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Recapitalisation Reality Check: Uncovering the Truth Behind Nigeria’s Banking Boom
Recapitalisation Reality Check: Uncovering the Truth Behind Nigeria’s Banking Boom
BY BLAISE UDUNZE
When the Central Bank of Nigeria (CBN) announced a new round of bank recapitalisation in March 2024, many expected the leading banks, especially those boasting record-breaking profits in the hundreds of billions and trillions, to sail through with ease. Their financial statements glistened with prosperity, with expanding balance sheets, rising dividends, and bullish share prices.
Indeed, five of Nigeria’s top 10 banks reported a combined pre-tax profit of N4.6 trillion in 2024, showing a staggering 70 percent increase from the previous year, with Zenith Bank and Guaranty Trust Holding Company crossing the trillion-naira mark for the first time. The results painted a picture of robust profitability and resilience.
Yet, barely months after the profit announcements, the same banks found themselves racing back-to-back to the capital market to raise fresh funds. By the first half of 2025, Nigeria’s banking industry was at a crossroads. Behind the glitter of trillion-naira profits lay a more sobering reality of an industry scrambling to meet the CBN’s recapitalisation directive.
The contradiction is stark: record profits on one hand, desperate fundraising on the other. If the banks were truly as profitable and resilient as they claimed, they wouldn’t be begging investors for fresh equity to meet new thresholds.
Behind the strong showing of the market leaders lies an even deeper concern. The smaller commercial and regional banks are struggling to formulate credible recapitalisation strategies. As the March 31, 2026 deadline looms, the CBN has confirmed that only 14 banks have so far scaled the recapitalisation hurdle. That leaves nearly 19 institutions still in search of capital in a market already skeptical of their true worth.
The recapitalisation push has therefore become the clearest indicator of the sector’s underlying fragility. The CBN’s new capital requirements of N500 billion for international banks, N200 billion for national banks, and N50 billion for regional banks have forced lenders to confront a fundamental question. How much of their reported profits actually represents real financial strength?
Much of Nigeria’s profit boom has been a deception, a mirage built on foreign exchange revaluation gains and arbitrary fees rather than genuine operational efficiency. The unification of exchange rates and subsequent naira depreciation in 2023 and 2024 delivered massive revaluation windfalls on dollar-denominated assets, inflating balance sheets overnight. But these were paper gains, not cash profits, and could not be deployed to strengthen capital or fund new loans.
Beyond FX gains, Nigerian banks have increasingly relied on fees and charges as easy revenue. Despite repeated CBN sanctions for breaching its Guide to Charges, banks continue to extract billions from customers through transfers, withdrawals, ATM fees, SMS alerts, and account maintenance. With over 312 million active bank accounts, these charges now contribute more to profitability than traditional lending or genuine financial intermediation.
It is little surprise, then, that the recapitalisation exercise has exposed the widening gap between declared profitability and true solvency. While five Tier-1 banks together raked in N4.6 trillion in pre-tax profit in 2024, nearly 70 percent higher than in 2023, many mid-tier banks can barely keep pace. The recapitalisation gap across the sector is now estimated at N4.7 trillion.
As of September 2025, only 14 banks had crossed the line, while others scramble for mergers, rights issues, or license downgrades to survive. The CBN’s insistence that only paid-up capital and share premium will count while excluding retained earnings has stripped away the accounting camouflage that once masked weakness.
For the market leaders, the race has been aggressive but achievable. Access Holdings raised N351 billion through a fully subscribed rights issue. Zenith Bank’s N350.4 billion hybrid offer was oversubscribed by 160 percent. Wema Bank, once a mid-tier lender, successfully raised N200 billion and became a national success story. Among specialised institutions, Greenwich Merchant Bank sealed its own recapitalisation, supported by capital injections and debt-to-equity conversions that secured its merchant banking license, while Jaiz Bank rose above the N20 billion target to remain the flagship of Islamic banking. Lotus has met the N10 billion bar, consolidating its place in Nigeria’s fast-growing alternative sector.
