Business

High interest rates choke real sector as banks break N1tr profit threshold

Published

12 months ago

March 31, 2025

• Three tier-one on track for N1 trillion post-tax profits
• Commissions, fees of Zenith, GTCo, UBA nearly triple
• Ovia, Elumelu, Agbaje earn N41 billion in dividend
• Industry ranks sixth in Africa on high non-interest income ratio

Like a vulture, the banking industry continues to feast on a bleeding economy, with the latest financials of the lenders diverging significantly from the performance of the real sector.

In the face of constricted real sector growth, including manufacturing and agriculture, banks are demonstrating an unusual resilience, with the tier-one players entering a 12-digit post-tax profit era.

For the first time in their corporate sojourn, GTCo Plc and Zenith Bank Plc broke the N1 trillion profit after tax (PAT) mark, emerging as the first Nigerian banks to hit the milestone.

Whereas GTCo almost doubled its PAT to N1.02 trillion in the year, many business operators considered as one of the toughest in recent years, Zenith almost grew by 50 per cent to cross N1 trillion as well.

Access Holdings Plc, the biggest player by asset size, also shows a great prospect of exceeding N1 trillion. The group would only need to grow its 2023 N619.3 billion by 62 per cent – which is a mean fit in the industry it operates – to reach N1 trillion.

In 2023, Access Holdings, which has reinvented growth by acquisition, quadrupled its post-tax profit. It does not need to double the figure this year to join the league of N1 trillion PAT banks the market witnessed last week.

Last week, three out of the three systemically important banks (SIBs) – otherwise considered too big to fail – posted what many investment analysts could consider as head-turning results and announced corporate actions.

The trio – GTCo, UBA Group and Zenith – posted a combined PAT of N2.78 trillion, an impressive 53 per cent jump from the N1.82 trillion they recorded in 2023.

Besides Lagos, the amount posted by the three banks can fund the budget of any state in the country. Lagos state plans to spend N3.37 trillion while Niger, Rivers and Ogun states are to spend N1.56, N1.19 and N1.05 trillion respectively. Some six states have a combined yearly budget of less than N2 trillion.

The three tier-one banks grew their interest income by 73.4 per cent – from N1.88 trillion to N3.23 trillion. As remarkable as the interest income appears, it is far behind the speed of growth of their fees and commissions, which form the bulk of their non-interest incomes and demonstrate how less the lenders depend on financial intermediation to grow their earnings.

At 31.4 per cent, Nigerian banking is sixth with the highest non-interest to total income ratio in Africa. It comes behind Egypt, the Republic of Benin, Ghana, Sierra Leone and Tunisia. Globally, it is the 94th.

In the year, fees and commissions grew by 178 per cent, nearly threefold, to reach N920 billion. As of 2023, their combined fees and commissions were a mere N330.5 billion.

Today, many banks are investing heavily in consumer products as part of the broader strategy to transition to transaction-led institutions – a cheaper option for risk-based financial intermediation.

Daily, Nigerians take to social media to protest the widespread ‘extortion’ by the financial institutions, which are more interested in deposit mobilisation and general transactions than credit underwriting. Deposit money banks (DMBs) fund trade and only stable businesses, while risky small businesses are left to source funding from the informal market and cut-throat microlenders.

A few small businesses that secure funds from mainstream banks are handed unaffordable interest rates. Data by the Central Bank of Nigeria (CBN) put the maximum interest rate at 29.79 per cent in January. But no bank currently charges less than 35 per cent. In some cases, borrowers pay as much as 40 per cent.

At 35 per cent, most banks are still indifferent to lending funds to risky businesses. At an asymmetric corridor of +500/-100, MDBs can warehouse funds mobilise at 8.3 per cent, which is the regulatory threshold of interest on savings, at 26.5 per cent through the standard deposit facility (SDF). It also leaves much to be questioned on how banks could lend at below 30 per cent when short-term liquidity from the CBN comes at 32.5 per cent.

The banks also have sufficient options in treasury bills with yields hovering around 20 per cent in over a year. Most banks would rather push their excess liquidity into these investment windows than fund businesses that are grappling with industry, economic and political risks, perhaps an explanation of the divergence of negative correlation between banks’ profitability and economic performance.

