Nigerian banks have experienced a significant 145 percent increase in investment securities over the first nine months of 2024, driven by rising yields on bonds and other fixed-income assets. Major financial institutions such as Ecobank, Access Holdings, and Zenith Bank collectively realized N40.9 trillion in investment securities during this period, up from N16.7 trillion in 2023. This surge has been supported by Nigeria’s tight monetary policy, which has led to elevated yields in the fixed-income market, as the central bank combats inflation and exchange rate volatility with a current monetary policy rate of 27.25 percent.
The devaluation of the naira has been a contributing factor to this growth, allowing banks with foreign currency-denominated securities, like Eurobonds, to benefit from revaluation gains. Analysts note that banks are also shifting their assets towards investment securities, which are seen as lower risk compared to loans. This shift has supported net interest income, providing a more stable earnings base in a challenging economic climate. Leading banks, including FBN Holdings and GTCO, have reported substantial growth in investment income, with FBN Holdings achieving the highest growth rate of 316 percent.
Further analysis shows that Ecobank, