Nine major Nigerian banks collectively spent N1.90 trillion on interest expenses in the first quarter of 2025, representing a sharp 43.2 per cent increase from the N1.33 trillion recorded during the same period in 2024. This is according to The PUNCH’s analysis of unaudited Q1 financial statements filed by the banks, which include Access Holdings, Zenith Bank, First HoldCo Plc, United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCO), Fidelity Bank, Stanbic IBTC Holdings, FCMB Group, and Wema Bank.
Despite the higher cost of funds, these lenders also recorded a rise in interest income, which stood at about N4.18 trillion for the period under review. Interest income refers to the earnings banks make by lending out money or investing it, while interest expense is what they pay customers and institutions to use their funds—such as on savings and fixed deposits.
Access Holdings reported the highest interest income among the nine banks with N964.6 billion, up by 58.6 per cent from N608.1 billion in Q1 2024. However, its interest expense also surged significantly by 71.3 per cent to N760.47 billion from N443.88 billion, putting pressure on the bank’s net interest margin.
Zenith Bank followed with N837.6 billion in interest income, a 71.5 per cent jump from N488.5 billion in the previous year. Its interest expense increased by 35.3 per cent to N246.45 billion from N182.10 billion, reflecting a rise in deposit and funding costs.
First HoldCo Plc, formerly First Bank Holdings, posted N625.3 billion in interest income, a 40 per cent increase from N446.1 billion. Its interest expense rose more moderately, up 18.6 per cent to N260.09 billion from N219.30 billion.
UBA earned N599.8 billion in interest income, a 36 per cent rise from N440.8 billion. However, its interest expense climbed steeply by 77 per cent to N247.96 billion from N140.09 billion, driven by what analysts describe as aggressive funding strategies to support growth.
GTCO’s interest income went up 41 per cent to N386 billion from N273.2 billion, while its interest expense increased 45.4 per cent to N79.03 billion from N54.35 billion, showing signs of rising deposit and debt servicing costs.
Fidelity Bank saw its interest income climb 58 per cent to N256.1 billion from N162 billion. Its interest expense also rose, though at a slower pace of 28.6 per cent, reaching N90.65 billion from N70.5 billion.
Stanbic IBTC Holdings stood out as the only bank among the nine to record a drop in interest expense. It reported N180.5 billion in interest income, up 55.8 per cent from N115.8 billion. But its interest expense declined by 21.4 per cent to N30.58 billion from N38.9 billion, suggesting more efficient management of funding sources.
FCMB Group recorded the fastest growth rate in both income and expenses. Interest income rose by 71 per cent to N214.4 billion from N125.4 billion, while interest expense jumped 81.2 per cent to N126.87 billion from N70 billion, reflecting expansion plans financed through costly borrowing.
Wema Bank also showed strong income growth. It recorded a 59 per cent increase in interest income to N110.3 billion from N69.4 billion. Its interest expense rose 24 per cent to N53.74 billion from N43.32 billion, consistent with growing deposit costs.
Speaking on the trend, the Director and Chief Economist at Proshare Nigeria LLC, Mr. Teslim Shitta-Bey, noted that the most important metric for evaluating banks is not interest expense alone, but net interest income—the difference between what they earn on loans and what they pay on deposits.
“First and foremost, interest expense by itself does not directly impact a bank’s lending capacity. What matters most to banks is their net interest income,” Shitta-Bey said. “Tax is not an operational issue; as long as a bank is profitable, it will pay tax accordingly.”
On the issue of liquidity, he added that many Nigerian banks currently have strong capital positions, often exceeding the minimum requirements set by the Central Bank of Nigeria (CBN). “With the current state of private placements and strong capital bases, many Nigerian banks are quite liquid,” he noted.
Shitta-Bey also emphasised the impact of monetary policy tools on lending decisions. “The Monetary Policy Rate (MPR) affects borrowing costs across the economy, while the Cash Reserve Ratio (CRR) helps control liquidity. Together, they influence how banks manage their capital and decide how much to lend.”
He concluded that while rising interest expenses may reflect tighter market conditions, Nigerian banks are still well-positioned to continue lending and supporting the economy due to their strong capital buffers and risk management strategies.
