Business
Why Nigeria’s Banks Still on Shaky Ground with Big Profits, Weak Capital
*Why Nigeria’s Banks Still on Shaky Ground with Big Profits, Weak Capital*
*BY BLAISE UDUNZE*
Despite the fragile 2024 economy grappling with inflation, currency volatility, and weak growth, Nigeria’s banking industry was widely portrayed as successful and strong amid triumphal headlines. The figures appeared to signal strength, resilience, and superior management as the Tier-1 banks such as Access Bank, Zenith Bank, GTBank, UBA, and First Bank of Nigeria, collectively reported profits approaching, and in some cases exceeding, N1 trillion. Surprisingly, a year later, these same banks touted as sound and solid are locked in a frenetic race to the capital markets, issuing rights offers and public placements back-to-back to meet the Central Bank of Nigeria’s N500 billion recapitalisation thresholds.
The contradiction is glaring. If Nigeria’s biggest banks are so profitable, why are they unable to internally fund their new capital requirements? Why have no fewer than 27 banks tapped the capital market in quick succession despite repeated assurances of balance-sheet robustness? And more fundamentally, what do these record profits actually say about the real health of the banking system?
The recapitalisation directive announced by the CBN in 2024 was ambitious by design. Banks with international licences were required to raise minimum capital to N500 billion by March 2026, while national and regional banks faced lower but still substantial thresholds ranging from N200 billion to N50 billion, respectively. Looking at the policy, it was sold as a modern reform meant to make banks stronger, more resilient in tough times, and better able to support major long-term economic development. In theory, strong banks should welcome such reforms. In practice, the scramble that followed has exposed uncomfortable truths about the structure of bank profitability in Nigeria.
At the heart of the inconsistency is a fundamental misunderstanding often encouraged by the banks themselves between profits and capital. Unknown to many, profitability, no matter how impressive, does not automatically translate into regulatory capital. Primarily, the CBN’s recapitalisation framework actually focuses on money paid in by shareholders when buying shares, fresh equity injected by investors over retained earnings or profits that exist mainly on paper.
This distinction matters because much of the profit surge recorded in 2024 and early 2025 was neither cash-generative nor sustainably repeatable. A significant portion of those headline banks’ profits reported actually came from foreign exchange revaluation gains following the sharp fall of the naira after exchange-rate unification. The industry witnessed that banks’ holding dollar-denominated assets their books showed bigger numbers as their balance sheets swell in naira terms, creating enormous paper profits without a corresponding improvement in underlying operational strength. These gains inflated income statements but did little to strengthen core capital, especially after the CBN barred banks from using FX revaluation gains for dividends or routine operations. In effect, banks looked richer without becoming stronger.
Beyond FX effects, Nigerian banks have increasingly relied on non-interest income fees, charges, and transaction levies to drive profitability. While this model is lucrative, it does not necessarily deepen financial intermediation or expand productive lending. High profits built on customer charges rather than loan growth offer limited support for long-term balance-sheet expansion. They also leave banks vulnerable when macroeconomic conditions shift, as is now happening.
Indeed, the recapitalisation exercise coincides with a turning point in the monetary cycle. The extraordinary conditions that supported bank earnings in 2024 and 2025 are beginning to unwind. Analysts now warn that Nigerian banks are approaching earnings reset, as net interest margins the backbone of traditional banking profitability, come under sustained pressure.
Renaissance Capital, in a January note, projects that major banks including Zenith, GTCO, Access Holdings, and UBA will struggle to deliver earnings growth in 2026 comparable to recent performance.
In a real sense, the CBN is expected to lower interest rates by 400 to 500 basis points because inflation is slowing down, and this means that banks will earn less on loans and government bonds, but they may not be able to quickly lower the interest they pay on deposits or other debts. The cash reserve requirements are still elevated, which does not earn interest; banks can’t easily increase or expand lending investments to make up for lower returns. The implications are significant. Net interest margin, the difference between what banks earn on loans and investments and what they pay on deposits, is poised to contract. Deposit competition is intensifying as lenders fight to shore up liquidity ahead of recapitalisation deadlines, pushing up funding costs. At the same time, yields on treasury bills and bonds, long a safe and lucrative haven for banks are expected to soften in a lower-rate environment. The result is a narrowing profit cushion just as banks are being asked to carry far larger equity bases.
Compounding this challenge is the fading of FX revaluation windfalls. With the naira relatively more stable in early 2026, the non-cash gains that once flattered bank earnings have largely evaporated. What remains is the less glamorous reality of core banking operations: credit risk management, cost efficiency, and genuine loan growth in a sluggish economy. In this new environment, maintaining headline profits will be far harder, even before accounting for the dilutive impact of recapitalisation.
