Onome Amuge

Two of Nigeria’s financial institutions, United Bank for Africa (UBA) Plc and Zenith Bank Plc, have finally released their half-year 2025 results. The disclosures, which came a day after a Business A.M. report flagged the delay, showed contrasting outcomes for the Tier-1 banks, underlining the divergent strategies at play in Nigeria’s banking sector.

While UBA grew profit and expanded its asset base, Zenith reported a decline in earnings as rising impairment charges weighed on bottom-line results. Despite the divergence, both banks moved to reassure investors with interim dividends, with  UBA declaring 25 kobo per share, while Zenith announced  N1.25 per share, signalling resilience despite persistent macroeconomic headwinds.

UBA reported a profit after tax of N335.53 billion for the six months ended June 30, 2025, a 6 per cent increase from N316.36 billion in the same period last year. Profit before tax came in at N388.41 billion, down slightly from H1 2024, but a 38 per cent decline in income tax expenses to N52.88 billion helped lift net profit.

Revenue growth was anchored by interest income of N1.33 trillion, up 33 percent from N1.0 trillion a year earlier. This was largely driven by a 34 per cent rise in income from amortised cost and FVOCI securities, which contributed N1.29 trillion. However, interest expenses rose 70 per cent to N560.61 billion, reflecting the rising cost of deposits in a higher interest rate environment. Net interest income still rose 15 percent to N773.03 billion.

Credit risk costs provided some relief. Impairment charges on loans dropped to N35.15 billion, down from N58.56 billion a year earlier. UBA also booked a net write-back of N3.19 billion on other financial assets, contrasting with a N1.66 billion charge in H1 2024.

Non-interest income was a mixed bag. Fee and commission income rose to N253.60 billion, while net fee income reached N147.04 billion. However, the lender recorded a net trading and foreign exchange loss of N10.05 billion, a reversal from the N98.18 billion gain last year amidst Nigeria’s volatile FX and derivatives markets. Other operating income rose to N30.79 billion, buoyed by dividend and rental inflows.

Operating expenses increased to N520.43 billion from N472.62 billion in the prior period, driven by higher staff and administrative costs. Yet, with revenue growth outpacing expenses, the bank improved its cost efficiency ratio.

On the balance sheet, total assets grew 10 percent to N33.27 trillion by June 2025, up from N30.24 trillion in December 2024. Customer deposits expanded to N27.60 trillion, while loans and advances rose to N7.74 trillion, showing management’s intent to keep supporting credit growth.

In a move to reward investors, UBA declared an interim dividend of 25 kobo per 50 kobo share, payable to shareholders whose names appear on the register as of October 3, 2025.

Zenith hit by impairments, boosts interim dividend

Zenith Bank, Nigeria’s largest lender by market value, reported a weaker performance. Net income fell 8 percent to N532.2 billion from N578 billion in H1 2024, while profit before tax dropped 14 percent to N625.6 billion.

Gross earnings, however, climbed 20 percent to N2.52 trillion, powered by higher yields on loans and investments. Net interest income nearly doubled to N1.35 trillion, reflecting strong pricing on risk assets. Fee and commission income also rose 17 percent to N128.1 billion.

The real drag came from impairments. Loan-loss charges more than doubled to N760.8 billion from N415.3 billion a year earlier, as the bank faced rising credit risk in Nigeria’s tough macroeconomic climate. Analysts pointed to high inflation and a record-tight monetary stance that has strained borrowers’ repayment capacity.

Basic earnings per share fell to N12.95 from N18.41 in H1 2024.

Still, in a bid to shore up investor confidence, Zenith declared an interim dividend of N1.25 per share, higher than the N1.00 paid a year earlier. The payout, sourced from retained earnings, signals management’s confidence in the bank’s capital buffer. Shareholders’ equity climbed to N4.57 trillion, from N4.03 trillion in December.

Total assets stood at N30.99 trillion, flat from year-end, while customer deposits increased to N23.48 trillion from N21.96 trillion in December, underscoring customer loyalty even amid market uncertainty.

“Zenith Bank’s results highlight resilient interest income growth underpinned by elevated yields and growth in investment securities. However, the combination of higher impairment charges and weaker trading gains capped profitability in the review period,” Cordros Research said in a note. 

The analysts added that a lower interest rate environment later in the year could reduce provisioning pressure and strengthen Zenith’s earnings outlook.

The interim dividend policies of both banks stood out as key signals to the market.

UBA’s 25 kobo interim payout is consistent with its cautious approach, balancing shareholder returns with the need to preserve liquidity and fund expansion across its African footprint. For a bank with assets topping N33 trillion, analysts say the modest dividend reflects a conservative stance amid currency volatility and elevated costs.

Zenith, on the other hand, chose a more aggressive posture by raising its interim dividend to N1.25 per share, even as profits fell. This indicates the bank is leaning on its strong capital buffers and deposit base to reassure investors of stability and future earnings power.

Comparative Insights

The late filings had initially rattled investors, given that UBA, Zenith, GTCO, and Access collectively account for over 10 per cent of NGX’s market capitalisation. The eventual disclosures have partly calmed nerves, but analysts say timely reporting will remain essential for investor trust, especially as Nigerian banks operate under economic reforms, foreign exchange instability, and tighter regulatory oversight.

For investors, the contrasting half-year results show that UBA is leaning on diversification and disciplined cost management to sustain growth, while Zenith is facing higher impairments but compensating with shareholder-friendly dividends.

Looking ahead, analysts expect that lower rates, if implemented later in the year, could drive credit expansion, ease funding costs, and relieve provisioning pressure. Still, FX volatility and inflation remain wildcards that could swing outcomes for both lenders