The trend appears to be on a spiral, even as the banks are likely to continue to crowd out the scanty investments flowing to other sectors. In the past few years, when many manufacturers buckled under rising losses and single-digit growth in profit at best, banks’ profits have grown in leaps, leading to higher shareholders’ earnings and executive bonuses.

For one, the directors of Zenith Bank will pocket N25.88 billion as dividends for the 2024 financial year. Jim Ovia, the founder and majority shareholder of the bank, will receive 98.2 per cent of the amount or N25.4 billion. The bank has declared a final dividend of N5 per share in the year, subject to shareholders’ ratification at its yearly general meeting.

With a total shareholding of 2.542 billion in UBA, Tony Elumelu would similarly be handed a pay cheque of N12.7 billion by the bank for staking his interest in the company last year. The bank had declared N2 interim and N3 final dividend for the year.

Elumelu’s colleague at GTCo, Segun Agbaje, will earn N3.33 billion from the bank’s dividend payout for last year’s operation.

The trio, the last of the lineage of Nigeria’s 2000s super bankers, will earn N41.4 billion from the three institutions that shape and define the Nigerian banking industry.

The oversize and disproportionate dominance of the sector reflect its role in economic growth. Last year, the financial sector’s contribution to real GDP was a mere six per cent, but it saw the highest growth – an astronomical 28 per cent. Agriculture, with an overwhelming 25 per cent control of the gross domestic product (GDP) and manufacturing, which should determine the size and pattern of banking, were capped at 1.8 per cent each.

Of the disconnection, Agusto & Co wrote: “Notably, the seven largest sectors, which collectively contribute 76.45 per cent of Nigeria’s GDP, experienced growth slowdowns during the quarter. This trend underscores the prevailing constraints within the business environment and, in some cases, highlights deep-rooted structural challenges that continue to hinder sectoral expansion and overall economic resilience.”

Next year, the banks will have raised their capital thresholds significantly, enabling them to expand their business outreach. But with so substantial efforts made to derisk the core of the economy – manufacturing and agriculture especially – it does not appear that bigger banks would benefit the growth sector to stimulate an inclusive economic expansion.

At best, Nigeria may have bigger banks with more aggressive profit growth plans that would not be achieved with the support of the lethargic real sector but on its graveyard- perhaps by licking its sores.

-The Guardian

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Business

Liquidity Pressure Persists As Banks Dump N30.6tr with CBN Over 5 Days

Published

24 hours ago

March 28, 2026

Olumide Ojo

Liquidity conditions in the money market remained tight last week, as deposit money banks placed about N30.64 trillion with the Central Bank of Nigeria through the Standing Deposit Facility (SDF) window over the five trading sessions.

Data from the market showed that the huge deposits at the apex bank came amid persistent liquidity pressure in the financial system, with the average liquidity deficit settling at N5.7 trillion, slightly wider than the N5.1 trillion recorded in the previous week.

‎The breakdown of SDF placements showed that banks deposited N5.20 trillion on Monday, N5.27 trillion on Tuesday, N6.96 trillion on Wednesday, N6.69 trillion on Thursday, and N6.51 trillion on Friday, bringing the five-day total to N30.639 trillion, higher than the N26.161 trillion recorded in the preceding week.

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‎According to analysts, the large deposits reflect banks’ cautious liquidity management amid elevated short-term interest rates. Despite the tight liquidity environment, the overnight rate (OPR) remained unchanged at 22.0 per cent, while the overnight lending rate climbed by 12 basis points week on week to 22.3 per cent.

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‎At the treasury bills primary market, the apex offered N850 billion across the 91-day, 182-day and 364-day instruments. Market data showed that the 91-day bill recorded an offer of N100 billion but attracted N130.7 billion in allotments, while the 182-day instrument had an offer of N150 billion and attracted N71.4 billion in allotments. The 364-day paper dominated the auction with N600 billion on offer and N731.8 billion allotted.

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‎Overall demand stood at N2.8 trillion, translating to a 3.3 times bid-to-offer ratio, with investor appetite largely concentrated on the 364-day instrument, which recorded a 4.3 times subscription rate. Stop rates settled at 16.0 per cent for the short tenor and 16.7 per cent for both the mid and long dated instruments, while total allotment came to N933.9 billion, about 9.9 per cent above the initial offer.

