Banking Boom Amid Economic Gloom: How Nigerian Banks Hit a Historic N1 Trillion Profit Mark
Key Highlights:
• GTCo and Zenith Bank become the first Nigerian banks to surpass N1 trillion in post-tax profit.
• Three major banks—GTCo, UBA, and Zenith—record a combined N2.78 trillion PAT, outpacing the budgets of several Nigerian states.
• Fees and commissions nearly triple, reflecting a shift towards transaction-based earnings over traditional lending.
• Nigerian banks now rank 6th in Africa for high non-interest income dependency.
• Bank executives and top shareholders pocket billions in dividends amid soaring profits.
• Real sector struggles as businesses face crushing interest rates of up to 40%.
⸻
The Banking Sector’s Unprecedented Profit Surge
Nigeria’s banking sector has reached an unprecedented milestone, with GTCo and Zenith Bank crossing the N1 trillion post-tax profit mark in 2024. Access Holdings is also on track to join this exclusive league, with projections indicating a 62% growth requirement to hit the threshold. The combined profits of the top three tier-one banks—GTCo, UBA, and Zenith—soared to N2.78 trillion, a 53% increase from N1.82 trillion in 2023.
This astronomical growth starkly contrasts the struggles of the real sector, where manufacturing and agriculture remain constrained by economic instability and exorbitant borrowing costs.
⸻
Banks Profit as Interest Rates Strangle the Real Economy
While Nigerian businesses grapple with high operating costs and limited credit access, banks are thriving through aggressive deposit mobilization and transaction-based earnings.
• Interest income: Grew by 73.4%, from N1.88 trillion to N3.23 trillion.
• Fees and commissions: Nearly tripled (178% increase) to N920 billion, reflecting a shift from traditional lending to transactional revenue.
• Non-interest income dominance: Nigerian banks now rank 6th in Africa, with non-interest income forming 31.4% of total earnings.
Meanwhile, lending remains out of reach for most businesses, with interest rates ranging from 35% to 40%. Banks find it more profitable to invest in treasury bills (offering 20% yields) than to lend to small businesses struggling with economic uncertainties.
⸻
Bank Executives Cash In: Billionaire Dividends
As banks report record profits, shareholders and executives are reaping massive rewards:
• Jim Ovia (Zenith Bank): Set to earn N25.4 billion in dividends.
• Tony Elumelu (UBA): Receives N12.7 billion.
• Segun Agbaje (GTCo): Earns N3.33 billion.
• Total payout to top three executives: N41.4 billion.
Despite this financial windfall, the banking sector’s impact on the broader economy remains disproportionate. The financial sector contributed only 6% to Nigeria’s GDP in 2024 but recorded a staggering 28% growth rate. In contrast, manufacturing and agriculture, which drive economic stability, grew by just 1.8% each.
⸻
Bigger Banks, But at What Cost?
With the upcoming capital raise across the banking industry, banks will have greater financial firepower to expand operations. However, unless the real sector receives more affordable credit, these profits may continue to rise at the expense of economic growth.
Rather than serving as catalysts for industrial expansion, Nigerian banks appear to be thriving in an economy that struggles under their weight—flourishing as the real sector bleeds.
Key Highlights:
• GTCo and Zenith Bank become the first Nigerian banks to surpass N1 trillion in post-tax profit.
• Three major banks—GTCo, UBA, and Zenith—record a combined N2.78 trillion PAT, outpacing the budgets of several Nigerian states.
• Fees and commissions nearly triple, reflecting a shift towards transaction-based earnings over traditional lending.
• Nigerian banks now rank 6th in Africa for high non-interest income dependency.
• Bank executives and top shareholders pocket billions in dividends amid soaring profits.
• Real sector struggles as businesses face crushing interest rates of up to 40%.
⸻
The Banking Sector’s Unprecedented Profit Surge
Nigeria’s banking sector has reached an unprecedented milestone, with GTCo and Zenith Bank crossing the N1 trillion post-tax profit mark in 2024. Access Holdings is also on track to join this exclusive league, with projections indicating a 62% growth requirement to hit the threshold. The combined profits of the top three tier-one banks—GTCo, UBA, and Zenith—soared to N2.78 trillion, a 53% increase from N1.82 trillion in 2023.
This astronomical growth starkly contrasts the struggles of the real sector, where manufacturing and agriculture remain constrained by economic instability and exorbitant borrowing costs.
⸻
Banks Profit as Interest Rates Strangle the Real Economy
While Nigerian businesses grapple with high operating costs and limited credit access, banks are thriving through aggressive deposit mobilization and transaction-based earnings.
• Interest income: Grew by 73.4%, from N1.88 trillion to N3.23 trillion.
• Fees and commissions: Nearly tripled (178% increase) to N920 billion, reflecting a shift from traditional lending to transactional revenue.
• Non-interest income dominance: Nigerian banks now rank 6th in Africa, with non-interest income forming 31.4% of total earnings.
Meanwhile, lending remains out of reach for most businesses, with interest rates ranging from 35% to 40%. Banks find it more profitable to invest in treasury bills (offering 20% yields) than to lend to small businesses struggling with economic uncertainties.
⸻
Bank Executives Cash In: Billionaire Dividends
As banks report record profits, shareholders and executives are reaping massive rewards:
• Jim Ovia (Zenith Bank): Set to earn N25.4 billion in dividends.
• Tony Elumelu (UBA): Receives N12.7 billion.
• Segun Agbaje (GTCo): Earns N3.33 billion.
• Total payout to top three executives: N41.4 billion.
Despite this financial windfall, the banking sector’s impact on the broader economy remains disproportionate. The financial sector contributed only 6% to Nigeria’s GDP in 2024 but recorded a staggering 28% growth rate. In contrast, manufacturing and agriculture, which drive economic stability, grew by just 1.8% each.
⸻
Bigger Banks, But at What Cost?
With the upcoming capital raise across the banking industry, banks will have greater financial firepower to expand operations. However, unless the real sector receives more affordable credit, these profits may continue to rise at the expense of economic growth.
Rather than serving as catalysts for industrial expansion, Nigerian banks appear to be thriving in an economy that struggles under their weight—flourishing as the real sector bleeds.