Nigerian banks are increasingly turning their attention to non-interest income as the extraordinary foreign exchange (FX) gains they enjoyed after the FX market harmonisation begin to fade. This trend was highlighted in the November 2025 Banking Sector Highlights released by Meristem Securities, which reviewed the changing earnings pattern in the industry.
The shift started in mid-2023 when President Bola Ahmed Tinubu, shortly after assuming office, approved the harmonisation of the multiple FX windows. This policy triggered a sharp depreciation of the naira, creating large FX revaluation gains for banks. However, the National Assembly later introduced a windfall tax through the amendment of the Finance Act 2023 to capture part of these unexpected profits. Reports showed that six major banks paid a total of about N205.59 billion as windfall tax in the 2024 financial year.
According to Meristem Securities, as the 2025 financial year draws to a close, the growth in banks’ gross earnings is expected to slow down compared to previous periods. The analysts said interest income will still remain the main driver of earnings, supported by the high Monetary Policy Rate (MPR), which currently stands at 27.00 per cent. They added that the Central Bank of Nigeria (CBN) decision to widen the asymmetric corridor to +50 and -450 basis points has reduced banks’ effective borrowing costs and strengthened their ability to expand their balance sheets and extend more credit to businesses and households.
Beyond interest income, experts said banks are now working harder to grow revenue from fees, commissions, and digital banking services. This push is partly due to the decline in FX revaluation gains experienced over the last two years. Rising demand for electronic payments, mobile banking, and other digital services is helping to support this strategy.
Data reviewed from nine financial institutions showed that by the end of the third quarter of 2025, banks generated about N2.81 trillion from account maintenance charges, commissions on collections, e-business, and other service fees. This represented a 24.10 per cent increase compared to the N2.27 trillion earned during the same period in 2024, reflecting stronger activity in non-interest income streams.
At Access Holdings Plc, non-interest income fell slightly by 2.32 per cent year-on-year to N996.86 billion. The decline was mainly caused by FX revaluation losses, which dropped by 53.43 per cent to N255.40 billion. Despite this, the group recorded strong growth in other operating income and fees and commission income, which increased by 110.31 per cent and 49.53 per cent respectively, showing increasing focus on core banking operations.
Sterling Financial Holding Company Plc recorded growth in fees and commission income of 17.12 per cent, while trading income rose sharply by 78.19 per cent year-on-year. These gains helped to offset FX revaluation losses of about N1.88 billion. At United Bank for Africa Plc, non-interest income declined to N488.63 billion from N599.11 billion in the same period of the previous year, largely due to an 83.34 per cent year-on-year fall in FX revaluation gains. This also led to a 77.34 per cent drop in net trading income, reversing the previous year’s FX-driven performance.
Wema Bank Plc also experienced a sharp decline in FX revaluation gains, which fell by 70.21 per cent to N4.23 billion as of September 2025. This significantly affected its other income, which dropped by 58.03 per cent year-on-year.
The Monetary Policy Committee of the Central Bank of Nigeria has kept the benchmark interest rate at 27 per cent, while adjusting liquidity management tools. The Standing Lending Facility rate now stands at 27.50 per cent, while the Standing Deposit Facility has been set at 22.50 per cent. Although banks now have lower borrowing costs, analysts believe lending rates to customers will remain high as banks try to comply with the 50 per cent loan-to-deposit ratio and manage rising non-performing loans.
Meristem noted that banks such as Access Holdings Plc, Stanbic IBTC Holdings Plc, and Zenith Bank Plc still maintain strong low-cost funding bases, with current and savings account ratios above 60 per cent. This gives them flexibility to expand lending or place funds in interbank markets.
Meanwhile, the Central Bank of Nigeria confirmed that 16 banks have now met the recapitalisation requirements, up from 14 recorded at the September 2025 Monetary Policy Committee meeting, showing growing strength in the sector.
At the recently held 2025 Parthian Economic Discourse in Lagos, the Managing Director of Financial Derivatives Company, Bismarck Rewane, warned that banks are facing stronger competition from fintech firms. He pointed to companies like OPay and Moniepoint, as well as MoMo and MTN, noting their rising visibility and advertising presence. He explained that the banking sector is moving away from rent-based income linked to FX round-tripping and arbitrage, and towards efficiency, innovation, and better customer service as Nigerian customers become more sophisticated and resistant to rising charges.
