(MENAFN- The Arabian Post)

Major banks in Nigeria posted solid earnings in the quarter ending September 30 as elevated interest rates and assets repricing lifted income streams, though underlying risks linger. Leading the pack, United Bank for Africa Plc recorded a profit after tax of ₦537.53 billion, up 2.3 per cent from the same period last year. Gross earnings rose 3.0 per cent to ₦2.469 trillion while net interest income climbed 6.2 per cent to ₦1.172 trillion, supported by deposit growth and disciplined asset mix. Its total assets expanded by 7.2 per cent to ₦32.492 trillion and deposits rose 7.7 per cent to ₦26.54 trillion.

Also posting strong top-line growth, Zenith Bank Plc reported gross earnings of ₦3.4 trillion, a 16 per cent year-on-year increase. Interest income rose 41 per cent to ₦2.7 trillion, lifted by the high-yield interest rate environment and expansion in the investment portfolio. Non-interest income declined 38 per cent to ₦535 billion as trading gains dropped sharply. Profit before tax was ₦917 billion compared with ₦1.00 trillion in the same period last year, while profit after tax stood at ₦764 billion, down 8 per cent amid higher funding costs and credit-risk provisioning. The lender's net interest margin improved to 12 per cent from 10 per cent a year earlier.

The broader banking sector posted mixed half‐year results. The top ten banks by profitability in Nigeria achieved combined pre‐tax profits of ₦2.7 trillion for the six months ended June, down around 12 per cent compared to the same period last year. That drop was driven by rising impairment charges and slower foreign-exchange gains as the naira stabilised. Global rating agency Moody's Investors Service warned that margin pressures remain significant for Nigerian banks facing higher cost of funds and weaker trading income.

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Several factors underpin this performance. High policy interest rates in Nigeria lifted yield on cash and earning assets, benefitting banks with large loan books and deposit franchises. Asset repricing in a high-yield environment has driven core interest income. At the same time, draw-downs in foreign-exchange gains have lowered non-interest income contributions, while loan-book pressures and rising impairment costs have weighed on profitability. Banks such as Zenith have managed to expand assets moderately but experienced a 9 per cent decline in gross loans, reflecting caution on lending.

Capital adequacy and liquidity remain areas of concern. Although UBA's shareholder funds rose 25.8 per cent to ₦4.301 trillion, and its liquidity buffers remain above regulatory minimums, the industry is navigating tighter funding costs and regulatory capital requirements. The Central Bank of Nigeria has mandated that banks bolster capital ahead of March 2026 to absorb shocks from currency volatility and economic headwinds. Some smaller banks may face consolidation or licence changes if they fail to meet thresholds.

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