9am News report reveals that Nigerian banks experienced a record-breaking year in 2024, earning N8.41 trillion from customer loans a 106% surge from N4.08 trillion in 2023. This significant increase is attributed to the Central Bank of Nigeria’s (CBN) aggressive monetary tightening which saw interest rates rise by over 800 basis points to 27.5% in a bid to rein in inflation.
The elevated interest rate environment provided banks with ample room to reprice existing loans and issue new ones at significantly higher rates, more than doubling their interest income.
By the end of 2024, the combined loan portfolio of ten listed banks on the Nigerian Exchange grew by 37.6% to N51.36 trillion, reflecting both increased credit activity and loan repricing.
Aside from customer loans, banks earned N6.66 trillion from other interest-generating assets, including government securities, bonds, and interbank placements, up from N2.7 trillion in 2023. Interest-based earnings accounted for 72.4% of their gross revenue, confirming the centrality of lending in bank profitability.
Top Banks by Interest Income on Customer Loans
#1: Access Corporation – N1.63 trillion
Access Corporation, parent of Access Bank, topped the list, earning N1.63 trillion in 2024—a 118% increase from the N747.2 billion recorded in 2023. With the largest customer loan book of N11.49 trillion, Access averaged a 17% return on its N9.76 trillion average customer loan portfolio.
#2: Zenith Bank – N1.52 trillion
Zenith Bank followed closely with N1.52 trillion in interest income, up 126% from 2023. Its customer loan portfolio rose to N9.97 trillion with an average interest yield of 18%.
#3: First HoldCo – N1.36 trillion
First HoldCo, the holding company of First Bank of Nigeria, earned N1.36 trillion a 124% increase from the previous year. Its average customer loans reached N7.56 trillion, delivering an 18% yield.
#4: UBA – N779.7 billion
United Bank for Africa posted N779.7 billion in interest income, growing 99% year-on-year. Its customer loans grew to N6.95 trillion, with a 13% interest yield.
#5: Fidelity Bank – N626.3 billion
Fidelity Bank recorded a 72% increase, with customer loan interest income of N626.3 billion. Its loan book hit N4.39 trillion and yielded 17% on average.
While interest income reached new highs, the cost of funds also rose, pressuring banks’ profit margins. Zenith Bank saw a 180bps increase, Stanbic IBTC rose 60bps, and GTCO’s cost of funds climbed 28bps, reflecting tighter liquidity and higher deposit rates.
The knock-on effect of elevated borrowing costs resulted in higher non-performing loans (NPLs), with the average NPL ratio among the top ten banks rising from 4.1% in 2023 to 4.5% in 2024. This indicates growing difficulty for households and businesses in meeting loan repayment obligations.
With the Monetary Policy Rate (MPR) still at 27.5% as of April 2025 and inflation above 24%, the CBN appears set to maintain its hawkish stance. Analysts suggest that while banks may continue to enjoy high interest income, the challenge of loan quality and rising default risks may intensify.
In sum, 2024 was a profitable year for the Nigerian banking sector, driven by strategic loan repricing and credit expansion. However, it also underscored the need for careful balance between profitability and asset quality, especially in a high-interest, inflationary environment.
Stay tuned to 9am News Nigeria for more Breaking News, Business News, Sports updates And Entertainment Gists.
