Nigerian banks boost African interest income growth

Nigerian banks contributed significantly to the fastest growth among emerging markets during the first half of 2025, according to a recent report by Fitch. This growth was largely driven by an increase in interest income.

The report, released Tuesday, indicated that African banks experienced a notable rise in net interest margins compared to other emerging markets.

Net Interest Margin Performance

Fitch’s Emerging Markets Largest Monitor Banks Monitor stated that average net interest margins for emerging market banks were generally stable at 4.2 percent in the first half of 2025. However, African banks saw an increase to 6.2 percent, up from 5.7 percent in 2024. This increase was primarily attributed to banks operating in Nigeria.

Africa’s net interest margin exceeded that of other emerging market peers, despite European banks reporting the highest loan growth at 31 percent. This highlights the impact of high policy rates across the African continent on bank revenue.

Nigerian Interest Rates and Banking Income

Nigeria’s benchmark interest rate reached 27.5 percent at the end of the first half of 2025, following six consecutive aggressive rate hikes in 2024, totaling 875 basis points. While this policy allowed Nigerian lenders to generate substantial revenue by charging higher interest rates on loans, it also increased borrowing costs for businesses.

Nigeria’s five largest banking institutions recorded an average net interest income growth of 59.8 percent compared to the previous year, based on data from their earnings reports.

Access Holdings experienced a 91.8 percent increase, followed by Zenith (89.5 percent), First HoldCo (75.7 percent), Guaranty Trust Holding Company (28.6 percent), and United Bank for Africa (14.6 percent).

Monetary Policy Adjustments

Following the period of high interest rates, Nigerian monetary authorities implemented a rate reduction of 0.5 percentage points in the latter half of 2025. They have indicated a willingness to pursue gradual easing this year to support economic growth as inflation decreases.

At its first meeting of the year, the Central Bank of Nigeria lowered the reference rate by 0.5 percent to 26.5 percent, balancing the need to stimulate growth with the goal of maintaining price stability.