Big Banks’ FX Gains Fall to Three-Year Low as Nigeria’s Banking Sector Shifts Strategy
Nigeria’s biggest banks are seeing a sharp slowdown in foreign exchange (FX) gains, once a major source of profits, as the sector adjusts to a more stable currency environment and evolving monetary policy. For the first nine months of 2025, FX gains across leading lenders dropped to N470.1 billion, down from N562.5 billion a year earlier and a steep 55.9 percent fall from the N1.07 trillion recorded in 2023, marking the weakest performance in three years.
The slowdown has not been uniform across the sector. Access Holdings and UBA recorded significant declines of 53.4 percent and 77.4 percent respectively in FX gains, while other lenders posted contrasting results. First Holdco reported N71.6 billion, more than doubling its FX income, while Zenith Bank rebounded from a loss last year to N24.2 billion. GTCO also posted modest growth, reflecting differences in FX exposure and treasury management strategies among Nigeria’s tier-one banks.
According to Samuel Oyekanmi, research and insights lead at Abuja-based consultancy Norreberger, the uneven outcome highlights how banks manage currency risk. He noted that institutions with more favourable foreign currency exposure and active treasury positioning benefited, while more conservative or hedged balance sheets limited gains. The trend, he said, underscores the growing importance of sophisticated treasury operations as FX-driven windfalls fade.
Policy changes have played a key role in reshaping bank earnings. The Central Bank of Nigeria (CBN) has maintained its benchmark interest rate at 27 percent while adjusting its asymmetric corridor, reducing incentives for banks to park excess liquidity with the apex bank. At the same time, cooling inflation—reported at 16.1 percent in October by the National Bureau of Statistics (NBS)—and a more stable naira have reduced opportunities for FX revaluation gains that once inflated profits.
With extraordinary FX income drying up and a one-off windfall tax introduced in 2024 further eroding past gains, banks are now pivoting toward core lending and diversified non-interest revenue. BusinessDay data show customer loans across tier-one banks have continued to rise, signalling a strategic return to traditional banking activities. Analysts at Moody’s and Meristem Securities say the sector is entering a more normalised earnings environment, where sustainable growth will depend less on currency swings and more on credit expansion, fees, digital services, and disciplined balance-sheet management.
source: Business day