Another notable entrant is Globus Bank, which in 2024 raised N52.9 billion to lift its capital to N98.6 billion and followed in 2025 with a further N102 billion via rights issues and private placements. The raise subscribed entirely by existing shareholders took its capital above N200 billion. The bank now awaits final verification from the CBN before being formally recognized as compliant.
For others, however, it has been a painful crawl. Fidelity Bank’s N205.45 billion hybrid offer still leaves a N160 billion gap to the N500 billion benchmark. Guaranty Trust Bank reached its own target through a two-phased approach that started with a rights issue in Nigeria that netted N365.8 billion. Subsequently, GT listed shares on the London Stock Exchange with proceeds of $105 million to reach the required target, while UBA Plc launched a N157 billion rights issue in July 2025, following a N239 billion offer in November 2024 that was oversubscribed at N251 billion, with N240 billion accepted. The new offer, extended to September 19, 2025, helped the bank meet the CBN’s N500 billion capital requirement.
As of September 2025, First Bank has secured N187.6 billion and plans an additional N350 billion in private placements, but it still needs to secure the remaining funds to meet the CBN’s requirements. FCMB Group Plc launched a N160 billion public share offer to meet the CBN’s N500 billion capital requirements for international banks, with the offer closing on November 6, 2025. The offer follows a successful N147.5 billion share sale in 2024.
Fidelity raised N176 billion in fresh capital in 2024 and is moving to get an additional N195 billion via private placement before the end of the year. Sterling Bank has not yet completed its recapitalisation as it commenced an N87.067 public offer. This offer follows completion of a N75 billion private placement and a N28.79 billion rights issue, which was significantly oversubscribed by its shareholders.
Consolidation pressures are once again reshaping Nigeria’s banking landscape. Titan Trust’s acquisition of Union Bank and the completed Providus and Unity Bank’s merger reflect the reality that not every institution will raise sufficient equity alone. More combinations are expected in the months ahead, with smaller lenders likely to be folded into stronger franchises as the recapitalisation deadline approaches.
This trend mirrors the 2005 consolidation era, which trimmed 89 banks down to 25, ushering in a new era of scale and scrutiny. The 2024-2026 recapitalisation may well repeat history, producing fewer but sturdier players, banks large enough to finance Nigeria’s economic transformation.
But history offers a warning that recapitalisation is not reform. Bigger balance sheets may shield banks from global shocks, but they do not guarantee developmental relevance. Unless the philosophy of Nigerian banking itself changes from profit-first to purpose-driven intermediation, the sector will keep producing “giant banks in a fragile economy.”
The real challenge is not size, but substance. Nigeria doesn’t just need bigger banks; it needs better banks. It needs institutions that see SMEs as partners rather than liabilities, that lend to real producers rather than recycle deposits into government securities. It needs lenders that adopt fintech-driven underwriting, regulators that reward productive lending, and policymakers that create the infrastructure, power, and security needed to make risk-taking viable.
Recapitalisation, in this light, should not be seen merely as a regulatory hurdle but as a mirror reflecting both the success and the shame of Nigeria’s banking system. The trillion-naira profits may have dazzled investors, but the scramble for new capital reveals the truth that the sector’s foundations remain fragile, its governance inconsistent, and its contribution to real economic development still limited.
The CBN’s policy, painful as it may be, is a necessary reality check. It forces banks to prove that their wealth is more than paper-deep and that their balance sheets can support Nigeria’s ambitious $1 trillion economy vision. For investors and depositors, it is a wake-up call that what glitters in the financial statements may not always be gold.
