• Moody’s warns Nigeria’s rate cut to 27% could shrink banks’ net interest margins, raising concerns over profitability in the coming quarters.
• Zenith, GTCO, UBA, and FBNH’s H1 2025 results show strong growth in interest income but lower profits due to impairments and weaker non-interest gains.
• Sector profits fell 5–10% on average, despite 30–50% revenue growth; banks’ shares rose by N822 billion after the results, showing resilient investor sentiment.

Moody’s Investors Service has warned that Nigeria’s recent monetary policy rate cut to 27% will weigh on banks’ profitability by compressing net interest margins. The Central Bank of Nigeria lowered the rate by 50 basis points on September 23, 2025, after keeping it at 27.5% through the first half of the year. Moody’s noted that while high rates had boosted interest income, further easing could erode margins unless offset by stronger loan growth.

Half-year 2025 results from Nigeria’s tier-1 banks show profits already under pressure before the policy change. Zenith Bank, GTCO, UBA, and FBN Holdings all reported strong growth in interest income but mixed profitability, as higher impairment charges and weaker non-interest income eroded earnings.

Zenith Bank reported gross earnings of N2.5 trillion ($1.61 billion), a 20% year-over-year increase, driven by a 25% rise in interest income to approximately N1.8 trillion ($1.16 billion). Profit after tax fell 7.9% to N532 billion ($343.2 million), while profit before tax dropped 13.9% to N625.6 billion ($403.6 million). Loan impairment charges rose 40% to N150 billion ($96.8 million), and the non-performing loan ratio increased to 4.2%. Deposits grew 18% to N15 trillion ($9.68 billion), and the interim dividend was raised to N1.25 ($0.0008) per share.

GTCO posted the steepest decline, with profit after tax dropping 50.4% to N449 billion ($289.7 million) from N905.6 billion ($584.3 million) in H1 2024. Profit before tax fell 40% to N600.9 billion ($387.7 million). Interest income rose 31.5% to N812.4 billion ($524.1 million), but non-interest income fell 83.5% to N108.8 billion ($70.2 million). Operating expenses increased 28.1% to N250 billion ($161.3 million), while deposits climbed 18.6% to N6.5 trillion ($4.19 billion). The group’s non-performing loans rose to 5%.

UBA reported profit after tax of N335.5 billion ($216.5 million), up 6.1% year-on-year, while profit before tax declined 3.3% to N388.4 billion ($250.6 million). Gross earnings rose 17.3% to N1.61 trillion ($1.04 billion), with interest income up 32.9% to N1.33 trillion ($858.1 million). Non-interest income dropped 25.4% to N400 billion ($258.1 million), but impairment charges eased 40% to N35 billion ($22.6 million). Deposits grew 12% to N27.6 trillion ($17.81 billion), and group assets expanded 9.7% to N33.3 trillion ($21.48 billion).

FBN Holdings reported profit after tax of N283.8 billion ($183.1 million), down 21.2% year-on-year, and profit before tax of N356.2 billion ($229.8 million), down 13.6%. Interest income surged 51.7% to N1.44 trillion ($929.0 million), with net interest margin improving to 4.5% from 3.2%. Non-interest income turned to a N54 billion ($34.8 million) loss compared with a N432 billion ($278.7 million) gain last year. Impairments doubled to N185 billion ($119.4 million), and non-performing loans stood at 4.8%. Deposits increased 16.5% to N20.7 trillion ($13.35 billion).

Across the sector, analysts estimate that profit after tax declined 5–10% on average in H1 2025, despite a 30–50% growth in interest income. Impairment charges and weaker trading and FX income were key drags, while deposits rose in double digits. Nigerian bank stocks added about N822 billion ($530.3 million) in market capitalization in late September after the results, but Moody’s cautions that the impact of rate cuts on margins will test earnings resilience in the coming quarters.

Idriss Linge