That dilution is another underappreciated consequence of the capital rush. Massive share issuances mean that even if banks manage to sustain absolute profit levels, earnings per share and return on equity are likely to decline. Zenith, Access, UBA, and others are dramatically increasing their share counts. The same earnings pie is now being divided among many more shareholders, making individual returns leaner than during the pre-recapitalisation boom. For investors, the optics of strong profits may soon give way to the reality of weaker per-share performance.
Yet banks have pressed ahead, not only out of regulatory necessity but also strategic calculation.
During this period of recapitalization, investors are interested in the stock market with optimism, especially about bank shares, as banks are raising fresh capital, and this makes it easier to attract investments. This has become a season for the management teams to seize the moment to raise funds at relatively attractive valuations, strengthen ownership positions, and position themselves for post-recapitalisation dominance. In several cases, major shareholders and insiders have increased their stakes, as projected in the media, signalling confidence in long-term prospects even as near-term returns face pressure.
There is also a broader structural ambition at play. Well-capitalised banks can take on larger single obligor exposures, finance infrastructure projects, expand regionally, and compete more credibly with pan-African and global peers. From this perspective, recapitalisation is not merely about compliance but about reshaping the competitive hierarchy of Nigerian banking. What will be witnessed in the industry is that those who succeed will emerge larger, fewer, and more powerful. Those that fail will be forced into consolidation, retreat, or irrelevance.
For the wider economy, the outcome is ambiguous. Stronger banks with deeper capital buffers could improve systemic stability and enhance Nigeria’s ability to fund long-term development. The point is that while merging or consolidating banks may make them safer, it can also harm the market and the economy because it will reduce competition, let a few banks dominate, and encourage them to earn easy money from bonds and fees instead of funding real businesses. The truth be told, injecting more capital into the banks without complementary reforms in credit infrastructure, risk-sharing mechanisms, and fiscal discipline, isn’t enough as the aforementioned reforms are also needed.
The rush as exposed in this period, is that the moment Nigerian banks started raising new capital, the glaring reality behind their reported profits became clearer, that profits weren’t purely from good management, while the financial industry is not as sound and strong as its headline figures. The fact that trillion-naira profit banks must return repeatedly to shareholders for fresh capital is not a sign of excess strength, but of structural imbalance.
With the deadline for banks to raise new capital coming soon, by 31 March 2026, the focus has shifted from just raising N500 billion. N200 billion or N50 billion to think about the future shape and quality of Nigeria’s financial industry, or what it will actually look like afterward. Will recapitalisation mark a turning point toward deeper intermediation, lower dependence on speculative gains, and stronger support for economic growth? Or will it simply reset the numbers while leaving underlying incentives unchanged?
The answer will define the next chapter of Nigerian banking long after the capital market roadshows have ended and the profit headlines have faded.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
Business
BUA Group, AD Ports Group and MAIR Group Launch Strategic Plan for World-Class Sugar and Agro-Logistics Hub at Khalifa Port
BUA Group, AD Ports Group and MAIR Group Sign MoU to Explore Collaboration in Sugar Refining, Agro-Industrial Development, and Integrated Global Logistics Solutions
Abu Dhabi, UAE – Monday, 16th February 2026
BUA Group, AD Ports Group, and MAIR Group of Abu Dhabi today signed a strategic Memorandum of Understanding (MoU) to explore collaboration in sugar refining, agro-industrial development, and integrated global logistics solutions. The partnership aims to create a world-class platform that strengthens regional food security, supports industrial diversification, and reinforces Abu Dhabi’s position as a hub for trade and manufacturing.
The proposed collaboration will leverage BUA Group’s industrial and logistics expertise, Khalifa Port’s world-class infrastructure, and AD Ports Group’s operational experience. The initiative aligns with the objectives of the UAE Food Security Strategy 2051, which seeks to position the UAE as a global leader in sustainable food production and resilient supply chains. It also aligns with Nigeria’s food production- and export-oriented agricultural transformation agenda, focused on scaling domestic capacity, strengthening value addition, improving post-harvest logistics, and unlocking new markets for Nigerian produce across the Middle East, Asia, and beyond.