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‎-Leadership

Business

Tinubu Government Approves Rollout Of Electric Vehicles In Nigeria Amid Fuel Crisis, Power Failure

Published

2 days ago

March 27, 2026

Olumide Ojo

Earlier, the country’s Minister of Power, Adelabu Adebayo, apologised about the state of electricity, stating that some of the issues that led to the blackout were beyond government control.

Despite Nigerians lamenting constant electricity blackout, the Bola Tinubu-led administration has announced introduction of “electric vehicles in the country.”

Earlier, the country’s Minister of Power, Adelabu Adebayo, apologised about the state of electricity, stating that some of the issues that led to the blackout were beyond government control.

Nigeria has also experienced serial grid collapses that has consistently thrown Nigeria into endless blackouts.

Amid these challenges and issues facing decent electricity available, President Bola Tinubu has approved the expansion of the mandate of the Presidential Initiative on Compressed Natural Gas (PiCNG); the initiative will now be known as the Presidential Initiative on Compressed Natural Gas and Electric Vehicles (PiCNG & EV), reflecting its broadened scope to include both gas-powered and electric mobility solutions.

The directive was conveyed in a statement issued on Thursday , March 26, 2026, by Bayo Onanuga, Special Adviser to the President on Information and Strategy.

With the approval, PiCNG & EV is expected to “lead and coordinate Nigeria’s clean mobility strategy, covering gas-driven vehicles and Electric Vehicles nationwide.”

According to the statement, the initiative will continue to drive the deployment of compressed natural gas (CNG) infrastructure, including “Mother and Daughter Stations, Integrated Refuelling Units, CNG vehicles and equipment, and nationwide conversion programmes.”

It will also “anchor the development and rollout of electric vehicles, EV charging infrastructure, and related investments nationwide.”

The presidency noted that gas remains “a competitive and strategic fuel for transportation,” leveraging Nigeria’s abundant natural resources to reduce costs, enhance energy security, and conserve foreign exchange.

It added that “the inclusion of electric vehicles further strengthens the government’s agenda for affordable, efficient, and environmentally responsible mobility.”

President Tinubu has also directed the Executive Chairman of PiCNG & EV to “immediately establish a coordinated process for the rapid deployment of vehicle conversion kits across the country” and ensure that the kits are accessible to Nigerians “at a cost that is not burdensome.”

To achieve this, the initiative will collaborate with CreditCorp Nigeria, financial institutions, and other relevant partners to design cost-effective financing structures that will make vehicle conversions widely accessible.

The President further directed “the accelerated deployment of Mobile Refuelling Units (MRUs) to expand access to CNG while permanent infrastructure continues to scale.”

-Sahara

Business

Sterling Bank Charts Way Forward for Nigeria’s Transport, Logistics Sector

Published

2 days ago

March 27, 2026

Olumide Ojo

Lagos, Nigeria, Industry leaders, policymakers, financiers, and innovators convened in Lagos today for the inaugural Nigeria Transport & Logistics Summit (NTLS) 2026, hosted by Sterling Bank at Eko Hotel & Suites, to forge actionable strategies for building a faster, more connected Nigeria through transport, mobility, and logistics.

Held under the theme “Funding the Engine of Growth,” the summit positioned Nigeria’s transport and logistics sector as a critical but under-leveraged driver of productivity, regional integration, and economic growth. Transport, mobility, and logistics collectively form the backbone of the Nigerian economy, yet chronic underinvestment, infrastructure deficits, and limited access to financing have long constrained its potential.

Transport, mobility, and logistics collectively form the backbone of Nigeria’s economy. While the logistics sub-sector alone contributes approximately ₦1 trillion to national GDP, experts estimate that the broader transport and logistics market exceeds ₦15 trillion in potential value. Yet persistent infrastructure gaps, inefficiencies, financing constraints, and policy fragmentation continue to limit the sector’s full impact.

