Nigerian Banks Post Record Profits Amid Naira Volatility

Nigeria's Tier-1 commercial banks delivered a stunning earnings season for fiscal year 2024, with five of the country's largest lenders reporting a combined pre-tax profit of ₦2.3 trillion — a 187% year-on-year surge that left analysts and investors scrambling to revise their models upward.

Zenith Bank led the pack with a pre-tax profit of ₦796 billion, up 202% from the prior year, driven largely by foreign exchange revaluation gains after the naira's devaluation added hundreds of billions to the book value of dollar-denominated assets. Access Holdings followed closely with ₦729 billion, while GTCO reported ₦609 billion, buoyed by strong non-interest income and digital banking fees.

The outsized profits, however, have attracted scrutiny. The CBN levied a ₦50 billion windfall tax on foreign exchange gains in late 2024, a measure that trimmed reported earnings but still left the banks with record after-tax returns. Some financial commentators have raised questions about whether the bonanza reflects genuine operational strength or simply the accounting arithmetic of naira depreciation.

Beyond FX gains, the banks demonstrated real improvements in their core businesses. Non-performing loan ratios fell across the sector to an average of 4.1%, the lowest in seven years, as oil prices recovered and agribusiness borrowers returned to solvency. Digital transaction volumes grew 61% industrywide, reducing the cost-to-income ratio of leading banks below 40% for the first time.

For investors, the earnings season has been transformative. The NGX Banking Index surged 43% in the first quarter of 2025, making Nigerian bank stocks among the best-performing financial equities in sub-Saharan Africa. Dividend announcements were generous — Zenith declared a final dividend of ₦4 per share, and GTCO raised its payout by 150% — prompting a fresh wave of institutional buying from foreign portfolio investors who had abandoned Nigerian equities during the 2023 naira crisis.