May 05, (THEWILL) — Nigeria’s five largest lenders recorded strong operating growth in 2025, but a sharp reversal in foreign-exchange windfalls, rising credit impairments and higher operating costs dragged overall profitability lower.
A review of the 2025 financial statements of Access Holdings Plc, FirstHoldCo Plc, Guaranty Trust Holding Company Plc, United Bank for Africa Plc and Zenith Bank Plc shows that the Tier-1 group, commonly referred to as the FUGAZ banks, reported a combined profit before tax of ₦4.15 trillion in 2025, down 18 percent from ₦5.06 trillion in 2024.
The decline occurred despite robust growth in core banking income. Combined interest income rose 17.66 percent to ₦14.49 trillion, up from ₦12.31 trillion a year earlier, reflecting higher lending yields and strong returns on government securities.
Loans and advances remained the largest contributor, generating ₦7.2 trillion, representing roughly half of total interest income. However, income from investment securities is rapidly closing the gap. Earnings from treasury bills, bonds and other financial assets rose to ₦6.21 trillion, accounting for about 43 percent of interest income.
The narrowing gap highlights a gradual shift in asset allocation as banks increasingly deploy liquidity into government instruments. Combined investment securities grew 23.25 percent to ₦48.88 trillion, surpassing total loans and advances, which rose a modest 7.63 percent to ₦43.01 trillion.
The trend is particularly evident at UBA and GTCO, where income from securities exceeded lending income, while Access Holdings, Zenith Bank and FirstHoldCo remained relatively more loan-driven.
However, the improvement in core earnings was offset by a surge in credit losses and the fading of currency-related gains. Impairment charges jumped 58.73 percent to ₦2.29 trillion, partly reflecting the end of regulatory forbearance introduced during earlier economic shocks.
At the same time, net trading and foreign-exchange income fell sharply by 53 percent to ₦1.52 trillion, compared with ₦3.22 trillion in 2024 when naira devaluation produced exceptional FX gains.
Operating pressures also intensified as total expenses rose 29.03 percent to ₦5.53 trillion, driven by inflation, technology investments and currency-related cost increases.
Despite the profit moderation, the sector’s balance sheets continued to expand. Combined total assets increased to ₦160.97 trillion, supported by ₦114.27 trillion in customer deposits, underscoring sustained confidence in the banking system.
The results suggest that while extraordinary FX gains boosted profits in 2024, the 2025 performance reflects a return to earnings driven primarily by core banking activities.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
