Smaller Nigerian Banks Beat Big Rivals in Earnings Growth

*Wema, Stanbic, Sterling see nine-month profits jump 160%

Some mid-sized Nigerian banks more than doubled their combined earnings in the first nine months of 2025, while big lenders saw their profits slump amid rising funding costs and elevated impairment charges, according to a MarketsReporters analysis.

The latest financial statements from Wema Bank Plc, Stanbic IBTC Holdings, and Sterling Financial Holdings Company Plc show that their combined after-tax profit jumped to N541.6 billion from N208.4 billion in the same period of 2024. FCMB Group Plc, which had yet to release its third-quarter numbers as of 24 November, reported a 23.6 percent rise in first-half profit to N73.4 billion.

But tier one lenders—Guaranty Trust Holding Company Plc (GTCO), Zenith Bank Plc, First HoldCo Plc, and Access Holdings Plc—posted combined profits of N2.49 trillion, down from N3.07 trillion a year earlier. United Bank for Africa (UBA) was an exception as it reported a modest 2.3 percent increase compared to a 17 percent growth in 2024.

Among mid-tier lenders, Fidelity Bank bucked the trend with a profit decline to N211.7 billion from N224.6 billion in 2024. The bank’s interest expense grew by 76.1 percent. 

GTCO, the country’s most valuable banking group, recorded the biggest drop among its peers, with a 35.9 percent year-on-year fall to N699.6 billion. First HoldCo followed with a 15.5 percent decline, while Access earnings dipped by 2.2 percent.

Analysts at CSL Research attributed the decline in big banks’ profits to the disappearance of the fair value gains. Fair value gains arise when assets increase in value due to market movements within an accounting period.

“GTCO’s unaudited nine-month 2025 results showed a 25.6 percent year-on-year increase in interest income to N1.23 trillion, driven by the sustained high-yield environment and growth in earning assets. However, interest expense rose by 40.2 percent year on year to N278.7 billion, reflecting higher funding costs relative to the same period in 2024,” they said in a note.

The group’s results came three months after its landmark debut on the London Stock Exchange on July 9, 2025—the first listing by a Nigerian financial institution. The move, a key step in its global expansion strategy, pushed its market capitalisation above N3 trillion. As of 24 November, GTCO was valued at N3.09 trillion.

For the mid-sized banks that delivered strong earnings—Sterling, Stanbic, and Wema—interest income more than doubled to N396.9 billion, reflecting the high-yield environment created by elevated interest rates. 

FCMB also saw interest income jump 70.3 percent in the first six months of the year, while its foreign exchange position swung to a gain of N1.41 billion from a loss of N35.2 billion.

Nigerian biggest banks reported supernormal profits in 2023 and 2024 on the back of steep naira devaluations and aggressive monetary tightening. As the currency stabilised and interest rates softened, earnings began to normalise, exposing banks with heavy cost structures and large impairment books.

President Bola Tinubu’s early-term reforms—including steep currency devaluations in June 2023 and January 2024—delivered outsized gains to banks with significant foreign exchange exposure. 

The Central Bank of Nigeria (CBN) data show the average official rate rose to N1,450/$ in 2024 from N645.10/$ in 2023. In the first eight months of 2025, the naira traded between N1,500 and N1,600/$ before firming to N1,480.3/$ on September 26. It closed at N1,457.3/$ on November 21.

The CBN’s tightening cycle—an 875-basis-point increase in the Monetary Policy Rate (MPR) to 27.5 percent between July 2023 and May 2025—boosted yields and interest income across the industry. But that trend shifted this year after the regulator paused rate hikes and delivered its first cut since 2020, trimming the MPR to 27 percent in September. 

Analysts expect another 100–200 basis-point cut at the final Monetary Policy Committee meeting of the year on November 24–25.