LAGOS, Nigeria — As Nigeria’s economy dey change with new government policy, banking sector dey face serious cost wahala. Early report wey don come from leading banks for the first quarter of 2025 show say their spending don increase sharply while their profits dey slow down.
The Central Bank of Nigeria (CBN) approved the unaudited financial results last week, and dem show say banks dey struggle with high operational costs driven by inflation and interest rate wey don increase significantly. Current Monetary Policy Rate (MPR) na 27.5 percent, e don almost double from two years ago, affecting how banks dey operate.
“We dey see rising cost wey dey press our profit margins,” one bank executive wey prefer to remain anonymous talk. “Banks go need to find better ways to manage their costs make dem fit survive.”
First Bank and UBA don report sharp increases in operational expenses. First Bank’s cost-to-income ratio don climb to 52.3 percent, owing to high personnel costs and regulatory fees. UBA also don suffer well, as their funding cost rise sharply from 2.8 percent to 3.7 percent, reducing their net interest margin to 6.6 percent.
GTBank and Zenith Bank talk say dem too dey face pressure as operating expenses rise dramatically. Access Bank report say interest expense don jump up by 71.3 percent year-on-year while their operating expenses increase by 25.0 percent.
Fidelity Bank, wey dey among smaller banks, show resilience as dem still manage to grow their profits by 290 percent to N91.1 billion, even with the general increase in costs.
According to experts, the overall economic environment dey contribute to this situation. “High inflation dey make it difficult for businesses to thrive,” Dr. Ifeanyi Adebayo, an economist, talk in an interview. “The cost of doing business don increase to a level wey many companies fit hardly survive.”
Despite the wahala, some banks still dey record growth. UBA report 33.1 percent increase in Profit After Tax to N189.8 billion, while Access Bank still manage a 14.7 percent growth in their profits. Zenith Bank too show 20.7 percent rise in their PAT, thanks to better interest income.
The financial landscape for Nigerian banks dey evolve as they balance growing costs and profitability amid tough conditions. This period of rising expenses na critical time for banks to rethink their strategies and find ways to improve efficiency to remain competitive.
