Analysis of the unaudited third-quarter results for Access Holdings Plc (parent of Access Bank), First HoldCo, Zenith Bank Plc, United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO), Stanbic IBTC Holdings, Sterling Financial Holding Company, Wema Bank, and Ecobank Transnational Incorporated shows that a combination of rising lending rates and strategic loan deployment drove the surge in interest income.
Interest income, as defined by the Corporate Finance Institute, is the revenue a financial institution earns from lending its funds—either through deposits in other banks or investment in instruments such as certificates of deposit. For Nigerian banks, loans and advances to customers remain the primary contributor, alongside investments in debt securities and cash holdings.
Among the top performers, Access Holdings led in absolute terms, posting interest income of N2.90 trillion, up 21.11 percent from N2.39 trillion in Q3 2024. Zenith Bank followed closely, generating about N2.74 trillion, representing a 40.77 percent year-on-year increase. Ecobank Transnational, which reports in both naira and US dollars, recorded a 20 percent rise to N2.33 trillion from N1.93 trillion. First HoldCo also crossed the N2 trillion mark with N2.29 trillion, up from N1.63 trillion the previous year. Collectively, these four institutions accounted for the majority of the sector’s interest income during the period.
In terms of growth momentum, Zenith Bank and First HoldCo recorded the strongest gains. Zenith Bank achieved the largest absolute increase in interest income, adding approximately N793.84 billion, while First HoldCo followed with a growth of about N659.37 billion. GTCO’s interest income grew by 25.56 percent to N1.23 trillion, while UBA registered the lowest growth rate among the major banks at 10.08 percent, reaching N1.98 trillion.
Some smaller banks posted remarkable gains: Wema Bank saw its interest income surge 72.65 percent to N396.95 billion, while Sterling Financial Holding Company recorded a 38.73 percent increase to N262.42 billion. Stanbic IBTC Holdings achieved a 37.24 percent rise, contributing an additional N158.53 billion compared to the same period last year. For Sterling, loans and advances were the largest revenue contributor, followed by debt instruments measured at fair value through other comprehensive income (FVOCI).
The sector-wide growth largely reflects the sustained hikes in Nigeria’s benchmark interest rates, which drove higher yields on loans and investment securities. However, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) cut the Monetary Policy Rate (MPR) by 50 basis points to 27 percent in September 2025, marking the first reduction in years. The move also included adjustments to the Standing Facilities corridor, Cash Reserve Requirement (CRR) for commercial banks, and a 75 percent CRR on non-Treasury Single Account (TSA) public sector deposits.
CBN Governor Olayemi Cardoso explained that the rate cut was supported by the increasing momentum of disinflation in August, the fastest in the past five months. Despite this, money market indicators showed the maximum lending rate remained high at 29.84 percent in September, though private sector credit dropped to N72.53 trillion from N75.88 trillion in August, suggesting a moderated appetite for borrowing.
Global ratings agency Moody’s Investors Service has warned that the rate cut could pose profitability challenges for Nigerian banks. According to Moody’s, lower policy rates may reduce yields on loans and government securities faster than the decline in deposit costs, potentially squeezing net interest margins. In 2024, net interest income accounted for 62 percent of Nigerian banks’ operating income, and the recent reduction in CRR is expected to provide only partial relief.
The first nine months of 2025 highlight the resilience of Nigerian banks amid fluctuating policy rates, showcasing their ability to leverage high-yield environments while also signaling caution in the face of potential profitability pressures ahead.