in the short term, continued to tie bank balance sheets closely to sovereign credit dynamics.
The report also noted that with rising provisions and stricter prudential deductions, Capital Adequacy Ratios (CARs) across most banks remained robust, with many institutions maintaining levels above 20 per cent.
However, the report also highlighted emerging stress points.
It pointed out that First Bank of Nigeria had temporarily breached its 15 per cent minimum CAR requirement, although Fitch expects a near-term restoration of compliance.
The report also flagged tighter buffers at two large banks, especially as callable instruments and regulatory deductions narrow headroom above minimum thresholds.
Fitch noted that Nigeria’s reform agenda—particularly naira liberalisation—had begun to deliver tangible gains, with improved FX market turnover, greater exchange-rate stability, and sustained rebuilding of external reserves by the Central Bank of Nigeria CBN).
It stated that banks have also benefited from stronger foreign-currency liquidity and a net foreign asset position, supported by higher oil prices and improved FX inflows.
However, the ratings agency cautioned that inflationary pressures remained entrenched, with upside risks from geopolitical tensions such as the Iran conflict and domestic election-related spending pressures.
A key structural shift highlighted in the report was the implementation of new paid-in capital requirements introduced in March 2024.
Fitch further stated that almost all banks had complied with the new capital raise CBN recently confirmed that 33 banks met the new thresholds.
However, the ratings institution observed that reforms have not triggered meaningful mergers and acquisitions activity, as compliance had largely been achieved through direct capital injections rather than consolidation.
The report also highlighted increasing geographical diversification by banks, particularly among the largest Nigerian lenders with growing pan-African footprints.
United Bank for Africa and Access Bank remained the most regionally exposed, with subsidiaries across multiple African markets.
It stated that new acquisitions and capital raising are expected to support further expansion, while institutions such as Fidelity Bank and FCMB are leveraging international licences to scale operations.
The report also noted that banks have repaid expensive external debt, while several institutions—including United Bank for Africa and Fidelity Bank—are expected to redeem Eurobonds without refinancing, adding that First Bank of Nigeria and Ecobank Nigeria had already completed similar redemptions.
Fitch added that while Access Bank holds a large stock of foreign-currency liquidity, it may partially refinance its $1 billion Eurobond, even as it continues asset optimisation through minority stake disposals linked to regulatory limits.
Commenting on the benefits of naira liberalisation to the banking sector, it stated: “Higher foreign-currency inflows and FX market turnover, CBN has settled a large proportion of FX swaps with banks, banks have repaid expensive external debt, and banking sector has sustained net foreign asset position.”
Fitch noted further that the benefits of the reforms were becoming increasingly evident in the broader economy, with improved exchange rate stability and stronger foreign exchange market activity.
The rating agency noted that naira liberalisation was “bearing fruit”, citing “greater naira stability and FX market turnover.”
It also stated that the “CBN is rebuilding international reserves” and that the banking sector’s foreign-currency liquidity has improved.”
Despite the positive developments, Fitch cautioned that inflationary pressures remained a risk to the economy.
According to the agency, “inflation was trending down”, but warned that the “Iran conflict and election spending pose upside risks,” although “high oil prices” are expected “to boost external receipts.”
On external debt obligations, Fitch stated that Nigerian banks appear better positioned to meet upcoming maturities without significant refinancing pressure.
The agency noted that “FBN and Ecobank Nigeria redeemed without refinancing” and said it expects “UBA and Fidelity Bank to do the same.”
Fitch added that “Access Bank has a large stock of foreign-currency liquid assets but may opt to part refinance its $1 billion of Eurobonds.”
Overall, the agency said the sector has recorded a “sustained improvement in foreign-currency liquidity,” supported by stronger FX inflows, higher market turnover, the settlement of legacy obligations and the maintenance of a net foreign asset position.
James Emejo and Nume Ekeghe
