FUGAZ banks grow half-year revenues 24% to N9.2trn as profit pressures mount

Onome Amuge

Nigeria’s banking industry began the first half of 2025 under intense strain, contending with high interest rates, rising impairment charges, and the demanding recapitalisation targets set by the Central Bank of Nigeria. Nevertheless, the nation’s leading lenders, referred to as the “FUGAZ” banks,managed to post strong revenue growth and, in several cases, resilient profitability.

As analysed by Business a.m., the five banks under review reported combined gross earnings estimated at N9.2 trillion for H1 2025, compared with a roughly estimated N7.4 trillion for the same period in 2024, representing a year-on-year increase of about 24 per cent. 

Among the FUGAZ group, Access Holdings Plc and Zenith Bank Plc emerged as the standout performers in the first half of 2025. Access Holdings posted a 13.8 per cent increase in gross earnings to N2.5 trillion, up from N2.2 trillion in the same period of 2024. The group’s net interest income was up 91.8 per cent to N984.6 billion, buoyed by stronger lending volumes and improved yield management, while profit after tax (PAT) came in at N215.9 billion.

Zenith Bank recorded a near 20 per cent rise in gross earnings to N2.52 trillion, compared with N2.10 trillion a year earlier. However, its profit before tax (PBT) declined to N625.6 billion from roughly N727 billion, while PAT stood at N532.18 billion, reflecting the impact of higher impairment charges and operating costs.

United Bank for Africa (UBA) maintained steady momentum, with gross earnings rising 17.3 per cent to N1.61 trillion from N1.37 trillion, while PAT increased by 6.1 per cent to N335.53 billion.

Guaranty Trust Holding Company (GTCO) reported a profit before tax of N600.9 billion, underpinned by robust growth in core income streams. However, profit after tax dropped by about 40 per cent, as the exceptional fair value gains booked in 2024 did not recur in the current period.

FBN Holdings Plc delivered an 18.1 per cent increase in gross earnings to N1.66 trillion, up from N1.40 trillion, but saw profit after tax fall by 20.7 per cent to N289.8 billion, weighed down by higher impairment charges and foreign exchange normalisation.

Across the group, Zenith Bank led in absolute profitability, Access Holdings recorded the fastest growth in interest income, and UBA sustained consistent, broad-based expansion. Meanwhile, GTCO’s decline underscored the distortionary effect of one-off gains, while FBN Holdings’ result reflected continued balance-sheet restructuring amid a challenging credit environment.

Interest and similar income, the primary engine of profitability for Nigerian banks, expanded across the FUGAZ group in the first half of 2025. Zenith Bank recorded one of the strongest gains, with interest income rising from N1.15 trillion to N1.84 trillion, representing a growth of nearly 60 per cent. UBA followed with a 32.9 per cent increase to N1.33 trillion, while FBN Holdings reported a 51.7 per cent jump to N1.44 trillion. Access Holdings also delivered a 38.9 per cent rise, bringing its total interest income to around N2.0 trillion.

However, performance in non-interest income, comprising fees, commissions, and trading gains was more uneven. Access Holdings achieved a 16.1 per cent increase in fee and commission income, while UBA experienced an estimated 25 per cent decline. Analysts note that while the sector’s profitability remains heavily supported by elevated interest rates, this dependence exposes banks to potential margin compression should the CBN ease monetary policy or lower benchmark rates in the coming quarters.

Total assets across the group continued to expand in the first half of 2025, underscoring both balance sheet resilience and deepening customer deposit strength. Zenith Bank’s total assets climbed to roughly N31 trillion, compared with about N30 trillion at the end of 2024, while Access Holdings reported assets of N42.4 trillion, supported by N22.9 trillion in customer deposits and N13.2 trillion in loans and advances.

FBN Holdings also strengthened its balance sheet, with total assets up 2.5 per cent year-to-date to N27.2 trillion, reflecting disciplined risk asset growth. UBA recorded an 11.9 per cent increase in deposits to N27.6 trillion, extending its lead in retail funding, while FBNH’s deposit base advanced to around N17.9 trillion.

Despite strong topline expansion, profitability across Nigeria’s Tier-1 banks came under pressure in the first half of 2025 as rising impairments and cost inflation eroded margins. Zenith Bank’s profit before tax declined by about 14 per cent, while profit after tax slipped 8 per cent, even as revenue grew. The drop was largely driven by an increase in impairment charges, which jumped to N760.8 billion from N415 billion a year earlier.

FBN Holdings also faced earnings pressure, with PAT falling around 21 per cent following a N53.67 billion loss in non-interest income, compared with a N432 billion gain in the same period of 2024, alongside higher credit provisions. The group’s cost-to-income ratio widened to 50.5 per cent from 46.9 per cent, while the cost of risk rose to 3.9 per cent.

In contrast, Access Holdings maintained operational momentum by leaning on its non-banking subsidiaries. Its pensions arm delivered a return on average equity of 48.1 per cent and a cost-to-income ratio of 35.1 per cent, reflecting the benefits of diversification into businesses less exposed to credit volatility.

Dividend and shareholder returns remained resilient despite regulatory recapitalisation pressures. Zenith Bank’s board approved an interim dividend of N1.25 per share, up 25 per cent from N1.00 previously. UBA and GTCO each declared N1.00 per share. These payouts underscore the banks’ confidence in their capital buffers and earnings stability, even as the industry braces for higher capital requirements and tighter liquidity conditions ahead.

Analysts have cautioned that the current momentum in interest income growth may prove difficult to sustain amid a shifting monetary environment. Moody’s Investors Service recently warned that the Central Bank of Nigeria’s benchmark rate cut to 27 per cent could compress banks’ margins unless offset by higher loan volumes or stronger fee-based income.

The sector, they argue, is at an inflection point. Scale and deposit mobilisation remain essential, but long-term resilience will increasingly depend on the quality of earnings, asset mix, and balance sheet strength.

Competition among Nigeria’s Tier-1 lenders is also intensifying. Banks with robust capital buffers, diversified income streams, and disciplined cost management are likely to outperform. Access Holdings’ expansion into pensions, digital payments, and consumer lending underscores the strategic shift toward non-interest revenue. Zenith Bank continues to lead on asset base and returns, UBA’s pan-African network provides earnings diversification, FBN Holdings is focused on resolving legacy forbearance and capital issues, while GTCO faces the task of rebuilding its non-interest income base to sustain growth.

H1 2025 vs H1 2024 performance

The first-half 2025 results indicate that Nigeria’s largest banks continue to benefit from scale, sustaining growth and profitability despite increasing pressure, while margin expansion driven by high interest rates remains supportive but potentially vulnerable to rate adjustments. At the same time, diversification beyond lending into areas such as payments, pensions, insurance, and digital platforms, is becoming critical to counter margin pressures and rising impairments, and maintaining strong capital adequacy will be essential for banks to absorb shocks and comply with forthcoming regulatory requirements.