Foreign exchange (FX) gains, once a major source of profits for Nigeria’s top banks, have dropped sharply, signaling a major shift in the banking sector. Analysts say this decline reflects a move away from relying on currency volatility toward traditional lending and core banking operations.
In the first nine months of 2025, Nigeria’s tier-one banks reported total FX gains of ₦470.1 billion, down from ₦562.5 billion in the same period last year, and a 56% drop from ₦1.07 trillion in 2023. The impact varied among banks: Access Holdings and UBA saw FX income fall by 53% and 77% respectively, while First Bank posted a 132% increase to ₦71.6 billion. Zenith Bank bounced back from a loss to gain ₦24.2 billion, a remarkable 1,517% jump, and GTCO’s FX gains rose 28% to ₦77.2 billion.
Experts point to policy changes as a key driver of the decline. In July 2024, the government introduced a one-off 50% windfall tax on FX profits earned in 2023, wiping out a significant portion of the extraordinary earnings banks recorded after the naira’s 37% devaluation in June 2023. Moody’s described the tax as “credit negative,” especially for banks operating near minimum capital requirements, forcing lenders to adjust their strategies.
By 2025, FX gains have largely disappeared due to stabilizing currency markets. The naira, which started the year at ₦1,660/$1, closed at ₦1,450.42/$1 in December, narrowing the potential for valuation gains. Combined with a stable Monetary Policy Rate of 27% and adjustments to the CBN lending corridor, banks are now incentivized to lend more to businesses and individuals rather than rely on parked funds or FX windfalls.
With FX profits fading, banks are refocusing on core lending. Customer loans across tier-one banks rose 2% year-on-year to ₦41.3 trillion, and were 5% higher than full-year 2024 levels. Analysts like Samuel Oyekanmi of Norreberger note that sophisticated treasury management and risk strategy are increasingly important. “FX gains are largely short-term, but banks with favorable currency exposures and active treasury operations gain a clear competitive edge,” he said, highlighting a new era of strategic banking in Nigeria.
source: The Sun