Nigerian Banks Grow Revenue Despite Profit Pressure as CBN Tightens Oversight
Nigeria’s banking industry posted strong revenue growth in the 2025 financial year, driven largely by high interest rates and aggressive repricing of loans and investment securities, even as rising loan-loss provisions and tighter regulatory scrutiny weighed on profits.
An analysis of the audited financial statements of major lenders including Zenith Bank, GTCO, Access Holdings, UBA, First HoldCo, FCMB Group, Stanbic IBTC Holdings, Wema Bank, Sterling HoldCo and Ecobank Transnational Incorporated showed that the sector generated a combined N26.3 trillion in gross revenue in 2025, representing an 11.9 percent increase from N23.5 trillion in 2024.
Interest income remained the major driver of earnings, contributing over 70 percent of total revenue as banks benefitted from Nigeria’s elevated interest-rate environment. Industry-wide interest income rose sharply to N18.6 trillion from N14.3 trillion in the previous year, while non-interest income declined to N7.74 trillion.
Despite the strong topline performance, after-tax profits across the banking sector declined due to rising impairment charges, weaker foreign exchange gains, and higher operating expenses.
Among the tier-one lenders, Access Holdings recorded the largest gross earnings growth, rising by 13.3 percent to N5.52 trillion. Zenith Bank followed with N4.07 trillion, while First HoldCo and UBA posted moderate increases. GTCO also recorded marginal growth in earnings.
Banks such as Zenith and GTCO emerged among the biggest beneficiaries of the high-yield environment after significantly increasing returns from loans and investment securities. Zenith Bank’s interest income rose by 138.6 percent to N2.72 trillion, while GTCO’s climbed by 148.6 percent to N1.32 trillion.
However, analysts note that the extraordinary foreign exchange gains recorded after the naira devaluation in 2024 were not repeated in 2025. Combined FX income across major banks fell by more than 50 percent, contributing to the decline in overall profitability.
At the same time, operating costs continued to rise amid inflationary pressures, with total operating expenses across the major banks increasing by 29 percent to N5.53 trillion.
The development comes as the Central Bank of Nigeria intensifies efforts to strengthen regulatory compliance and improve capital quality in the banking sector.
Industry analysts say the apex bank’s recent decision to reportedly withhold approval for some dividend payments is part of a broader strategy to ensure banks fully comply with prudential guidelines under the Banking and Other Financial Institutions Act (BOFIA).
According to market analysts, the move reflects a stricter regulatory environment focused on capital retention, early recognition of loan losses, and stronger balance-sheet resilience rather than signs of systemic distress.
Recent sector reports indicate that impairment charges across several banks rose significantly in 2025, especially among lenders with exposure to the oil and gas sector. Access Holdings reportedly increased impairment charges by over 200 percent, while UBA recorded loan-loss provisions exceeding N300 billion.
Financial experts say the temporary pause in dividend approvals may create short-term discomfort for investors, but could ultimately strengthen the banking system by ensuring lenders maintain adequate buffers to absorb potential shocks.
The banking sector recapitalisation programme, which reportedly raised about N4.65 trillion across 33 banks, is now shifting from capital raising to capital quality assessment as regulators seek to reinforce long-term financial stability.
Analysts believe that while shareholders may experience delayed returns in the short term, improved transparency, stronger provisioning practices, and enhanced regulatory discipline could support more sustainable profitability and investor confidence in the years ahead.
