Zenith Bank, UBA sustain growth through interest income amid volatile market conditions

Two of Nigeria’s leading tier-one banks, Zenith Bank Plc and United Bank for Africa Plc (UBA), have released their unaudited financial statements for the nine months ended September 30, 2025, revealing resilient performances driven largely by robust interest income, prudent risk management, and balance sheet expansion despite a challenging macroeconomic environment marked by inflationary pressures, high funding costs, and fluctuating market liquidity.

Zenith Bank sustains solid performance, driven by robust interest income

Zenith Bank Plc delivered a solid performance for the nine-month period ended September 30, 2025, achieving a profit before tax (PBT) of N917.4 billion, according to its unaudited financial statement. Though this represented an 8.5% year-on-year decline, the bank’s underlying fundamentals remained strong, reflecting disciplined balance sheet management, growth in core banking operations, and improved risk controls.

For the third quarter alone, the bank recorded a pre-tax profit of N291.78 billion, a 6% growth over the N275.8 billion posted in the corresponding period of 2024. Gross earnings rose significantly by 16.29% to N3.37 trillion, compared to N2.89 trillion in the same period of the previous year.

According to the key highlights released by the bank, net interest income climbed 50.4% to N1.93 trillion, while non-interest revenue stood at N539.7 billion, reflecting an 18.4% improvement from 2024 levels. Operating profit before impairment rose to N1.31 trillion, up 15.2% year-on-year.

The bank’s profit after tax (PAT) closed the period at N764.2 billion, a 7.6% decline from the prior year’s figure. The slight dip in profitability was largely due to higher impairment charges and rising operating costs amid a volatile economic climate.

Despite this, Zenith’s balance sheet remained formidable, with total assets increasing to N31.18 trillion, representing a 2.6% year-on-year growth. Customer deposits surged 9.8% to N23.69 trillion, underlining continued customer confidence and strong funding stability. However, loans and advances to customers dipped marginally by 1.1% to N9.37 trillion, reflecting the bank’s cautious approach to credit risk amid economic headwinds.

Interest Income as a Key Growth Driver

Zenith Bank’s revenue growth was primarily underpinned by a sharp increase in interest income, which soared by 40.7% to N2.74 trillion in the nine-month period, up from N1.95 trillion in 2024.

A breakdown of the figures showed that interest income on loans and advances contributed N1.36 trillion, while income from investment securities — including treasury bills — contributed a combined N1.14 trillion, broken down into N740.5 billion from treasury bills and N400.3 billion from investment securities.

On the expense side, interest expenses rose 22.2% to N814.2 billion, mainly driven by the rising cost of customer deposits. Despite this increase, net interest income remained solid, standing at N1.93 trillion, representing a 50.4% growth year-on-year.

After accounting for impairment charges of N781.5 billion, net interest income after impairment closed at N1.15 trillion, up 42.2% from N802.9 billion in the previous year. The report noted that although impairment charges rose during the nine-month period, Q3 2025 saw a significant drop to N20.71 billion from N62.5 billion in Q3 2024, signaling a potential easing in credit impairment pressures and improving loan book quality.

This dynamic reflected a well-managed risk environment and effective credit assessment, which helped to sustain the bank’s profitability despite higher interest expenses.

Non-Interest Income Impacted by Decline in Trading Gains

Zenith Bank’s non-interest income for the period stood at N539.7 billion, representing a 38% decline year-on-year. The drop was primarily attributed to a sharp 60% decline in trading income, as gains from the bank’s other trading books fell from N755 billion in 2024 to N261 billion in 2025.

In the third quarter, the trading segment recorded a loss of N222.4 billion, reflecting the volatility in financial markets and foreign exchange segments during the period.

However, the bank recorded notable resilience in its fee and commission income, which grew 10.45% to N299 billion, supported by higher transaction volumes and strong performance in electronic channels.

Key contributors included:

Account maintenance fees: N64 billion
Fees on electronic products: N59 billion
The steady growth in transaction-based income indicates continued customer engagement and digital adoption, which have become critical to the bank’s retail and corporate strategy.

Resilient Balance Sheet and Liquidity Management

Zenith Bank’s total assets grew to N31.18 trillion, a 2.6% year-on-year increase, underpinned by strong liquidity and prudent investment decisions.

Cash and bank balances increased from N5.38 trillion to N6.85 trillion, while investment securities rose 2% to N4.86 trillion. Notably, treasury bill holdings surged 46% to N4.2 trillion, highlighting the bank’s strategy of maintaining liquidity and optimizing returns amid a high-yield environment.

On the liabilities side, customer deposits were a key driver of growth, climbing 9.8% to N23.69 trillion. This robust deposit growth underlines the bank’s strong brand trust, effective customer acquisition, and deep penetration across both retail and corporate segments.

