Nigeria’s leading three banks, Guaranty Trust Holding Company (GTCO), Zenith Bank and United Bank for Africa (UBA), recorded a combined profit before tax (PBT) of N1.61 trillion in their half-year operations, as against N2.13 trillion achieved in the corresponding period in 2024.
This figure represents a sharp 24.4 per cent drop in their pre-tax profits. According to data from the Nigerian Exchange Limited (NGX), GTCO posted a pre-tax profit of N600.9 billion for the period ended June 30, 2025, down from the N1.004 trillion it recorded in the first half of 2024.
Similarly, Zenith Bank’s PBT stood at N625.6 billion, down from N727 billion posted in the previous year.
Also, UBA reported a PBT of N388.4 billion, slightly lower than the N402 billion posted during the same period of last year. Despite the sharp drop in profits, the banks demonstrated resilience in their interim corporate actions, with UBA declaring a 25 kobo dividend per share, GTCO recommending N, and Zenith Bank rewarding shareholders with a N1.25 kobo interim dividend.
Analysts attributed the sharp decline in their profits to the absence of foreign exchange (FX) revaluation gains, a factor that significantly boosted earnings in the previous year.
According to them, the year-on-year drop in profitability underscored how much of the 2024 performance was driven by currency-related windfalls rather than core banking operations such as lending, fee income, or asset management.
In 2024, following the Central Bank of Nigeria’s (CBN) decision to adopt a more flexible exchange rate regime, the naira experienced a substantial devaluation. This created a one-time revaluation opportunity for banks holding significant foreign currency assets on their balance sheets.
As the naira weakened, the value of the dollar-denominated assets surged in naira terms, allowing banks to record massive FX revaluation gains in their income statements.
The non-recurring gains significantly inflated pre-tax profits across the banking sector, particularly for institutions with large international operations or FX positions.
However, in the first half of 2025, no similar devaluation event occurred. The exchange rate remained relatively stable compared to the sharp movement seen the previous year. As a result, banks were unable to book the kind of FX gains that buoyed earnings in 2024.
Executive Director at Halo Capital Management Limited, Dr Paul Uzum, said the absence of fresh revaluation income played a central role in the year’s weaker profit performance.
He pointed out that in 2024, many banks recorded substantial gains purely from currency movements triggered by monetary reforms. According to the President of the NewDimension Shareholders Association of Nigeria, Patrick Ajudua, the lower performances recorded by some banks are not surprising given the current macroeconomic challenges facing the country.
He explained that the decline largely stemmed from a drop in other income streams, including trading investments, foreign exchange revaluation, forward transactions on financial instruments, gains from the disposal of fixed assets and dividend income.
Ajudua also stated that the recent strengthening of the naira against the dollar has created additional foreign exchange-related pressures on banks, particularly those with a significant portion of their funds domiciled in foreign currencies.
An independent investor, Amaechi Egbo, pointed out that the decline in profits does not necessarily reflect operational deterioration or mismanagement, but a recalibration toward a more realistic earnings baseline in the absence of FX-driven distortions.
According to him, the situation has also raised questions about the sustainability of earnings in the banking sector, particularly in an environment where core lending activities remain challenged by high interest rates, sluggish economic growth and weak consumer demand.
“Without the benefit of currency revaluation, banks are now relying more heavily on traditional revenue lines, such as interest income, transaction fees, and asset management, to sustain profitability.
“In essence, the sharp fall in pre-tax profits in H1 2025 is a reflection of a return to monetary and operational normalcy, after an exceptional year marked by policy-driven exchange rate volatility.
” While 2024’s record-breaking profits were celebrated across the sector, this year’s figures are prompting a more sobering assessment of bank performance, efficiency, and resilience in a less windfall-driven macroeconomic environment,” he said.
