Nigeria’s banking sector is reaping the gains of a high-interest rate environment, posting its biggest interest income and gross earnings growth despite loan provision, which impacted earnings in 2025.

According to the 2025 audited financial statements for Zenith Bank, First HoldCo, GTCO, Access Holdings Plc, UBA, FCMB Group, Stanbic IBTC, Wema Bank, Sterling Holdco, and Ecobank Transnational Incorporated, the industry is thriving on elevated yields rather than broad-based credit growth.

The financial data indicate that 70.7 percent of gross revenue came from interest income, underscoring how profitability is now tightly linked to monetary conditions. 29 percent was generated from non-interest income and trading /other income during the period.

Collectively, the ten listed banks generated N26.3 trillion in gross revenue in 2025, representing a 11.9 percent increase from N23.5 trillion recorded in 2024.

Interest income surged to N18.6 trillion from N14.3 trillion, while non-interest income declined sharply to N7.74 trillion from N8.19 trillion.

However, despite the growth across the Nigerian tier one and tier two income-generating streams, the total bank after-tax profit dipped by 7.36 percent as the bigger banks' loan provisions rose due to the Covid-19 era forbearance in June 2025.

Access HoldCo, Zenith, and FirstHoldco lead gross earnings growth

At the surface, Nigeria’s Tier-1 banks all grew. Gross earnings rose across the board, but the pace was modest. Access Holdings Plc led in scale and growth, expanding gross revenue to N5.52 trillion from N4.87 trillion, representing a 13.3 percent increase, adding the biggest absolute gain of N650 billion.

Zenith Bank Plc followed with N4.07 trillion, a 6.5 percent increase from N3.82 trillion, while First HoldCo Plc and United Bank for Africa Plc posted steady but slower growth of 5.0 percent and 4.4 percent, respectively. GTCO rose marginally by 1.9 percent.

In response to the Central Bank of Nigeria (CBN) reduction of the monetary policy rate in 2025, cutting it by 50 basis points in September from 27.5 percent to 27.0 percent, marking the first easing after several consecutive holds.

This year, the apex bank further reduced the rate to 26.5 percent in a bid to support growth amid moderating inflation.

Despite these cuts, banks were able to reprice loans and investment securities upward faster than their cost of funds, widening net interest margins.

This investment in securities boosted their interest income, with Zenith and GTCO leading the pack as winners of the high-rate environment across tier one.

Zenith’s interest income surged to N2.72 trillion from N1.14 trillion, a staggering 138.6 percent increase, adding N1.58 trillion alone. GTCO followed closely, jumping 148.6 percent from N531 billion to N1.32 trillion. These are not marginal gains; they represent a full repricing of their balance sheets, aggressively converting higher rates into earnings.

Why Tier-1 banks’ profits declined despite strong earnings growth

A review of results from Access Holdings, FirstHoldco, GTCO, UBA, and Zenith Bank shows that the decline was primarily driven by a sharp drop in net trading and foreign exchange gains, alongside a surge in impairment charges and operating expenses.

Combined FX income fell by 53 percent to N1.52 trillion in 2025, down from N3.22 trillion in 2024, as the windfall gains recorded in the prior year following currency devaluation did not recur.

While Access Holdings recorded a 40.33 percent increase in FX income to N1.23 trillion, most other banks saw steep declines. FirstHoldco’s FX income dropped by 90.75 percent to N47.2 billion, while Zenith Bank and GTCO recorded declines of 89.71 percent and 51.96 percent respectively.

UBA reported a net FX loss of N140.6 billion, representing a full reversal from the N181.8 billion gain recorded in 2024. At the same time, operating expenses, including depreciation and amortization rose significantly across the board, increasing by 29.03 percent to N5.53 trillion in 2025 from N4.29 trillion in the prior year.

Inflation continues to present a double-edged impact. Nigeria’s inflation rate rose to 15.38 percent in March from 15.06 percent in February, reinforcing concerns about persistent price pressures and complicating the policy outlook ahead of the CBN’s May meeting.

The latest data has weakened the case for near-term monetary easing, prompting analysts to expect a cautious stance from the central bank.

Olayemi Cardoso, the CBN Governor, warned that rising geopolitical tensions in the Middle East particularly involving the United States, Israel, and Iran could influence Nigeria’s interest-rate decisions.

Update news