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Some of Nigeria’s largest banks, including Zenith Bank, Guaranty Trust Holding Company, United Bank for Africa, Stanbic IBTC, and Fidelity Bank, reported record-breaking profits in their 2024 full-year financial results despite an economy struggling with inflation, naira depreciation, and declining consumer purchasing power.
The five lenders collectively posted a post-tax profit of N3.317tn. However, economists who spoke with The PUNCH cautioned that when these profits are converted to dollars, the figures paint a different picture, given the naira’s depreciation of approximately 70 per cent against the dollar since May 2023.
UBA’s profit after tax climbed 26.14 per cent to N766.6bn, up from N607.7bn in 2023. Another tier-one lender, Zenith Bank, recorded a post-tax profit of N1.03tn, a 52.5 per cent increase from the previous year’s N676.9bn.
GTCO, the parent company of GTB also posted a staggering N1.017ty n profit, reflecting an 88.4 per cent rise from N539.6bn in 2023.
Stanbic IBTC Holdings Plc also recorded strong growth, with post-tax profit rising 60.23 per cent to N225.3bn. Meanwhile, Fidelity Bank’s profit soared 179.63 per cent to N278.1bn.
“The devaluation of the naira has significantly impacted banks. Many of them hold dollar-denominated assets, which, when converted to naira, contributed to their reported gains. However, this does not necessarily reflect real economic growth, former Zenith Bank Chief Economist Marcel Okeke said.
While banks have benefited from currency devaluation, other sectors of the economy continue to struggle.
At least 10 multinational companies have either shut down or relocated from Nigeria since 2023, citing currency volatility, rising operational costs, and economic uncertainty. GlaxoSmithKline, Equinor, and Unilever Nigeria are among the notable exits.
However, it should be noted that the naira has remained relatively stable against the US dollar since December 2024, due to CBN’s reforms promoting transparency in the foreign exchange market. As of Friday, the local currency traded at approximately N1,536/$1 in the official market.
Okeke said these lenders had also invested heavily in government instruments, such as treasury bills, which further affected their performance on a positive note.
“Breaking down their balance sheets, you may likely realise that interest income was a significant contributor to their gains,” he said.
The sharp devaluation stems from policy shifts by President Bola Tinubu’s administration, including the elimination of fuel subsidy. While these policies were meant to attract foreign investment, they have led to higher inflation, a tripling of petrol prices, and increased costs for businesses and households.
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The Central Bank of Nigeria raised its monetary policy rate to 27.75 per cent in February, driving up interest rates on government securities and making credit more expensive for businesses.
Nigeria’s inflation rate stood at 23.18 per cent in February 2025, following a rebasing of the Consumer Price Index. The rebasing significantly dropped inflation figures from 34.8 per cent in December 2024.
“By 2023, a 50kg bag of cement cost around N2,000 to N3,000, but today, the price has surged to around N10,000,” he said.
“That person receiving N3m may feel like it’s a large sum, but in reality, its purchasing power has significantly declined. The key message here is that money’s true value lies in what it can buy, not just its nominal figure,” Okeke added.
Despite strong banking sector profits, developmental economist Ilias Aliyu argued that they do not translate into economic benefits for Nigeria.
“It is a strong contradiction that banks are making record profits while businesses are shutting down and Nigerians struggle with high inflation. In South Africa, the financial sector significantly contributes to GDP growth, but here, banking profits are not reflected in per capita income or improved living standards,” Aliyu argued.
He also noted that banks benefit disproportionately from foreign exchange policies, with forex allocations often skewed in their favour rather than supporting broader economic development.
Earlier this month, economist and data analytics expert at Lagos Business School, Prof Bongo Adi, noted that Nigeria’s economic resilience is being driven by banks, oil & gas, and telecoms sectors that contribute little to job creation.
The don cautioned that while these industries remain profitable, the broader economy is stagnating.
“The economy has managed to maintain some resilience to growth, but the nominal sectors seem to be dragging the real sector, and that is not a good thing,” Adi said at the FATE Foundation’s 10th Business Outlook and Annual General Meeting in Lagos.
He added, “The resilience of output in 2024 was driven by three key sectors: banks, oil and gas, and telecoms. But these sectors have no employment capability—how many jobs do they generate? Their contribution to job growth is very small.”