Lower loan-loss charges lift Nigerian banks’ profits as interest earnings shrink

Lower credit impairment charges emerged as the biggest source of profit support for eight Nigerian Exchange-listed banking groups in the nine months ended September 2026, even as their combined net interest income declined.

An analysis by Nairametrics Research of the 9M 2026 financial statements of the eight banking groups shows that combined profit before tax rose 14.2% to N5.29 trillion from N4.63 trillion in the corresponding period of 2025.

However, net impairment charges fell by 48.1% to N977 billion from N1.88 trillion, a reduction of about N906 billion that exceeded the N659 billion increase in combined pre-tax profit.

The analysis covers Zenith Bank, Ecobank Transnational Incorporated, First HoldCo, Guaranty Trust Holding Company, Access Holdings, Stanbic IBTC Holdings, Wema Bank and Sterling Financial Holdings.

Zenith, Access account for 89% of impairment relief

The reduction in credit impairment charges provided the largest collective support to profitability across the eight banking groups, although it was not the principal driver of earnings growth at every bank.

This was particularly significant because combined net interest income, the largest source of banking revenue, declined 1.8% to N7.88 trillion from N8.02 trillion.

Net fee and commission income, however, increased 13.2% to N2.26 trillion, providing another source of earnings support.

• Zenith Bank recorded the largest impairment reduction, with charges falling by about N552 billion. Its Profit before tax (PBT) increased only 1.2% to N928.80 billion from N917.41 billion, indicating that lower credit-loss provisions helped offset weaker income from some other activities.
• Access Holdings’ impairment charges declined by N257.08 billion, or 73.5%, to N92.91 billion. PBT rose 8.3% to N667.36 billion, while net interest income increased just 2.7% to N1.29 trillion.
• Together, Zenith and Access accounted for approximately N809 billion of the N906 billion reduction in impairment charges across the eight groups.
• GTCO also benefited from approximately N39.6 billion in lower impairment charges, but PBT still declined 2.3% to N879.90 billion.

The results show that lower impairment charges can materially support earnings, but they do not automatically translate into higher profit when other income sources weaken or expenses rise.

Trading income and interest margins split bank earnings growth

While Zenith and Access benefited significantly from lower credit losses, First HoldCo and Stanbic IBTC relied more heavily on trading and other non-interest income. Wema Bank and Sterling Financial Holdings, by contrast, recorded stronger growth in net interest income.

These differences show that the source of earnings growth varied considerably across the eight banking groups.

• First HoldCo recorded PBT of N911.24 billion, up 60.8%, despite a 16% decline in net interest income. Trading and fair-value income increased by about N190 billion, while higher fees and other operating income also supported profitability.
• Stanbic IBTC’s trading revenue increased to N210.13 billion from N23.86 billion, while net fee and commission revenue rose to N218.30 billion. PBT consequently increased by about 35% to N531.88 billion despite a 14.9% decline in net interest income.
• Wema Bank’s net interest income increased 38.3% to N325.88 billion, supporting a 76.6% rise in PBT to N258.64 billion.
• Sterling Financial Holdings recorded a 43.9% increase in net interest income to N205.90 billion, while PBT rose 37.1% to N97.28 billion, although higher impairment charges and operating expenses absorbed part of the improvement.

The contrasting performances underline how different combinations of credit costs, interest margins, fees and trading income shaped profitability across the banking sector.

Operating expenses outpace income as funding costs rise

Interest income remained the largest source of revenue across the eight banking groups, increasing marginally by 0.7% to N12.83 trillion from N12.73 trillion. However, interest expenses grew faster, rising 5.1% to N4.95 trillion from N4.71 trillion.

• Consequently, combined net interest income declined to N7.88 trillion and accounted for approximately 67.6% of operating income, compared with 69.3% in the corresponding period of 2025.
• Non-interest income increased 6.2% to N3.77 trillion, helping combined operating income rise by only 0.7% to N11.65 trillion.
• Operating expenses increased much faster at 6.4% to N5.39 trillion, placing additional pressure on the income generated by the banks.
• Ecobank’s naira-reported PBT declined marginally to N1.01 trillion as operating income weakened, while GTCO’s PBT fell 2.3% as higher funding costs and operating expenses weighed on earnings.

Across the eight banks, the N906 billion reduction in impairment charges therefore became an important factor in preserving earnings as core operating income growth remained modest.

Bank executives weigh in on earnings drivers and cost pressures

Management commentary accompanying the nine-month results also points to different sources of earnings growth, with executives emphasizing lower credit costs, diversified income and operating efficiency.

• Zenith Bank’s Group Managing Director, Adaora Umeoji, said growth in lending, transaction volumes and deposits supported its performance, while “lower funding and credit costs contributed to profitability and improved earnings quality.”
• Access Holdings’ Group CEO, Innocent Ike, similarly described the reduction in impairment charges and growth in income after impairment as evidence of the group’s stronger earnings base. He said the improvement “demonstrates the resilience of our core earnings base.”
• At First HoldCo, management highlighted the contribution of transaction-led revenues, with non-interest income growing by more than 143%, helping offset weaker net interest income.
• GTCO’s Group CEO, Segun Agbaje, also maintained that “our core earnings continued to grow” despite fair-value losses and pressure on reported profitability.
• Ecobank Group CEO Jeremy Awori pointed to deposit growth and operating efficiency as sources of resilience, while acknowledging risks from inflation, energy prices and foreign exchange volatility.

The statements suggest that bank executives remain confident about earnings resilience. However, the results show that the improvement was uneven, with lower impairments and trading income providing significant support to profitability, while rising funding costs and operating expenses continued to weigh on underlying earnings.