For years, Nigerian banks especially the “FUGAZ” community (FirstBank, UBA, GTCO, Entry, and Zenith) were utilizing high on a wave of sage-breaking revenue.
Quarter after quarter, they posted pre-tax earnings in extra of ₦150 billion, due to a mix of gentle investments, FX windfalls, and a favourable macro ambiance. But 2025 is shaping as much as be a diversified legend.
Despite easy posting billions in revenue, quite lots of these banks are now exhibiting indicators of slowing down. Some are even reporting fascinating declines in earnings. The inquire is: what’s in the again of the unexpected high-tail on development?
The ticket of staying afloat is rising
A few of the largest culprits is inflation. The rising ticket of everything—skills, operations, workers salaries is hitting banks grand. They are spending extra correct to defend change as frequent.
Entry Monetary institution, as an instance, reported over ₦41 billion in IT and e-change prices, whereas Zenith Monetary institution spent bigger than ₦21 billion in the the same class. These are now not exiguous numbers.
Marketing prices have additionally ballooned. FirstHoldCo on my own spent over ₦19 billion on promoting and promotions some distance bigger than it did the outdated twelve months. As banks make bigger their operations and modernize, their overheads are scaling up alongside their ambitions.
Personnel prices are growing too. With an even bigger physique of workers and growing power to adjust salaries basically based totally on inflation, workers-connected prices are eating deeper into profit margins.
To make matters worse, banks are additionally shouldering heavier regulatory burdens. Levies just like the AMCON price continue to develop, alongside side great extra power to their backside lines.
The international change gain collectively is over
Perchance essentially the most dramatic shift has arrive from the international change market. In outdated years, various devaluations of the naira handed banks huge revaluation beneficial properties.
Those windfalls helped prop up their profit figures even when diversified areas underperformed.
But in 2025, the naira has remained rather stable, and these beneficial properties have all but disappeared.
Zenith Monetary institution, as an instance, noticed its trading beneficial properties descend from ₦186.3 billion in Q1 2024 to correct ₦12.8 billion this twelve months. GTCO’s unrealized international change beneficial properties fell off a cliff from ₦331 billion to a mere ₦1.5 billion. These were now not correct bonuses; they’d develop to be a core portion of the earnings legend.
Now that the currency market has cooled, banks are having to rely extra on core banking activities and that’s a more durable sport in the sizzling economic local weather.
Extra Shares, Smaller Slices
There’s additionally a quieter, structural swap that’s affecting profit metrics: portion dilution.
Following regulatory power to satisfy recapitalization targets, many banks raised critical quantities of equity in 2024 practically ₦2 trillion in total.
That’s just staunch for lengthy-timeframe balance, but it unquestionably comes at a ticket. With extra shares in circulation, earnings per portion (EPS) naturally take a success, although the total profit figure stays solid.
EPS is a key metric for traders, and decrease EPS can injure market sentiment. To defend or develop EPS, banks would must vastly boost their earnings, a fancy job when prices are up and windfall revenues are drying up.
What Occurs Subsequent?
Extra Q1 results are easy on the manner, but early indicators are sure: the explosive profit development of most recent years is in actuality fizzling out.
That doesn’t imply Nigerian banks are failing. Perchance they’re easy winning, stable, and rather solid and are entering a extra now not easy section. With out the easy boost from international change revaluations and with rising prices on all fronts, future development will depend extra on method than circumstance.
Will they aggressively develop their loan books no topic economic fragility? Can they attach prices in check with out slowing down innovation? Or will they sight contemporary revenue streams that might possibly defend profit phases?