Market Performance and Outlook

Zenith Bank’s stock has rewarded shareholders handsomely in 2025, gaining 38.5% year-to-date and closing at N63 as of the last trading session, up from N45.50 at the start of the year. This performance reflects investor confidence in the bank’s fundamentals, profitability, and dividend-paying history.

Commenting on the results, Group Managing Director/CEO, Dame Dr. Adaora Umeoji, OON, stated:

“Zenith delivered a solid nine-month performance despite a demanding backdrop. We stayed disciplined on risk, deepened customer relationships across retail and corporate segments, and deployed our balance sheet where we saw quality opportunities.”

She further highlighted the bank’s focus as it heads into the final quarter:

“As we enter the final quarter, our priorities are clear: service excellence, prudent growth, and sustained value creation for our shareholders.”

Her comments reflect a continuation of Zenith’s strategy of combining operational efficiency, disciplined asset growth, and long-term shareholder value creation.

UBA records steady profit growth as interest income lifts performance

United Bank for Africa Plc (UBA) also demonstrated resilience in its nine-month performance, achieving a profit after tax (PAT) of N537.5 billion, representing a 2.33% increase over N525 billion posted in the corresponding period of 2024.

The Group’s gross earnings rose 2.9% to N2.47 trillion, driven mainly by higher interest income. Net interest income grew by 6.2% to N1.17 trillion, reflecting the benefits of a larger loan book and increased yields on earning assets.

Although non-interest income dropped 28.8% to N310.1 billion, the bank maintained steady growth in operating profit and net margins. Operating profit before impairment stood at N1.42 trillion, representing a modest 0.6% increase, while profit before tax (PBT) came in at N578.6 billion, a 4.12% decline year-on-year.

Interest Income Remains the Backbone of Growth

UBA’s performance was largely supported by a 10.1% rise in interest income, which grew to N1.98 trillion during the period. The increase was attributed to a higher volume of loans and advances, as well as growth in investment securities.

A major contributor to this performance was the bank’s loan portfolio, which expanded by 3.5% to N7.20 trillion, driven by both retail and corporate segments. In addition, investment securities, including instruments held at amortized cost and fair value through other comprehensive income (FVOCI), also provided significant income growth.

However, interest expenses rose by 16.27% to N808.72 billion, reflecting the elevated cost of deposits in a tight liquidity environment. Despite this, the Group sustained a healthy net interest margin, with net interest income climbing to N1.17 trillion, up 6.18% from the prior year.

Non-Interest Income Impacted by Trading and FX Pressures

UBA’s non-interest income for the nine-month period stood at N310.1 billion, representing a decline of 28.8% compared to N435.8 billion in the same period of 2024. The drop was primarily due to a steep 77.3% decline in trading and foreign exchange income, which fell to N41.4 billion, reflecting the volatility in Nigeria’s FX market during the year.

Despite this, fees and commission income grew by 4.3%, supported by increased customer transactions, enhanced digital banking adoption, and expansion in trade finance and credit services.

Lower Impairment Charges Support Profitability

UBA recorded a remarkable improvement in asset quality during the review period, as net impairment charges on loans and receivables declined 54% to N56.89 billion, from N123.48 billion in 2024.

This improvement significantly boosted net interest income after impairment, which rose to N1.11 trillion, compared to N1.08 trillion in the corresponding period of 2024. The reduction in impairment charges underscored better credit quality and strengthened risk management practices across its loan book.

Strong Balance Sheet and Investor Confidence

UBA’s balance sheet remained robust, with total assets growing 8% to N32.49 trillion. The increase was driven by a rise in cash and bank balances to N9.11 trillion, and growth in investment securities to N13.59 trillion.

Customer deposits also expanded 8.7% to N23.80 trillion, reflecting sustained customer confidence and strong deposit mobilization. Shareholders’ funds grew to N4.301 trillion, up from N3.418 trillion at the end of December 2024, underscoring the bank’s strong capital position and retained earnings growth.

Following the release of the results, UBA’s share price rose to N39.75, up from N39.00, representing a 1.9% increase, while year-to-date, the stock has appreciated 16.9%, reflecting investor optimism over the bank’s stable performance and regional diversification strategy.

Both Zenith Bank and UBA have demonstrated resilience and adaptability amid a volatile macroeconomic and regulatory environment. For Zenith, the sharp growth in interest income, solid net interest margins, and prudent balance sheet management reinforce its reputation for operational efficiency. UBA’s steady profitability, supported by lower impairment charges and strong loan growth, highlights its robust fundamentals and growing pan-African footprint.

As the two banking giants enter the final quarter of 2025, both institutions are focused on consolidating their gains, deepening digital transformation, enhancing customer experience, and delivering sustainable value to shareholders in an increasingly competitive financial landscape.