Nigerian banks drive Africa’s increased interest income gains among emerging markets – Report

Nigerian banks are pivoting Africa through an interest income boom that powered the fastest growth among emerging markets in the first half of 2025, according to a new report by Fitch.

Average net interest margin, an indicator that measures the difference between the interest lenders earn on loans and the interest they pay to depositors, for Africa was 2 per cent than that of all emerging markets put together during the period, said the credit rating in its Emerging Markets Largest Monitor Banks Monitor issued Tuesday.

“EM banks’ net interest margins (NIMs) were generally stable at 4.2 per cent in 1H25,” according to the document.

“Average NIMs declined slightly in most regions, but increased for African banks to 6.2 per cent (2024: 5.7 per cent), mostly due to banks in Nigeria,” it noted further.

Africa’s net interest margin stood taller than other emerging market peers’, even though European banks reported the sharpest loan growth at 31 per cent, highlighting the substantial impact of generally high policy rates across the continent on banks’ revenue.

Benchmark interest rate in Nigeria stood at 27.5 per cent at the end of the first half of last year, the culmination of six straight aggressive hikes in 2024, totalling 875 basis points.

While the hawkish policy stance opened up a golden moment for lenders in Nigeria to generate bumper revenue as it gave them liberty to charge more for loans, it forced several businesses down the sticky path of borrowing at pretty elevated rates, driving their financing costs rapidly up in turn.

The country’s five biggest banking institutions recorded an average net interest income growth of 59.8 per cent during the period under review, compared to a year ago, according to PREMIUM TIMES’ calculation, using data from their earnings report.

Access Holdings posted a 91.8 per cent increase, Zenith 89.5 per cent, First HoldCo 75.7 per cent, Guaranty Trust Holding Company 28.6 per cent and United Bank for Africa 14.6 per cent.

Monetary authorities in Nigeria cut rates by only half a percentage in the latter half of 2025, and have signalled the readiness to pursue gradual easing this year to support growth as inflation cools.

At its first meeting of the year on Tuesday, the Central Bank of Nigeria lowered the reference rate by 0.5 per cent to 26.5 per cent, opting for a slight cut as a balancing act between the need to foster growth and keep price levels stable at the same time.