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After an explosive start to 2025 driven by foreign exchange (FX) windfalls and record profit growth, Nigeria’s banking sector is now fac­ing a hard landing.

The third quarter scorecards of the country’s largest lenders, Access Holdings, Zenith Bank, Guaranty Trust Holding Compa­ny (GTCO), United Bank for Africa (UBA), and FBN Holdings, reveal a sector under pressure from harsh economic realities, rising costs, and fading FX gains.

The once blistering earnings growth that characterised the first half of 2025 has cooled sharply.

 Despite inflation, now hovering around 18.2 percent, surging inter­est rates, currency volatility, and sluggish consumer spending have combined to squeeze margins and dampen profitability across the board.

Analysts say the slowdown marks a transition from a short-lived FX-driven boom to a more dif­ficult era of organic, slower growth where efficiency, digital transfor­mation, and cost control will define success.

From Windfall To Whiplash

When the Central Bank of Ni­geria (CBN) unified the FX market in 2024, the ensuing naira deprecia­tion unlocked massive revaluation gains across bank balance sheets. Many lenders, buoyed by the cur­rency revaluation effect, recorded triple-digit profit growth through 2024 and into early 2025.

However, as the FX market stabilised in Q3 2025 and those once-lucrative gains vanished, the underlying weaknesses of the economy resurfaced. Rising inflation, subdued credit demand, and costly regulatory adjustments have reversed much of the earlier momentum.

Access Holdings, Nigeria’s larg­est bank by assets, posted N3.9 tril­lion in gross earnings for the nine months ended September 2025, rep­resenting 14 percent growth year-on-year. Yet, this paled in comparison to the 77 percent jump recorded in H1, signaling a cooling profit engine. Profit after tax dipped by 2.18 per­cent to N447.5 billion.

According to Access HoldCo’s Company Secretary, Sunday Ekwo­chi, the Group’s non-Nigerian sub­sidiaries provided a crucial buffer, contributing more than 50 percent of consolidated results. “The Ni­gerian operations experienced un­derperformance during the period, attributable to changing macroeco­nomic conditions, inflationary pres­sures, and continued regulatory adjustments,” he explained.

Similarly, Zenith Bank, long re­garded as the system’s most efficient player, posted a 40.8 percent rise in interest income to N2.74 trillion but recorded a 7.6 percent drop in net profit. Total assets grew marginally by 4.1 percent, while deposits rose by 7.9 percent. Its loan book, however, shrank by nearly 6 percent, reflect­ing risk aversion in an uncertain economic climate.

Zenith’s Group Managing Direc­tor, Dame Adaora Umeoji, described the performance as “solid, despite a demanding backdrop,” crediting the results to disciplined risk man­agement and deepened customer relationships. “As we enter the final quarter, our priorities are clear — service excellence, prudent growth, and sustained value creation,” she said.

For UBA, profit after tax grew by just 12.2 percent in the first nine months of 2025, compared to a blis­tering 115.5 percent surge in the same period of 2024. Interest income rose by 10.1 percent, down sharply from last year’s 170 percent jump. Asset growth slowed to 7.2 percent from 64 percent, while customer deposits inched up 8.7 percent — a fraction of 2024’s 54 percent leap.

At GTCO, interest income actu­ally fell 25.6 percent, even as fee and commission income rose modestly by 16.7 percent. Net profit declined from N1.085 trillion in 2024 to N699.6 billion, while loan growth slowed to 16.5 percent. “Our focus remains on operational excellence and innova­tion,” said Group CEO Segun Agba­je. “We are well-positioned to sustain performance momentum despite near-term challenges.”

FBN Holdings, the oldest of the group, saw the steepest slide. Inter­est income tumbled 62.7 percent, fee income dropped 64.7 percent, and net profit shrank by 64.1 percent — a dramatic reversal from the tri­ple-digit growth of 2024.

Harsh Fundamentals Take Centre Stage

The sharp slowdown in bank earnings mirrors Nigeria’s deepen­ing economic malaise. GDP growth for 2025 is projected at 2.8 percent — below population growth — indi­cating declining per capita income. Inflation, now among the highest globally, has eroded purchasing power and undermined consumer lending.

Businesses, particularly in man­ufacturing and trade, continue to grapple with rising energy costs, FX shortages, and weak demand. The result has been muted loan growth and increased risk of defaults.

