Nigerian Banks Earn N8.4 Trillion from Customer Loans in 2024 Amid High Interest Rates
April 25, 2025 – In a remarkable financial year, Nigerian banks collectively generated an impressive N8.41 trillion from customer loans in 2024, driven by a steep rise in interest rates. This figure marks a dramatic 106% increase from the N4.08 trillion earned in 2023, according to a recent analysis by Nairametrics Research, which examined the performance of ten publicly listed banks on the Nigerian Exchange.
Impact of Monetary Policy on Banking Sector
The surge in loan interest income follows the Central Bank of Nigeria’s (CBN) aggressive monetary policy adjustments. The CBN raised the benchmark interest rate by more than 800 basis points to 27.5% throughout 2024 in efforts to combat inflation and stabilize economic conditions. This tightening cycle enabled banks to significantly increase their lending rates, which in turn doubled their income from loans and advances to customers.
Growth of Loan Portfolios
By the end of 2024, the combined loan portfolio for these ten banks rose to N51.36 trillion, reflecting a 37.6% increase from the previous year. This growth indicates heightened credit activity alongside the bank’s strategic repricing of existing loans in line with evolving interest rate dynamics.
Additionally, banks experienced a notable increase in interest income from other financial instruments, including government securities and corporate bonds, which totaled N6.66 trillion—more than double the N2.7 trillion recorded in 2023. Interest income thus constituted a significant 72.4% of the total earnings of these banks, underscoring the critical role of interest-generating assets within their financial structures.
Performance Highlights of Major Banks
The following highlights detail the top performers in terms of interest income from customer loans during 2024:
-
Access Corporation: Led the pack with N1.63 trillion, an increase of 118% from the previous year’s N747.2 billion. The corporation’s loan book expanded by 43% to N11.49 trillion.
-
Zenith Bank: Generated N1.52 trillion in interest income, up 126% from N671.9 billion, supported by a loan portfolio growth of 52% to N9.97 trillion.
-
First HoldCo: Reported N1.36 trillion in interest income, a 124% increase from N609.8 billion, with a loan portfolio of N8.77 trillion.
-
UBA (United Bank for Africa): Earned N779.7 billion, nearly doubling its previous year’s performance with a 99% increase from N391.9 billion.
-
Fidelity Bank: Became the fifth-largest earner with N626.3 billion in interest income, a 72% rise from N363.4 billion in 2023. ## Challenges Alongside Earnings Growth
Despite the impressive earnings, the banking sector faced challenges as well. The increase in interest rates drove up the cost of funds for banks, evidenced by fluctuations in reported costs among major institutions. Notably, Zenith Bank saw an increase of 180 basis points in its cost of funds. The higher borrowing costs negatively affected customers, contributing to a rise in non-performing loans (NPLs). The average NPL ratio among the top ten banks increased from 4.1% in 2023 to 4.5% in 2024, highlighting the mounting pressure on individuals and businesses to meet their loan obligations.
Looking Ahead
As the year progresses into 2025, the trend in loan interest income is poised to continue given that the Monetary Policy Rate (MPR) remains high at 27.5%, with inflation levels hovering above 24%. The CBN’s ongoing tight monetary policy suggests a sustained environment for banks to capitalize on interest income, although this may similarly exert pressure on the quality of loans issued and overall funding costs.
In summary, while 2024 proved to be a lucrative year for Nigerian banks owing to increased loan profitability, it also underscores the critical need for a careful balance between generating income and maintaining asset quality within a challenging economic landscape.
Share this article:
