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

In the nine months ending September 2026, eight Nigerian banks experienced a 14.2% increase in profit before tax, reaching N5.29 trillion from N4.63 trillion during the same period in 2025. Notably, lower loan-loss charges played a significant role in boosting these banks' profits. The combined net impairment charges dropped by 48.1% to N977 billion, a substantial reduction of around N906 billion, which outweighed the N659 billion increase in combined pre-tax profit.

This decrease in credit impairment charges provided the largest collective support to profitability, although it was not the primary driver of earnings growth for all banks. While interest income marginally increased by 0.7% to N12.83 trillion, interest expenses grew 5.1% to N4.95 trillion, resulting in modest growth in core operating income.

Despite the overall positive trend, the earnings improvement was uneven, with lower impairments and diversified income sources providing substantial support to profitability. Some banks, like Zenith and Access, benefited significantly from reduced credit losses, while others, such as First HoldCo and Stanbic IBTC, relied more on trading and other non-interest income.

Wema Bank and Sterling Financial Holdings recorded stronger growth in net interest income. The contrasting performances across the eight banks highlight the varying impact of credit costs, interest margins, fees, and trading income on profitability in the Nigerian banking sector. Management commentary indicated that bank executives remained confident about earnings resilience, but the results showed that the improvement was not uniform, with rising funding costs and operating expenses continuing to put pressure on underlying earnings.