In the end, recapitalisation is not just about raising funds; it is about restoring credibility. Because trust, once eroded by profit manipulation and corporate posturing, takes far more than a balance sheet to rebuild.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]
FirstBank Integrates PAPSS into LIT App for Seamless Cross-Border Payments Across Africa
FirstBank, the premier bank in West Africa and a leading financial inclusion service provider, is thrilled to announce the successful integration of the Pan-African Payment and Settlement System (PAPSS) into its flagship digital banking platform, the LIT app, enabling customers to make instant, secure, and local currency-based cross-border payments across Africa.
PAPSS, developed by the African Export-Import Bank (Afreximbank) in collaboration with the African Union and the AfCFTA Secretariat, enables instant, low-cost payments in local currencies between African countries.
Speaking on the integration, the Group Executive, e-Business and Retail Products at FirstBank, Chuma Ezirim, said, “The integration of PAPSS into the LIT app is a testament to FirstBank’s commitment to delivering innovative, customer-centric solutions that simplify and enhance financial transactions. This milestone aligns with the Bank’s strategic goal of deepening digital capabilities and expanding access to seamless cross-border payment services across Africa.”
Commenting on this collaboration, Mike Ogbalu, CEO of PAPSS said, “Every time an individual, an SME or a Company sends money instantly within Africa in their own currency, we are not just moving funds, we are connecting ambitions, supporting livelihoods, and bridging dreams across borders. This collaboration with FirstBank and their LIT app brings us a step closer to making African borders invisible to movement of money, so that the continent’s entrepreneurs and families can focus on what matters most: building their future, not battling payment barriers.”
The LIT App, FirstBank’s innovative digital banking platform, offers a wide range of features including virtual cards, scheduled payments, and multiple transfers in one go, designed to meet the dynamic needs of customers. The addition of PAPSS expands its capabilities to support cross-border commerce, especially for individuals and SMEs engaged in pan-African business.
With PAPSS now live on the LIT App, FirstBank is breaking down barriers to payments, trade and financial inclusion across Africa. Customers can now send funds conveniently to other countries in Naira, without needing US dollar, GBP or Euro conversions. This landmark integration enables real-time cross-border payments in local African currencies, reduces transaction costs, and improves settlement efficiency. It also expands access to digital banking services, promotes financial inclusion, supports SMEs and fosters growth under the African Continental Free Trade Area (AfCFTA).
This integration of PAPSS to the LIT app reinforces FirstBank’s leadership in digital banking innovation and supports the African Continental Free Trade Area (AfCFTA) agenda by simplifying intra-African transactions.
How Nigerian Banks Built a N219 Trillion Asset Empire on Depositors’ Funds
BY BLAISE UDUNZE
In the first quarter of 2025, Nigeria’s 10 largest banks proudly reported a combined total asset base of N218.99 trillion, up from N212.75 trillion at the end of 2024, according to a report by Nairametrics published on May 19, 2025.
On paper, it looked like a victory as evidence that the sector remains robust despite inflationary headwinds, exchange rate volatility, and a struggling real economy. But beneath that glossy narrative lies a deeper, more uncomfortable truth that reveals Nigeria’s asset boom is not driven by innovation, real-sector productivity, or capital efficiency; rather, it is fueled largely by customer deposits and balance-sheet inflation.
According to data from the banks’ own filings, about N164.7 trillion, representing roughly 75.2 percent of the N218.99 trillion total asset base, came directly from customers’ deposits. In plain terms, three-quarters of the industry’s celebrated “assets” are actually liabilities owed to the public, which are deposits that banks temporarily hold, not capital they generated or invested productively.
Bank Customer Deposits (N Trillion)
Access Holdings / Access Bank 38.8655
Ecobank (Group) 33.2080
Zenith Bank 22.6818
United Bank for Africa (UBA) 25.6500
FBN Holdings / FirstBank Group 17.2699
GTCO (Guaranty Trust) 10.8923
Fidelity Bank 6.5990
FCMB Group 4.1254
Stanbic IBTC 3.0456
Wema Bank 2.4096
Total N164.75 trillion
This dependency on depositors’ funds reveals a system that looks rich in assets but is, in essence, shallow in innovation and weak in capital depth. At first glance, the growth appears dramatic, with the sector’s total assets jumping from N170.02 trillion in 2024, representing a 39.6 percent year-on-year rise, to nearly N219 trillion by Q1 2025. Yet, this “growth” is misleading. Much of it stems not from new value creation but from naira devaluation adjustments, inflationary expansion, and paper gains on government securities.