NTLS 2026 brought together senior government officials, regulators, infrastructure operators, investors, development partners, and private sector leaders to address critical priorities including multimodal connectivity, airport and road modernization, energy-efficient mobility, digital trade facilitation, and innovative financing frameworks.

Speaking at the summit, Sterling Bank’s Managing Director and CEO, Mr. Abubakar Suleiman, represented by Sterling One Foundation CEO, Mrs. Olapeju Ibekwe, called for urgent, coordinated action to fix the systems that move Nigeria’s economy forward.

He emphasized that while Nigeria’s transport and logistics challenges, ranging from port congestion to inefficient corridors and high operating costs, are well documented the real opportunity lies in effective execution.

“We must move beyond diagnosing the problem to building integrated, modern logistics systems that can power productivity at scale. This means fixing our ports, strengthening logistics corridors, improving road and rail connectivity, and embedding efficiency across the value chain.”

“Nigeria’s competitiveness, both regionally and globally will increasingly depend on how effectively we move goods, people, and services. The time for incremental change has passed; what is required now is bold, coordinated execution across public and private sectors,” Abubakar concluded.

Also speaking at the event, the Divisional Head, Renewable Energy, Mobility and Tourism at Sterling Bank, Mr. Darlington Nwankwo, described logistics as the backbone of trade, industry, and national competitiveness.

He noted that while the sector contributes just under four percent to Nigeria’s GDP, estimated at approximately ₦15trillion, its true economic impact is significantly larger when viewed as an enabler of productivity across agriculture, manufacturing, and trade.

“We must be deliberate about fixing the logistics backbone of the economy if we are to unlock the growth we need. Nigeria’s trade competitiveness is directly linked to the efficiency of its logistics corridors, from ports to inland distribution networks.”

“At Sterling, we see our role as connecting capital to execution, designing financing solutions that do not just fund infrastructure but unlock entire value chains. This includes supporting multimodal transport systems, enabling cleaner mobility solutions, and partnering with both government and private sector players to reduce investment risk. The opportunity before us is not just to fix what is broken, but to build a logistics ecosystem that is faster, more efficient, and globally competitive.”

Lagos State Commissioner for Transportation, Mr. Oluwaseun Osiyemi, echoed the call for bold ideas, strategic investments, and forward-looking policies, describing the summit as a vital platform to shape the future of movement, trade, and connectivity in Nigeria. He urged policymakers to move swiftly from planning to implementation, called on investors to support infrastructure and innovation, and encouraged industry leaders to champion efficiency, sustainability, and accountability.

In his keynote address, Professor Biodun Adedipe grounded these ambitions in hard realities, noting that with nearly 90 percent of Nigeria’s logistics dependent on road transport, the country faces mounting congestion and maintenance costs that demand diversification into rail and more durable infrastructure. He cautioned that economic transformation requires patience, with meaningful results unlikely to materialise in under 18 months.

Panel discussions throughout the day focused on reducing logistics costs, strengthening aviation and road integration, modernizing downstream energy distribution, and accelerating the adoption of cleaner and more sustainable mobility solutions.

The summit concluded with a call for sustained public-private collaboration, stronger regulatory coordination, and the creation of structured financing vehicles to de-risk infrastructure investments.

As Nigeria seeks to strengthen its regional trade position and unlock non-oil export growth, NTLS 2026 marks a decisive step toward building a more integrated, resilient, and globally competitive transport and logistics ecosystem.

About Sterling Bank

Sterling Bank Limited is a full-service national commercial bank in Nigeria and a member of Sterling Financial Holdings Group. With a heritage of more than 60 years, the bank has evolved from Nigeria’s pre-eminent investment banking institution to a trusted provider of retail, commercial, and corporate banking services.

Sterling is a forward-thinking financial institution committed to transforming lives through innovative solutions, exceptional service, unwavering integrity, and a steadfast focus on its HEART strategy, which centers on Health, Education, Agriculture, Renewable Energy, and Transportation. As pioneers in digital banking and financial inclusion, Sterling continues to lead by example, showing how purpose-driven leadership can deliver transformative outcomes for individuals, businesses, and society at large.

Guided by a culture of innovation and a passion for excellence, Sterling Bank remains dedicated to redefining the banking experience for millions of customers across Nigeria.