Nine leading Nigerian banks collectively reported a 43.2% increase in interest expenses, which rose to ₦1.90 trillion in the first quarter of 2025, up from ₦1.33 trillion during the same period last year. The spike reflects the mounting cost of funds in Nigeria’s evolving monetary environment.
In contrast, the banks generated a total of ₦4.18 trillion in interest income during the quarter. Interest income is derived from lending activities, while interest expense captures the cost banks incur for accessing funds, including deposits and borrowings.
Among the banks, Access Holdings led with the highest interest income at ₦964.6 billion—up 58.6% from Q1 2024. However, its interest expense jumped 71.3% to ₦760.47 billion, narrowing its net interest margin.
Zenith Bank posted ₦837.6 billion in interest income, marking a 71.5% growth, while interest expenses rose 35.3% to ₦246.45 billion. First HoldCo Plc followed with ₦625.3 billion in income (up 40%) and ₦260.09 billion in expenses (up 18.6%).
UBA recorded ₦599.8 billion in interest income, up 36%, while expenses surged 77% to ₦247.96 billion. GTCO also saw a 41% rise in income to ₦386 billion, with expenses up 45.4% at ₦79.03 billion.
Fidelity Bank grew its income by 58% to ₦256.1 billion, while expenses rose by 28.6% to ₦90.65 billion. Stanbic IBTC Holdings, in a rare exception, cut its interest expense by 21.4% to ₦30.58 billion despite a 55.8% rise in income to ₦180.5 billion, indicating improved funding efficiency.
FCMB Group posted the sharpest rise in expenses—up 81.2% to ₦126.87 billion—on income growth of 71% to ₦214.4 billion. Wema Bank reported ₦110.3 billion in income (up 59%) and ₦53.74 billion in expenses (up 24%).
Commenting on the trend, Teslim Shitta-Bey, Chief Economist at Proshare Nigeria, clarified that net interest income—rather than gross expenses—remains the key indicator of a bank’s financial health.
“Interest expense alone doesn’t determine a bank’s ability to lend. What truly matters is the net spread between interest earned and interest paid,” he said, adding that tax liabilities are secondary so long as banks maintain profitability.
Shitta-Bey also highlighted that most Nigerian banks remain highly liquid, with many exceeding the Central Bank of Nigeria’s minimum capital requirements. Regulatory tools such as the Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) continue to shape liquidity dynamics and lending behavior in the sector.
Despite growing cost pressures, analysts suggest Nigerian banks are well-positioned to maintain lending capacity, thanks to strong capital buffers and regulatory safeguards.