Banks are becoming bigger on paper, not stronger in impact. The so-called asset expansion has not translated into more affordable credit for manufacturers, small and medium enterprises (SMEs), or agribusinesses. Instead, it reflects a financial system more comfortable with passive wealth storage than active economic stimulation.
In simpler terms, Nigeria’s banks are becoming richer without making the economy stronger. Their balance sheets have ballooned, but their capital efficiency, which represents the ability to convert deposits into productive loans, remains weak.
The false appearance of size becomes even more striking when placed in a continental context. As of June 30, 2025, Standard Bank Group of South Africa, Africa’s largest financial institution, reported total assets of R3.4 trillion, equivalent to $191.8 billion. At Nigeria’s prevailing exchange rate of N1,484.50 to $1, that translates to approximately $191.8 billion × N1,484.50 = N284,983 trillion, or roughly N285 trillion. That means a single South African bank now outvalues the entire Nigerian banking industry, whose 10 largest lenders collectively hold N218.99 trillion in assets.
The comparison is humbling. It highlights how Nigeria’s asset numbers, while massive in naira terms, shrink dramatically when viewed through a global lens. While Standard Bank’s strength stems from robust capitalization, efficient risk management, diversified income streams, and strong regional investments, Nigerian banks remain largely driven by deposit inflows, short-term instruments, and FX revaluation surges.
Moreover, the disconnect between banking prosperity and economic stagnation is becoming impossible to ignore. Despite N219 trillion sitting on bank balance sheets, access to credit for manufacturers, small businesses, and startups remains prohibitively difficult. Lending rates are high, collateral demands are steep, and real-sector credit continues to shrink as a share of GDP. Manufacturing’s contribution to GDP remains in low single digits, private sector credit lags behind African peers, and inflation continues to erode the value of naira-denominated deposits. The banks’ “assets” may rise, but they are paper assets, not productive capital, rather figures that comfort shareholders but fail to transform society.
A banking system overly reliant on deposits is inherently fragile. Deposits are short-term and confidence-sensitive and can flee quickly during periods of policy uncertainty. Unlike equity or long-term capital, they offer little cushion against shocks. This overdependence creates an illusion of liquidity but hides structural weakness. Nigeria’s banks may look stable, but their foundations are vulnerable, just like a tower built on shifting sands of depositor confidence rather than the rock of sustainable capital formation.
For Nigeria’s regulators, analysts, and policymakers, the question is no longer how large the banks’ assets appear, but what those assets are doing for the economy. True strength must come from innovation in financial intermediation, capital efficiency, and credit diversification; support for real-sector growth; and regional competitiveness on the African and global stage.
Until Nigerian banks start to convert deposits into genuine development by funding infrastructure, technology, and enterprise, the industry’s trillion-naira balance sheets will remain a false hope of progress without prosperity. Nigeria’s N219 trillion banking booms may glitter, but it is a reflection of financial inflation, not economic transformation. When one South African bank commands more assets than the entire Nigerian industry combined, it is not just a comparison; it is a revelation.
It reveals how far Nigeria must go to move from deposit dependency to capital creation, from paper prosperity to real productivity, and from illusory balance sheet growth to genuine economic strength. Until that shift happens, Nigeria’s banking system will remain what it is today as a trillion-naira illusion shimmering over a weak economic base.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]
ZENITH BANK SIGNALS STRONG FULL-YEAR OUTLOOK WITH N51.3 BILLION INTERIM DIVIDEND PAYOUT
Zenith Bank Plc, on Friday, October 10, 2025, made good on its promise as it paid a total interim dividend of N51.3 billion to its shareholders for the Half Year (H1) 2025, at N1.25 per share. This significant payout represents an increase of over 60% from the N31.4 billion paid in H1 2024, demonstrating the bank’s commitment and enhanced capacity to continually generate value for its shareholders amidst a challenging macroeconomic environment.
