Despite Economic Headwinds, Nigerian Banks Rake in N3.317 Trillion Profits

While the economy of the country continues to falter, some of Nigeria’s largest banks have posted record profits in their 2024 full-year accounts.

The five banks, which include Zenith Bank, Guaranty Trust Holding Company, United Bank for Africa, Stanbic IBTC, and Fidelity Bank, collectively posted a post-tax profit of N3.317 trillion.

The earnings of the banks were spurred by a combination of factors, including the depreciation of the naira, which has increased the value of their dollar-denominated assets, and their investments in government securities such as treasury bills.

The reforms of the Central Bank of Nigeria (CBN), which have promoted transparency in the foreign exchange market, have also been responsible for the banks’ earnings.

But economists caution that the gains of the banks do not reflect actual economic growth and that the devaluation of naira has negatively impacted other parts of the economy. At least 10 multinational companies have closed or relocated from Nigeria since 2023 as a result of currency volatility, higher operating costs, and economic uncertainty.

CBN’s action in abolishing fuel subsidies and hiking interest rates also led to inflation, as the country’s inflation rate stands at 23.18% as of February 2025. The inflation of the cost of living has also reduced Nigerians’ purchasing power, as a 50kg bag of cement went from costing N2,000 to N3,000 in 2023 to around N10,000 now.

Despite record profits in the banking industry, developmental economist Ilias Aliyu contended that they don’t translate to economic benefit to Nigeria.

“It is a sharp contradiction that banks are raking in record profits while businesses are shutting down and Nigerians are experiencing high inflation,” Aliyu stated.

Nigeria’s economic strength is being spearheaded by non-job-creating banks, telecommunication, and oil & gas industries, said economist and data analyst Prof Bongo Adi.

“The economy has been able to retain some resilience to growth, but the nominal sectors seem to be pulling back the real sector, and that is not a good thing,” said Adi.

The economy of Nigeria is also severely affected by high inflation, currency fluctuations, and declining consumer purchasing power. While the revenues of the banking industry can be viewed as a positive development, they do not necessarily reflect a general economic boom.

The authorities and policymakers must make efforts to address the challenges facing the economy so that economic growth is inclusive and touches the life of every Nigerian.