Nine major Nigerian banks have recorded a combined interest expense of N1.90tn in the first quarter of 2025, representing a 43.2% increase from N1.33tn in the same period of 2024. According to an analysis of their unaudited financial statements made available, the banks’ total interest income stood at approximately N4.18tn.
The banks affected include Access Holdings, Zenith Bank, First HoldCo Plc, United Bank for Africa, Guaranty Trust Holding Company, Fidelity Bank, Stanbic IBTC Holdings, FCMB Group, and Wema Bank. Each bank saw significant changes in interest income and expense, with some experiencing sharp increases in funding costs.
Access Holdings posted the highest interest income of N964.6bn in Q1 2025, up 58.6% from N608.1bn in the first quarter of 2024. However, its interest expense also increased sharply by 71.3% to N760.47bn from N443.88bn, putting pressure on net interest margins.
Other banks that recorded significant increases in interest income include Zenith Bank, which rose 71.5% to N837.6bn, and FCMB Group, which jumped 71% to N214.4bn. Meanwhile, Stanbic IBTC Holdings recorded a decline in interest expense, down 21.4% to N30.58bn.
Commenting the Director and Chief Economist at Proshare Nigeria LLC, Teslim Shitta-Bey, has emphasised that net interest income remains the most crucial metric for evaluating Nigerian banks’ operational health, rather than just interest expenses or tax liabilities.
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“First and foremost, interest expense by itself does not directly impact a bank’s lending capacity,” Shitta-Bey said. “What matters most to banks is their net interest income, the actual spread between what they earn and what they pay out. Tax is not an operational issue; as long as a bank is profitable, it will pay tax accordingly.”
On concerns about rising interest expenses amid liquidity challenges, Shitta-Bey pointed out that liquidity conditions, rather than just borrowing costs, determine banks’ capacity to lend. “With the current state of private placements and strong capital bases, many Nigerian banks are quite liquid. Some even have higher share capital than the Central Bank of Nigeria’s minimum requirements,” he noted.
Shitta-Bey also highlighted the role of key regulatory tools such as the Monetary Policy Rate and Cash Reserve Ratio.
“The MPR influences borrowing costs in the economy, while the CRR acts as a liquidity control mechanism. Banks maintain elevated share capital to ensure they have adequate shelter against risk, safeguarding financial stability,” he explained.
In his view, the bank’s strong capital positions and regulatory safeguards provide a cushion that supports lending activities despite fluctuations in interest expenses.
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