Are Nigerian Banks Profits Shrinking?

For years, Nigerian banks especially the “FUGAZ” group (FirstBank, UBA, GTCO, Access, and Zenith) have been riding high on a wave of record-breaking profits. 

Quarter after quarter, they posted pre-tax earnings in excess of ₦150 billion, thanks to a mix of smart investments, FX windfalls, and a favourable macro environment. But 2025 is shaping up to be a different story.

Despite still posting billions in profits, many of these banks are now showing signs of slowing down. Some are even reporting sharp declines in earnings. The question is: what’s behind the sudden drag on growth?

The cost of staying afloat is risingOne of the biggest culprits is inflation. The rising cost of everything—technology, operations, staff salaries is hitting banks hard. They are spending more just to maintain business as usual. 

Access Bank, for example, reported over ₦41 billion in IT and e-business expenses, while Zenith Bank spent more than ₦21 billion in the same category. These are not small numbers.

Marketing costs have also ballooned. FirstHoldCo alone spent over ₦19 billion on advertising and promotions far more than it did the previous year. As banks expand their operations and modernize, their overheads are scaling up alongside their ambitions.

Personnel costs are increasing too. With a larger workforce and growing pressure to adjust salaries in response to inflation, staff-related expenses are eating deeper into profit margins.

To make matters worse, banks are also shouldering heavier regulatory burdens. Levies like the AMCON fee continue to grow, adding even more pressure to their bottom lines.

The forex party is overPerhaps the most dramatic shift has come from the forex market. In previous years, multiple devaluations of the naira handed banks massive revaluation gains. 

Those windfalls helped prop up their profit figures even when other areas underperformed.

But in 2025, the naira has remained relatively stable, and those gains have all but disappeared.

Zenith Bank, for instance, saw its trading gains drop from ₦186.3 billion in Q1 2024 to just ₦12.8 billion this year. GTCO’s unrealized forex gains fell off a cliff from ₦331 billion to a mere ₦1.5 billion. These were not just bonuses; they had become a core part of the earnings story.

Now that the currency market has cooled, banks are having to rely more on core banking activities and that’s a tougher game in the current economic climate.

More Shares, Smaller SlicesThere’s also a quieter, structural change that’s affecting profit metrics: share dilution.

Following regulatory pressure to meet recapitalization goals, many banks raised significant amounts of equity in 2024 nearly ₦2 trillion in total. 

That’s good for long-term stability, but it comes at a cost. With more shares in circulation, earnings per share (EPS) naturally take a hit, even if the overall profit figure remains solid.

EPS is a key metric for investors, and lower EPS can hurt market sentiment. To maintain or grow EPS, banks would need to significantly boost their earnings, a difficult task when costs are up and windfall revenues are drying up.

What Happens Next?More Q1 results are still on the way, but early indicators are clear: the explosive profit growth of recent years is tapering off.

That doesn’t mean Nigerian banks are failing. Maybe they are still profitable, stable, and relatively strong and are entering a more challenging phase. Without the easy boost from forex revaluations and with rising expenses on all fronts, future growth will depend more on strategy than circumstance.

Will they aggressively grow their loan books despite economic fragility? Can they keep costs in check without slowing down innovation? Or will they discover new revenue streams that can sustain profit levels?