While individuals and businesses continue to endure biting economic challenges — including soaring prices of basic goods and a persistently high inflation rate of 23.18% — commercial banks appear to be thriving. This contrast is sharply illustrated by the combined N4.56 trillion in pre-tax profits reported by Nigeria’s top five tier-1 banks in 2024, representing a 69.5% increase from 2023. Similarly, their net profits after tax jumped by 66.2%, from N2.27 trillion to N3.78 trillion.
Banks Post Record Profits Despite Harsh Economy
The financials from banks such as United Bank for Africa (UBA) Plc, First Holdco Plc, Zenith Bank International Plc, Guaranty Trust Holding Company (GTCO), and Stanbic IBTC Holdings Plc indicate an unprecedented surge in profitability. Collectively, their total assets reached N108.21 trillion in 2024, up from N72.80 trillion in 2023.
- UBA posted a pre-tax profit of N803.72 billion and net profit of N766.6 billion.
- Zenith Bank crossed the trillion-naira mark with N1.32 trillion pre-tax profit and N1.03 trillion net profit.
- GTCO more than doubled its net profit, reaching N1.02 trillion.
- First Holdco grew profit before tax by 142% to N862.39 billion.
- Stanbic IBTC saw its profit after tax rise to N225.3 billion.
Even Fidelity Bank, outside the tier-one circle, stunned observers with a 210% growth in pre-tax profit, reaching N385.2 billion, and 179.6% growth in net profit to N278.1 billion.
The Paradox of Prosperity Amid Poverty
These numbers are impressive. But they come with a critical question: How is it that Nigerian banks are flourishing while millions of citizens are sinking deeper into poverty?
This paradox underscores a deeper dissonance in Nigeria’s economic structure. While banks take advantage of high interest rate environments and foreign exchange revaluation gains, most Nigerians are faced with shrinking purchasing power, high unemployment, and a minimum wage that pales in comparison to those in similar economies.
Part of the profit windfall, critics argue, stems not from innovative financial services or strategic investments, but from hidden and arbitrary charges that erode customers’ savings. These include multiple fees such as:
- NIP transfer commissions
- SMS and VAT charges
- Processing and interest fees
- Card maintenance and ATM withdrawal costs
- Stamp duties and transfer levies
Often, customers are charged multiple times for a single transaction, in a system that lacks transparency and meaningful regulatory intervention.
Calls for Accountability and Regulatory Oversight
While profit-making is essential for any business, responsible banking must be built on transparency, fairness, and public trust. The Federal Competition and Consumer Protection Commission (FCCPC) and the Central Bank of Nigeria (CBN) have a critical role to play in curbing exploitative practices.
The CBN must strengthen regulations to discourage excessive interest spreads and promote lending to productive sectors like agriculture, manufacturing, and SMEs. Financial literacy campaigns should also be intensified to empower consumers to understand and challenge illegitimate deductions.
Real Sector Still Neglected
Amid this profit surge, a key concern remains the banking sector’s limited support for the real economy. The Manufacturers Association of Nigeria (MAN) recently voiced frustration over the lack of accessible and affordable credit for manufacturers. Only 12.9% of bank lending reportedly goes to the real sector, which is the engine of job creation and economic resilience.
MAN President Francis Meshioye noted that high-interest rates and short-term lending practices are crippling the productive capacity of local businesses. “Banks are declaring huge profits while manufacturers are shutting down,” he warned.
Windfall Tax and the Pursuit of Equity
Recognizing this disparity, the federal government introduced a windfall tax policy in 2024 through the Finance (Amendment) Act, targeting extraordinary bank profits driven by naira devaluation. This initiative aims to redirect part of these earnings toward public interest and ensure financial institutions contribute to national development in more tangible ways.
Toward Inclusive Growth
For Nigeria to progress meaningfully, economic growth must be inclusive. Banks must be more than profit centers; they should act as enablers of economic opportunity, supporting individuals, MSMEs, and underserved communities. Financial inclusion should not be a buzzword, but a measurable commitment.
The road to a fairer financial ecosystem lies in stronger regulation, corporate accountability, and policy frameworks that prioritize national development. As banks celebrate their profits, they must also embrace their responsibility to the broader economy.
After all, a prosperous banking sector in a struggling economy is not a success story — it is a wake-up call.