Meristem Securities analysts described the slowdown as “inevi­table,” given the one-off nature of last year’s FX windfalls. “Banks are now returning to organic drivers like loan expansion and transaction income, but those are constrained by macroeconomic weakness,” the firm noted.

The CBN’s benchmark interest rate, currently at 27.00 percent has also proven a double-edged sword. While higher rates support interest income, they simultaneously raise funding costs and suppress credit demand.

“Banks are earning more on loans but paying just as much to attract deposits,” explained John­son Chukwu, CEO of Cowry Asset Management. “With the economy slowing, the risk of loan defaults rises, so many are playing it safe — parking funds in government securities rather than lending to the private sector.”

Indeed, CBN data confirms that banks’ holdings of government se­curities have outpaced credit to the private sector this year — a clear sign of caution amid uncertainty.

The Consumer And SME Crunch

For retail and small business customers, the squeeze is even more severe. Inflation and high borrow­ing costs have slashed disposable incomes and curtailed loan appe­tite. Consumer lending, a growth frontier for Access and UBA, has slowed significantly.

Cordros Capital warns that the industry’s non-performing loan (NPL) ratio, which averaged 4.5 per­cent in mid-2025, could rise toward 6 percent if inflation and FX volatility persist. “Households and SMEs are under intense financial strain,” the firm said. “If this continues into 2026, banks may face a new round of asset quality challenges.”

Recapitalisation And Regulation Add Pressure

Adding to the mix is the CBN’s ongoing recapitalisation directive, which mandates higher minimum capital thresholds by 2026. The pol­icy is designed to strengthen finan­cial stability, but it has created short-term strain as banks set aside funds for capital raising and compliance.

Access Holdings and Zenith Bank have already indicated plans to explore rights issues and strategic partnerships, but with the Nigerian equities market still weak and inves­tor sentiment cautious, fundraising could prove difficult.

“The recapitalisation exercise is necessary for long-term resilience,” said a Lagos-based investment banker, “but it will compress short-term returns as banks reallocate earnings toward meeting capital requirements.”

Ecobank’s Regional Paradox

The challenge is not limited to domestic players. Ecobank Trans­national Incorporated (ETI), with operations across Africa, also reported weaker results from its Nigerian arm — once its biggest profit engine. ETI’s Nigerian busi­ness contributed just N113.3 billion in income and N9 billion in net profit in 9M 2025, compared with N607.6 billion and N257.9 billion, respectively, from its Central, East­ern, and Southern Africa (CESA) operations.

Analysts say this underscores how Nigeria’s difficult macroeco­nomic conditions have made re­gional diversification a vital hedge for pan-African banks.

Betting On Digital And Efficiency

To navigate the storm, the big banks are accelerating digital transformation and cost optimis­ation strategies. Access Bank con­tinues to build out its AccessMore app and regional digital channels, while Zenith is investing heavily in automation, cybersecurity, and artificial intelligence.

UBA is focusing on payments and cross-border digital banking across its 20 African markets. GTCO, meanwhile, is pushing inno­vation through its fintech subsidiar­ies, positioning itself for growth in non-interest income streams such as payments, remittances, and asset management.

“The future of Nigerian banking lies in technology and efficiency,” said Ifeoma Okoye, financial analyst at Afrinvest. “The days of relying on FX revaluation to drive profits are gone. Only banks that digitise, innovate, and diversify their income will thrive in the next cycle.”

Outlook: Slower, Smarter Growth Ahead

Despite the immediate head­winds, industry watchers remain cautiously optimistic. Nigerian banks remain well-capitalised and resilient, with strong liquidity and expanding regional footprints.

If the central bank succeeds in stabilising the naira and inflation begins to ease in 2026, credit growth and profitability could rebound. But for now, the era of easy profits is clearly over.

“The sector is entering a new normal of slower, more disciplined growth,” said one senior banker. “The test now is not how much you earn from FX swings, but how efficiently you operate and how in­novative you can be.”

With FX gains gone, inflation bit­ing, and recapitalisation looming, the FUGAZ giants are bracing for a tougher journey — one that will demand strategic agility, digital strength, and relentless efficiency to sustain shareholder value.

As one banking executive puts it succinctly: “The easy money phase is over. What lies ahead is the real test of resilience — and survival.”