₦airaland Forum

Nigerian banks have begun releasing their Q1 2025 results, and while many are still posting billions in profit, the era of runaway earnings growth may be drawing to a close.

For years now, Nigeria’s biggest banks, popularly referred to as the FUGAZ, have normalized quarterly pre-tax profits above N150 billion.

However, early numbers from this quarter suggest that growth is beginning to stall, and in some cases, reverse.

GTCO, one of the sector’s most efficient banks, saw its pre-tax profit fall sharply by 41% to N300 billion. FirstHoldCo wasn’t spared either, recording a 20.2% drop.

Access Holdings and Zenith Bank still posted modest growths of around 10%, but even that marks a steep drop from the triple-digit surges seen this time last year. So, what changed?

The cost of staying in business is rising

A closer look at the financial statements tells part of the story. Operating expenses are rising across the board, largely in response to spiraling inflation.

As the cost of doing business climbs, banks are spending more on everything—from technology to salaries. With bigger balance sheets, their overheads are also scaling up.

For instance, FirstHoldCo spent over N19 billion on advertising and promotion—a huge spike compared to last year.

Access Bank reported N41 billion in IT and e-business expenses, while Zenith Bank’s IT spend surged past N21 billion. Personnel expenses are also on the rise, as banks adjust wages and expand their workforce to support growth.

In addition to inflationary pressures, banks are also seeing spikes in statutory costs. The controversial AMCON levy, a resolution fund fee, is taking a bigger bite out of profits.

Then there’s the sharp drop in foreign exchange revaluation gains—another major factor now weighing on bottom lines.

The forex windfall is drying up

Over the last two years, Nigerian banks recorded massive gains from forex revaluation, thanks to multiple currency devaluations. But with the naira now showing relative stability in 2025, those once-in-a-lifetime windfalls are tapering off.

Take Zenith Bank. Its trading gains dropped from N186.3 billion in Q1 2024 to just N12.8 billion this quarter. Last year, the bank made over N1 trillion in revaluation and trading gains.

GTCO’s story is even more dramatic, with unrealized FX gains plunging from N331 billion to just N1.5 billion.

This sharp drop was expected, but its effect on earnings is now clearly visible.

The EPS challenge looms

There’s another factor quietly at play: dilution from last year’s capital raises. In 2024, Nigerian banks raised nearly N2 trillion in fresh equity to meet recapitalization targets.

This means more shares in circulation—and therefore lower earnings per share (EPS), even if total profit still grows.

EPS is critical for valuations and investor sentiment. To maintain or grow EPS at 2024 levels, banks would need to significantly scale up profits—perhaps double or triple current levels.

That will be a tall order, especially as banks are now expected to grow earnings primarily through lending.

While interest rates remain high and risk-free instruments like treasury bills are attractive, expanding loan books in a fragile economy could increase non-performing loans.

Fortunately, most banks have built solid buffers by making provisions during the profitable years. But the risks remain.

What to expect going forward

While more Q1 results are yet to be released, the early signs point to a common trend: earnings growth is cooling off. This doesn’t mean banks are in trouble—it just means investors must adjust their expectations.

The Nigerian banking sector is still very profitable. But the days of bumper gains driven by one-off FX revaluations, underpriced equities, and windfall trading income may be behind us.

For investors, it’s time to watch how banks respond: Will they double down on lending? Will costs spiral further? Or will they find new, more sustainable paths to profit?

The golden era of easy bank profits may be fading. What comes next will demand better strategy—and a lot more patience.

Careful4u:
Tinubu will handle the economy

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally

Careful4u:
Tinubu will handle the economy

ClearFlair:
Economy in shambles. You were warned about APC.
Mesef no get sense for 2014 and 2019, but I thank God I got wiser in 2023. I could have been one of the people believing lies since 2014 if not for God-given wisdom. I pray they all receive common sense soon. Because nobody should go through life with this amount of foolishness.

Aify147:
Tinubu will build it like he built Lagos, you people shouldn't worry at all. Vote him again in 2027 for continuity.

reiddecuti:
Tinubulation on the beat...
Everything he touches dies.

Chikarata2020:
Everything is going down in this country, and we all know that it's due to clueless leaders we have. Hope God saves Nigeria

ClearFlair:
What happened to the grey one between your own ears when they were posting fake data trying the deceive the masses? Is integrity even a thing to you?

lexy2014:
How have you used "that grey stuff between your ears"?
How were you expecting them to use theirs?

Walai:
Opay is bae

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally

cnnamoko:
The Opay effect

I told a cashier in G.. that was raising shoulder during naira scacity period, that this big bank hall ll be converted to a museum or better still a poultry farm in 5-10 years time. She was still formimg untop of my unreversed 11k tilll date.

Fintech ll show them shege. Without a single major branch Opay and Moneipoint ll snatch all their customers like how sidechicks do it professionally