• Nigeria's top deposit bank closed 2025 with ₦24.3 trillion ($15.2bn) in customer funds but lent less than 43 cents per dollar — its tightest credit ratio in at least five years

• Government securities generated $1.02bn in interest, nearly matching the $1.14bn earned from a loan book more than twice their size, while reducing the bank's effective tax rate to 17.6%

• The audited December 2025 filing shows a bank that found lending to the Nigerian state more financially and fiscally rewarding than lending to the Nigerian economy

Zenith Bank Plc, Nigeria's largest deposit-taking institution, ended 2025 holding ₦24.3 trillion ($15.2 billion) in customer deposits while lending out just $6.5 billion — a loan-to-deposit ratio of 42.9%, its lowest in at least five years, according to the group's audited financial statements for the year ended 31 December 2025, approved by the board on 29 January 2026 and filed with the Nigerian Exchange in April 2026.

The gap between deposits gathered and credit extended to the private economy stood at $8.7 billion at year-end. The bank deployed a large part of that surplus into government paper. It purchased $4.3 billion in treasury bills during 2025, sold back $2.2 billion, and held a closing balance of $2.9 billion in the instrument at December 31 — 74% above the $1.7 billion held a year earlier, the filing showed. The bank held an additional $3.4 billion in investment securities, principally government and quasi-government bonds, bringing its total allocation to sovereign assets to roughly $6.3 billion — close to matching the entire loan book in size.

"Despite the huge provisioning requirements as the industry exits the CBN forbearance regime, we've seen substantial improvement in our asset quality," Dame Adaora Umeoji, Group Managing Director of Zenith Bank, said in a statement released with the bank's half-year results in September 2025. Umeoji, who took the top job in June 2024, oversaw a year in which net interest income rose 53% to $1.65 billion — driven not by new lending but by a balance sheet increasingly weighted toward government securities — while the impairment charge on financial instruments, as reported under Note 8a of the filing, reached ₦742 billion ($464 million), consuming 28% of pre-provision net interest income.

The annual results also contain a figure that drew little attention during the year: the bank's trading desk recorded a loss of ₦63 billion ($39 million) in 2025, against a gain of ₦1.1 trillion ($688 million) in 2024 — a swing of $727 million in a single year. That reversal, driven by the disappearance of foreign exchange revaluation gains that had inflated 2024 earnings, is the main reason profit before tax fell 5% even as gross revenues rose 6% and net interest income expanded 53%. Zenith absorbed a near-billion-dollar income shock and still delivered $650 million in after-tax profit because its government securities portfolio generated enough to compensate.

Sovereign arithmetic and forward downwards

Note 6 of the audited statements shows how. Treasury bills alone generated ₦1.13 trillion ($706 million) in interest income in 2025 — a 95% increase from a year earlier — implying a yield of roughly 24% on the $2.9 billion closing balance. Government and other bonds contributed a further $318 million. Together, sovereign securities produced ₦1.64 trillion ($1.02 billion) in interest income, nearly matching the ₦1.82 trillion ($1.14 billion) earned from the entire $6.5 billion loan book. The loan book is more than twice the size of the treasury bill portfolio. The income gap between the two is just 11%.

The tax note tells a parallel story. Zenith paid ₦223 billion ($139 million) in income tax against a profit before tax of ₦1.26 trillion — an effective rate of 17.6%, against Nigeria's statutory corporate rate of 30%, according to Note 13 of the filing. At the statutory rate the charge would have been ₦379 billion, a difference of $98 million. Three factors explain the gap. A Windfall Tax Levy of ₦63.3 billion charged in 2024 on extraordinary FX revaluation gains did not recur in 2025 as those gains normalised — a one-off saving of $40 million that will not repeat.

Corporate income tax itself fell by $27 million as higher impairment charges under IFRS 9 reduced the taxable profit base. And interest income earned from Federal Government of Nigeria bonds — which generated $318 million for the group in 2025 — is fully exempt from corporate income tax under Nigerian law, a provision preserved explicitly under Section 163(1)(n) of the Nigeria Tax Act 2025, according to the Debt Management Office. That exemption means a portion of Zenith's sovereign income enters reported profit without entering the taxable base, widening the gap between the statutory and effective rates in proportion to the bank's allocation to FGN securities.

For Nigerian businesses, the consequences are visible in the data. Private sector credit growth slowed to its weakest inflation-adjusted pace in four years in 2025, according to CBN monthly economic reports. The Manufacturers Association of Nigeria cited cost and access to credit as the top constraints on industrial output in every quarter of the year. Zenith's loan book did grow — rising 4.9% to $6.5 billion over the full year — but that expansion was outpaced by the $1.5 billion net increase in customer deposits the bank collected over the same period, widening rather than closing the gap between what it gathered from Nigerians and what it returned to them as credit.

The conditions that made that trade so attractive in 2025 are now shifting. At its 304th meeting on February 23-24, 2026, the CBN cut the benchmark rate by 50 basis points to 26.5%, while inflation continued to ease, reaching 15.10% in January 2026, with food inflation at 8.89%. At the same time, Nigeria’s tax treatment of short-term sovereign paper has tightened: following a FIRS notice announced in late October 2025, interest on treasury bills and other short-term securities is now subject to 10% withholding tax at source, while income from FGN bonds remains exempt. Since treasury bills accounted for ₦1.13 trillion of Zenith’s 2025 interest income from sovereign paper, versus ₦507.9 billion from government and other bonds, a larger share of that trade now faces a tax drag that did not apply for most of 2025

Idriss Linge