Photo Caption: L-R: Kabiru Rabiu, Group Executive Director, BUA Group; Cpt. Mohammed J. Al Shamisi, MD/Group CEO, AD Ports Group; Saif Al Mazrouei, CEO (Ports Cluster) AD Ports Group; Abdul Samad Rabiu, Founder/Executive Chairman, BUA Group; and Steve Green, Group CFO, MAIR Group
Through structured aggregation, processing, storage, and maritime export channels, the partnership is designed to reduce supply chain inefficiencies, enhance traceability and quality standards, and also create a predictable trade corridor between West Africa and the Gulf.
BUA Group—recognised as one of Africa’s largest and most diversified conglomerates, with major investments across sugar refining, food production, flour milling, cement manufacturing, and infrastructure- brings extensive industrial expertise and large-scale operational capability to the venture. MAIR Group will provide strategic support in developing integrated logistics and agro-industrial solutions, creating a seamless platform for production, storage, and distribution.
Abdul Samad Rabiu, Founder and Chairman of BUA Group, said:
“This MoU marks an important milestone in BUA’s international expansion and reflects our long-term vision of building globally competitive industrial platforms. Together with AD Ports Group and MAIR Group, we aim to develop sustainable food production and logistics solutions that strengthen regional supply chains and support the UAE’s Food Security Strategy 2051.”
He further added that, “This partnership represents not just a commercial arrangement but a strategic food corridor anchored on shared economic ambition, resilient infrastructure, and disciplined execution, reinforcing long-term food security objectives for both nations.”
A representative of MAIR Group added:
“This collaboration underscores our commitment to advancing strategic industries in Abu Dhabi and building integrated solutions that reinforce the UAE’s position as a global hub for trade, food security, and industrial excellence.”
A spokesperson from AD Ports Group commented:
“Our partnership with BUA Group and MAIR Group highlights Khalifa Port’s role as a catalyst for high-impact industrial investments. This initiative will enhance regional food security, strengthen global trade connectivity, and support Abu Dhabi’s economic diversification goals.”
This MoU marks a historic collaboration that combines world-class infrastructure, industrial expertise, and strategic vision, setting the stage for a sustainable and resilient food and logistics ecosystem that will benefit the UAE, the region, and global markets alike.
Dollar Scarcity Eases as Elumelu Briefs Tinubu on FX Stability
By George Omagbemi Sylvester | Published by SaharaWeeklyNG
The Chairman of United Bank for Africa (UBA), Tony Elumelu, has declared that the era of acute dollar scarcity in Nigeria is effectively over, following a high-level meeting with President Bola Ahmed Tinubu in Abuja. According to Elumelu, reforms introduced by the federal government and the monetary authorities have “sorted” the foreign exchange market, restoring liquidity and improving investor confidence.
The meeting took place at the Presidential Villa in Abuja, where Elumelu briefed the President on developments within the banking and financial services sector. Speaking to State House correspondents afterward, the UBA chairman said commercial banks are no longer experiencing the severe foreign currency shortages that plagued the system throughout 2023 and early 2024. He attributed the improvement to ongoing policy adjustments and enhanced coordination between fiscal and monetary authorities.
The development marks a potentially significant turning point in Nigeria’s macroeconomic management. The country has faced persistent foreign exchange instability since mid-2023, when the government liberalised the naira and dismantled the long-standing multiple exchange rate regime. The policy shift, overseen by the Central Bank of Nigeria (CBN), initially triggered sharp currency depreciation, widened arbitrage opportunities and strained dollar supply channels.
Dollar scarcity had profound consequences. Manufacturers struggled to import raw materials, airlines complained of trapped revenues, foreign investors exited local markets, and inflation accelerated as the naira weakened. The crisis was compounded by a backlog of unmet foreign exchange obligations, which the CBN later confirmed ran into several billions of dollars.
Elumelu’s remarks suggest that recent measures (such as clearing portions of the FX backlog, tightening banking supervision and increasing transparency in currency trading platforms) are beginning to stabilise the market. Analysts note that the CBN has also introduced reforms aimed at curbing speculative activities and boosting diaspora remittances through formal channels.
“The true test of reform is liquidity and confidence,” said Professor Pat Utomi, political economist and founder of the Centre for Values in Leadership, in prior commentary on Nigeria’s economic reforms. “If market participants believe the rules are clear and consistently applied, capital will respond.” Elumelu’s optimism appears to align with that perspective, indicating that domestic banks are now able to meet legitimate foreign currency demands more efficiently.
However, economists urge caution. Dr. Bismarck Rewane, Managing Director of Financial Derivatives Company, has consistently argued that exchange rate stability requires sustained inflows, not episodic interventions. “Stability is not achieved by pronouncement,” he noted in a recent economic briefing. “It comes from productivity, exports, and credible monetary discipline.”