The dividend payment follows the bank’s audited financial results for the half year ended June 30, 2025, released to the Nigerian Exchange (NGX) in September 2025, which showcased a robust financial position and strong growth trajectory.
Commenting on the dividend payout, the Group Managing Director/CEO, Dame Dr. Adaora Umeoji, OON, said:
> “We are pleased to have paid this significant interim dividend to our valued shareholders. Our half-year results underscore our resilience and commitment to our stakeholders. Based on the momentum achieved in H1, we are confident in our full-year outlook and expect to exceed shareholders’ expectations by year-end.”
The substantial dividend payout reflects the bank’s exceptional underlying performance, as it recorded a robust 20% year-on-year increase in gross earnings, rising from N2.1 trillion to N2.5 trillion in H1 2025. Interest income drove this performance with an impressive 60% growth, climbing from N1.1 trillion to N1.8 trillion. The bank achieved this increase through the strategic repricing of risk assets and effective treasury management.
The bank’s total assets also expanded to N31 trillion in June 2025, representing steady growth from N30 trillion in December 2024, underpinned by a robust and well-structured balance sheet. Customer confidence remained strong, with deposits growing by 7%, from N22 trillion to N23 trillion in June 2025.
Zenith Bank’s shareholders can be assured of the bank’s continued focus on delivering exceptional value and growth, driven by its strong financial fundamentals and strategic initiatives.
The bank’s consistent track record of excellent performance has continued to earn it numerous awards, including recognition as the Number One Bank in Nigeria by Tier-1 Capital for the sixteenth consecutive year in the 2025 Top 1000 World Banks Ranking published by The Banker, and as “Nigeria’s Best Bank” at the Euromoney Awards for Excellence 2025.
The bank was also awarded Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards for 2020, 2022, and 2024; Best Bank in Nigeria from 2020 to 2022, 2024, and 2025 in the Global Finance World’s Best Banks Awards; Best Bank for Digital Solutions in Nigeria at the Euromoney Awards 2023; and was listed among the World Finance Top 100 Global Companies in 2023.
Further recognitions include Best Commercial Bank, Nigeria for five consecutive years from 2021 to 2025 in the World Finance Banking Awards, and Most Sustainable Bank, Nigeria in the International Banker 2023 and 2024 Banking Awards. Additionally, Zenith Bank has been acknowledged as the Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards for four consecutive years from 2022 to 2025, and “Best in Corporate Governance – Financial Services, Africa” for four consecutive years from 2020 to 2023 by Ethical Boardroom.
The bank’s commitment to excellence also saw it named the Most Valuable Banking Brand in Nigeria in The Banker’s Top 500 Banking Brands for 2020 and 2021, Bank of the Year (2023–2025) at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards, and Retail Bank of the Year for three consecutive years from 2020 to 2022 and 2024 to 2025 at the BAFI Awards. The bank also received the accolades of Best Commercial Bank, Nigeria and Best Innovation in Retail Banking, Nigeria in the International Banker 2022 Banking Awards.
Zenith Bank was further named Most Responsible Organisation in Africa, Best Company in Transparency and Reporting, and Best Company in Gender Equality and Women Empowerment at the SERAS CSR Awards Africa 2024; Bank of the Year 2024 by ThisDay Newspaper; Bank of the Year 2024 by New Telegraph Newspaper; and Best in MSME Trade Finance 2023 by Nairametrics. The bank’s Hybrid Offer was also adjudged “Rights Issue/Public Offer of the Year” at the Nairametrics Capital Market Choice Awards 2025.
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