Efficient performance of the Nigerian banking sector is essential for a sound and viable financial system, yet sector indicators point to rising credit risk and weakening core profitability beneath headline results. This study examines the effects of oil price and unemployment on the performance of the Nigerian banking sector. Using quarterly data from 2007Q1 to 2024Q4 (72 observations), the study adopts the ex post facto research design. Return on assets (ROA) for the banking sector was obtained from the Central Bank of Nigeria; oil price is measured as the quarterly price of Bonny Light crude; and unemployment is the quarterly unemployment rate. The augmented Dickey–Fuller test, the ARDL bounds test for cointegration, and an error-correction ARDL model were employed. The bounds test indicated cointegration among the variables. In the short run, oil price was statistically significant only at the third lag, while unemployment was statistically insignificant at conventional levels. The error-correction term was negative and statistically significant, supporting convergence to long-run equilibrium. The study concludes that oil price dynamics matter for Nigerian banking-sector performance, while the evidence does not establish a statistically significant unemployment effect over the study period. Banks should treat oil-sector exposure as a risk-sensitive strategic consideration rather than an unconditional lending recommendation.