Nigeria’s Banking Sector Thrives Amid High Interest Rates
Nigeria’s banking sector has leveraged the high interest rate environment, achieving notable growth in interest income and gross profit. However, concerns linger as the provisions for loans are expected to impact revenues in 2025.
The 2025 audited financial statements from key players such as Zenith Bank, First HoldCo, GTCO, Access Holdings Plc, UBA, FCMB Group, Stanbic IBTC, Wema Bank, Sterling Holdco, and Ecobank Transnational Incorporated indicate that the industry is thriving more on rising yields than on broad-based credit growth.
Financial data reveals that interest income accounts for 70.7% of total revenue, underscoring the strong linkage between profitability and financial health. Non-interest income and trading/other income contributed 29% over the period.
Collectively, these ten banks reported total revenues of N26.3 trillion in 2025, marking an 11.9% increase from the N23.5 trillion recorded in the previous year.
Interest income surged from N14.3 trillion to N18.6 trillion, while non-interest income experienced a significant drop from N8.19 trillion to N7.74 trillion.
Growth Leaders: Access HoldCo, Zenith, and FirstHoldco
All Tier 1 banks in Nigeria show growth, albeit at varying rates. Access Holdings Plc stood out with a 13.3% increase in total revenue, rising from N4.87 trillion to N5.52 trillion, contributing the highest absolute profit of N650 billion.
Zenith Bank followed closely with a 6.5% increase in revenue from N3.82 trillion to N4.7 trillion. First Holdco and United Bank for Africa achieved steady, yet slower growth rates of 5.0% and 4.4%, respectively, while GTCO recorded a modest rise of 1.9%.
In response to the Central Bank of Nigeria’s (CBN) 2025 strategy to lower the monetary policy rate, a 50 basis point reduction from 27.5% to 27.0% was enacted in September—marking the first easing after a prolonged period of rate stability. Subsequent cuts brought the rate down to 26.5%, aimed at stimulating growth amid moderating inflation.
Despite these reductions, banks successfully elevated the costs associated with loans and investment securities at a rate that outpaced their operating expenses, ultimately widening their net interest margins. This shift significantly boosted interest income, with Zenith and GTCO emerging as notable beneficiaries in the prevailing high interest rate environment.
Declining Profits in Tier 1 Banks Despite Revenue Growth
An analysis of Access Holdings, FirstHoldco, GTCO, UBA, and Zenith Bank reveals that while revenues rose, total after-tax profits fell by 7.36%. This decline is attributed largely to increased loan provisions stemming from forbearance measures established during the COVID-19 pandemic.
A dramatic drop in net trading and foreign exchange gains contributed to the profitability decline. Total foreign exchange income plummeted by 53%, declining from N3.22 trillion in 2024 to N1.52 trillion in 2025. The absence of windfall gains experienced in the prior year due to currency depreciation exacerbated the situation.
Access Holdings noted a 40.33% rise in foreign exchange income to N1.23 trillion, while most banks reported substantial decreases. FirstHoldco’s foreign exchange income fell dramatically by 90.75% to N47.2 billion, and declines of 89.71% at Zenith Bank and 51.96% at GTCO were also recorded.
In terms of operational challenges, UBA faced a net foreign exchange loss of N140.6 billion, reversing the profit of N181.8 billion achieved in 2024. Operating expenses surged by 29.03%, escalating from N4.29 trillion in 2024 to N5.53 trillion in 2025, largely driven by increases in depreciation and amortization.
The persistent inflationary environment in Nigeria now stands at 15.38%, up from 15.06% in the previous month, raising concerns about ongoing price pressures and complicating the monetary policy landscape ahead of the CBN’s May meeting.
Recent data suggests a weakening case for short-term monetary easing, and analysts predict that the central bank will maintain a cautious approach. CBN Governor Olayemi Cardoso has underscored the potential impact of escalating geopolitical tensions in the Middle East, particularly concerning the US, Israel, and Iran, on Nigeria’s interest rate policy.
