No cause for alarm in bank results, numbers tell a stronger story, Says Cardoso

Nigeria’s largest banks delivered a mixed but ultimately reassuring set of financial results in 2025, as strong balance sheet expansion and revenue growth helped offset a sharp, policy-driven decline in profitability.

According to the 2025 audited financial statements for the year ended December 31, tier-one lenders recorded broad growth in gross earnings, which collectively rose by 7.69 per cent to N18.2 trillion from N16.9 trillion in 2024.

The growth was led by Access Holdings, whose gross earnings rose to N5.52 trillion in 2025 from N4.87 trillion in 2024. Zenith Bank followed with N4.07 trillion, up from N3.82 trillion, while First HoldCo posted N3.21 trillion from N3.37 trillion. United Bank for Africa recorded N2.97 trillion from N3.1 trillion, while Guaranty Trust Holding Company saw gross revenue rise to N2.11 trillion in 2025 from N2.15 trillion in 2024, confirming that core banking activity remained resilient despite macroeconomic pressures.

During the period, interest income calculated using the effective interest rate expanded sharply across most banks. Zenith Bank nearly doubled its interest income to N2.72 trillion, while GTCO recorded N1.32 trillion, underscoring the benefits of Nigeria’s high-yield interest rate environment.

At the same time, non-interest income continued to deepen, with e-banking revenues across the banks rising to N685.5 billion from N628.4 billion, highlighting the growing importance of digital banking channels.

More significantly, balance sheets strengthened considerably. Access HoldCo’s total assets surged to N51.5 trillion from N41.4 trillion, while UBA and Zenith Bank crossed N33.7 trillion and N31.4 trillion respectively. Shareholders’ funds also expanded across the sector following the recapitalisation exercise, which boosted capital buffers and improved banks’ loss-absorption capacity.

The capital build-up remains central to the banking sector’s resilience story. Nigerian banks raised a total of N4.65 trillion in fresh capital during a two-year recapitalisation drive, with 33 lenders meeting revised minimum capital requirements set by the Central Bank of Nigeria.

The Governor of the Central Bank of Nigeria, Olayemi Cardoso, said the recapitalisation programme had strengthened the industry’s ability to absorb shocks and support economic growth.

“The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks,” Cardoso said.

The apex bank also stated that all lenders remained fully operational throughout the recapitalisation period, with no disruption to banking services recorded, as regulators sought to maintain stability while tightening capital requirements.

The recapitalisation exercise comes alongside a phased withdrawal of regulatory forbearance introduced in previous years to cushion banks against economic headwinds.

However, the cost of that transition became visible in earnings performance.

According to the full-year reports of the country’s major lenders, First HoldCo’s profit after tax fell sharply to N52 billion in 2025 from N663 billion in 2024. UBA’s profit declined to N404 billion from N766 billion, while GTCO recorded a drop to N865 billion from N1.01 trillion. In contrast, Zenith Bank maintained a relatively stable performance at N1.04 trillion, while Access Holdings grew profit after tax to N743 billion.

Analysts say the divergence reflects elevated loan loss provisions as banks unwind regulatory forbearance measures and reclassify previously protected loans. The development is seen less as fresh deterioration and more as the recognition of legacy risks.

This also explains the expected pause in dividend payments reflected in some banks’ 2025 full-year results. UBA recorded loan loss provisions of N331 billion, while First HoldCo’s impairments rose to N710 billion from N371 billion. Access Holdings also saw impairment charges on loans and advances to customers jump by 209 per cent to N287.3 billion.

Despite this, UBA and First HoldCo assured investors that the temporary pause in dividends stemmed from prudent and forward-looking risk management decisions, describing it as a strategic clean-up exercise aimed at strengthening balance sheets and restoring investor confidence.

Investors nevertheless remained optimistic, as market data showed banking stocks rallying at the close of trading on May 4, with the NGX Banking Index rising by 0.36 per cent to 2,290.78 points.

Data from the Nigerian Exchange Limited showed that the All-Share Index gained 0.36 per cent to close at 243,158.97 points, bringing the year-to-date return to 56.26 per cent.

Market breadth also strengthened to 1.69x from 1.26x, reflecting strong buying interest across equities, with 54 stocks closing in positive territory.

Trading data indicated that banking stocks were the primary drivers of the market rally, with GTCO gaining 3.70 per cent and Stanbic IBTC Holdings rising by 9.70 per cent at the close of trading.