CBN Mandates Stress Tests for Banks by April 2026

The Central Bank of Nigeria (CBN) has directed commercial banks to conduct stress tests by April 1, 2026, as part of efforts to avert potential vulnerabilities in the financial sector. This directive, communicated in a letter dated March 6, 2026, requires banks to evaluate their ability to handle extreme economic conditions, including severe recessions and market crashes.

The CBN's stress tests will assess the impact on banks' non-performing loans (NPLs), loan loss provisions, and capital adequacy ratios (CAR). Banks are expected to apply credit exposure assessments, including off-balance sheet items and insider-related exposures.

The CBN has indicated that banks must report any capital shortfalls identified in the stress tests within 18 months and raise the necessary capital to meet risk-based capital requirements. The financial sector's excess liquidity, estimated at N61.1 trillion as of February 2026, underscores the need for these stress tests to ensure stability and resilience in the banking system.