AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Look at two figures in the bank's latest published accounts: the capital adequacy ratio (CAR), which shows how much capital stands behind its risk-weighted assets, and the non-performing loan (NPL) ratio, the share of loans 90 days or more overdue. The CBN's prudential limit for NPLs is 5%; the CAR minimum depends on licence type and is printed beside the ratio.
The capital adequacy ratio
Capital is the shareholders' money and retained profit that absorbs losses before depositors are affected. CAR divides that capital by the bank's assets weighted for risk: a loan to a business carries more weight than a Federal Government bond. A higher CAR means a thicker cushion. The CBN sets the minimum by licence category, so compare the bank's CAR with the minimum it states in its own report, not with another bank's. As one example of a set floor, the CBN's payment service bank guidelines (2020) require a CAR of 10%.
The non-performing loan ratio
Under the CBN's Prudential Guidelines for deposit money banks (2010), a loan becomes non-performing once payments are 90 days or more overdue. The NPL ratio is non-performing loans divided by total loans. The guidelines also require provisions against these loans, rising with age:
| Class | Days overdue | Minimum provision |
|---|---|---|
| Substandard | 90 to under 180 | 10% |
| Doubtful | 180 to under 360 | 50% |
| Lost | 360 and above | 100% |
The CBN's prudential limit is 5%. In its 2026 macroeconomic outlook, reported by ThisDay on 3 January 2026, the CBN estimated the industry NPL ratio at about 7%, above that limit, partly because COVID-era relief for banks was being withdrawn. More in NPL ratio explained.
Where to find the numbers
- Go to the bank's (or its holding company's) investor relations page and open the latest audited annual report or quarterly results.
- Search the document for "capital adequacy"; banks usually show CAR in the risk management or capital management note, with the regulatory minimum alongside.
- Search for "non-performing" or "Stage 3". Banks report under IFRS 9, where Stage 3 loans are broadly the credit-impaired ones; many also state an NPL ratio in the results presentation.
- Compare with the same bank's previous year to see the direction.
Worked example
Example (figures invented for illustration): a bank has ₦2,000bn of loans, of which ₦110bn are 90+ days overdue. NPL ratio = 110 ÷ 2,000 = 5.5%, above the 5% limit. If its qualifying capital is ₦300bn and risk-weighted assets ₦1,875bn, CAR = 300 ÷ 1,875 = 16%. Read together: decent capital, but bad loans worth watching.
Reading the two together
Bad loans eat into capital: every naira the bank must provision against a non-performing loan comes off profit and, if losses are large, off capital. So a rising NPL ratio today can mean a lower CAR tomorrow. A bank with a comfortable CAR and a falling NPL ratio is in a better position than one with a CAR just above the minimum and NPLs climbing. Look at the trend over two or three years rather than a single quarter.
Other signs worth a look
- Whether the bank met the 2024 recapitalisation requirement (see recapitalisation and your deposits).
- Any CBN restriction on dividends, which signals forbearance or capital pressure.
- Qualified audit opinions or late results.
None of these figures alone predicts failure, and your first protection as a depositor is NDIC cover up to the applicable limit (NDIC limits).
Questions people ask
What is a good capital adequacy ratio for Nigerian banks?
The minimum depends on the licence category; the bank's annual report shows its CAR next to the CBN minimum that applies. Above the minimum, more is a thicker cushion.
What is the CBN limit for non-performing loans?
The prudential limit is 5% of total loans, as cited by the CBN in its 2026 outlook.
Where can I see my bank's NPL ratio?
In its audited annual report or quarterly results on the investor relations page, under credit risk, often labelled NPL ratio or Stage 3 loans.
Does a high NPL ratio mean my money is at risk?
Not by itself. It shows pressure on profits and capital. Deposits remain insured by the NDIC up to the applicable limit.
Sources
- CBN: Prudential Guidelines for Deposit Money Banks (2010) · accessed Oct 2026
- AllAfrica/ThisDay: CBN, rising NPLs threat to banks' profitability (3 Jan 2026) · accessed Oct 2026
- CBN Payment Service Bank guidelines, 27 Aug 2020 (RegAlert copy) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.