Nigerian Banks Earn Over ₦8 Trillion from Loans in 2024 as Interest Rates Surge

In 2024, Nigerian banks experienced a record-breaking year, primarily driven by the Central Bank of Nigeria’s aggressive interest rate policies. 

With benchmark rates reaching 27.5%, the lending environment shifted dramatically, enabling commercial banks to significantly increase interest earnings on loans disbursed to customers. 

According to a detailed analysis of financial reports from ten publicly listed banks, interest income from customer loans rose sharply to ₦8.41 trillion, more than doubling the ₦4.08 trillion earned in 2023. This remarkable 106% increase highlights how monetary tightening has reshaped the country’s banking profitability landscape.

Strategic Lending Growth Amid High Rates

As inflation persisted and monetary policy tightened, banks capitalized on rising rates by repricing their loans and expanding credit portfolios. By the end of 2024, the cumulative loan book across the ten top banks surged by 37.6%, reaching ₦51.36 trillion. This rise not only reflects increased demand for credit but also the strategic expansion of existing loan contracts under the new rate regime.

Apart from customer loans, banks also earned significantly from other interest-yielding assets such as government securities, corporate bonds, and interbank placements. These contributed an additional ₦6.66 trillion to their earnings, up from ₦2.7 trillion the previous year. Combined, interest income accounted for a dominant 72.4% of total gross earnings, showing the centrality of interest-driven revenue to banking operations.

Top Performing Banks by Interest Income

Access Corporation led the pack with ₦1.63 trillion earned from customer loans in 2024—an increase of 118% from ₦747.2 billion in 2023. Backed by a 43% expansion in its loan portfolio to ₦11.49 trillion, the bank leveraged average lending rates of 17% to maintain its top spot.

Zenith Bank followed closely, earning ₦1.52 trillion, a 126% increase from the previous year. With its loan portfolio increasing by 52% to ₦9.97 trillion and an average interest rate on loans of 18%, Zenith sustained its position as one of the industry’s major lenders.

First HoldCo, the parent of First Bank, also experienced notable growth, with interest income reaching ₦1.36 trillion—an increase of 124% from 2023. The group’s customer loan book expanded by 38% to ₦8.77 trillion, with average loan rates hovering around 18%.

UBA earned ₦779.7 billion from customer loans, growing its loan base by 33% to ₦6.95 trillion. Despite a lower average yield of 13%, the bank’s scale helped drive revenue growth.

Fidelity Bank recorded ₦626.3 billion in interest earnings, a 72% year-over-year increase, supported by a 42% rise in loan volume to ₦4.39 trillion and an average lending rate of 17%.

Risks and Outlook

Despite the income boost, rising rates also came with increased costs and risks. Several banks, including Zenith Bank and Stanbic IBTC, reported higher funding costs due to elevated interest expenses. 

Furthermore, the burden of high borrowing rates was passed on to customers, resulting in a modest increase in non-performing loans (NPLs). The average NPL ratio among the top ten banks rose from 4.1% in 2023 to 4.5% in 2024, underscoring the strain on borrowers.

Looking ahead, with inflation still high (above 24% as of March) and the Monetary Policy Rate remaining at 27.5%, the outlook suggests continued strong earnings potential for banks, but also sustained pressure on credit quality and operating costs.

In conclusion, while 2024 was a milestone year for interest income growth in Nigerian banking, it also served as a reminder of the delicate balance between profitability and portfolio risk in a high-interest-rate environment.