Nigeria’s top banks are reporting billions in profit, but a closer look reveals a worrying trend: earnings growth is slowing, margins are compressing, and future projections look shaky.
According to a recent Nairametrics analysis, despite eye-popping headline profits, banks like GTCO, Zenith, and Access Holdings are struggling with rising costs, FX volatility, and regulatory tightening all of which are eating into their core earnings.
What’s Driving the Decline?
- High Operating Costs:
- Salaries, tech upgrades, and compliance burdens are pushing cost-to-income ratios higher.
- CBN’s Regulatory Clampdown:
- The apex bank’s stricter stance on FX, CRR, and digital operations is limiting banks’ ability to grow freely.
- Decline in Net Interest Margins (NIM):
- Competition and elevated inflation have made it harder to generate returns on loans.
- FX Pressure & Currency Risk:
- Naira devaluation and unstable FX markets are weakening banks’ foreign-denominated assets.
Quick Snapshot: Bank Pain Points
|
Bank |
YoY Profit |
Underlying Issue |
|
GTCO |
▲ High |
NIM declining, FX losses rising |
|
Zenith Bank |
▲ Flat |
Expanding loan book, higher cost base |
|
Access Holdings |
▲ Strong |
Integration costs from acquisitions |
Financial Literacy Nugget: Profits ≠ Growth
Just because a bank is “profitable” doesn’t mean it’s healthy.
Smart investors look beyond bottom-line figures and assess:
- Loan-to-deposit ratios
- Cost of funds
- Non-performing loans (NPLs)
- FX exposure
What to Watch
- Will CBN ease regulatory bottlenecks in H2?
- How will banks protect margins as inflation remains sticky?
- Will tech-driven fintechs eat further into banks’ market share?
Financial Juggernut Take
Nigeria’s banks may still be in the green but growth is no longer guaranteed.
For investors, the game is shifting from profit-hunting to balance sheet scrutiny.