Indeed, while official channels may show improved liquidity, structural vulnerabilities remain. Nigeria’s foreign reserves fluctuate in response to oil price volatility, and crude oil production levels (long below OPEC quotas due to theft and infrastructure challenges) continue to influence dollar inflows. Without significant diversification of export earnings, experts warn that gains could prove fragile.
The government’s broader reform agenda also plays a central role. President Tinubu’s administration has implemented sweeping economic changes since assuming office in May 2023, including the removal of petrol subsidies and the unification of exchange rates. These policies were designed to eliminate distortions and restore fiscal sustainability, but they have also contributed to short-term inflationary pressures and social hardship.
In its 2024 Article IV consultation, the International Monetary Fund emphasized that exchange rate reforms must be accompanied by strong social protection measures and credible fiscal consolidation. “A unified and market-determined exchange rate is critical to restoring confidence,” the IMF stated, while urging authorities to protect vulnerable populations from adjustment shocks.
Elumelu’s intervention carries weight beyond symbolic reassurance. As one of Africa’s most prominent bankers and a major investor across the continent, his assessment reflects sentiment within Nigeria’s financial elite. If commercial banks indeed have improved access to foreign currency and are meeting corporate demand without severe delays, it suggests operational normalisation within the banking system.
Yet market participants will look beyond official optimism to empirical indicators: narrowing spreads between official and parallel exchange rates, declining FX forward premiums, improved foreign portfolio inflows, and rising non-oil export receipts. These metrics will ultimately determine whether the crisis has truly abated.
For now, the meeting in Abuja signals a narrative shift from emergency management to cautious stabilization. Whether this transition becomes durable depends on policy consistency, institutional credibility and Nigeria’s capacity to expand its foreign exchange earning base.
As economic historian Niall Ferguson has observed, “Confidence is the cheapest and most powerful stimulus.” The Tinubu administration appears to be banking on precisely that: restoring belief in Nigeria’s economic direction. Elumelu’s declaration that the dollar scarcity is over may be a milestone, but the sustainability of that claim will be judged not by words, but by the resilience of the market in the months ahead.
Romance Meets Real Estate: Harmony Garden Redefines Valentine Gifting Culture
By Gbolahan Adetayo
In the spirit of Valentine’s Day celebration, Harmony Garden & Estate Development Ltd has rolled out a bold campaign encouraging Nigerians to rethink traditional gifts and invest in real estate instead.
In a vibrant promotional release tagged “Your Valentine Gift, My Love,” the company delivered a striking message: “She needs a Plot of Land, Not a Bushel of Flowers.” The campaign emphasizes long-term value over fleeting gestures, reminding buyers that while flowers may fade, land appreciates and builds lasting wealth.
The Valentine-themed creative features a symbolic proposal scene set against a lush green landscape, reinforcing the idea that love and investment can go hand in hand. The message concludes with a powerful call to action: “Because flowers fade, but land builds wealth. Give love that grows roots and returns this Valentine’s.”
According to the management of Harmony Garden, the initiative is designed to promote smarter gifting culture and financial empowerment among couples and families. The company noted that investing in property for sale in Lekki, Lagos, and other fast-growing corridors has become one of the most reliable ways to secure the future.
Real estate experts say areas such as Lekki continue to witness steady appreciation due to rapid urban development, infrastructure expansion, and increasing demand for residential and commercial spaces. With rising interest in land for sale in Lekki, investors are taking advantage of flexible payment plans offered by reputable developers.
Harmony Garden & Estate Development Ltd, known for its strategic estate developments, says it aims to make land ownership accessible through customer-friendly packages and verified documentation processes. The firm also highlighted its online presence via its official platforms, making inquiries and bookings seamless for prospective buyers searching online for property for sale in Lekki, land investment in Lagos, and affordable plots in Lekki.
Industry watchers describe the Valentine campaign as a creative blend of romance and financial literacy, targeting young professionals, newlyweds, and upwardly mobile Nigerians seeking secure investment options.
With Nigeria’s housing deficit still a pressing issue and land values in prime locations steadily climbing, stakeholders believe initiatives like this could encourage more Nigerians to prioritize asset acquisition over short-term spending.
As the season of love unfolds, Harmony Garden’s message is clear: beyond chocolates and roses, the ultimate expression of love may just be a tangible asset that secures tomorrow.
For those exploring property for sale in Lekki or seeking profitable land investment opportunities in Lagos, this Valentine’s season may offer more than just romance, it may present a chance to plant roots that yield lasting returns.
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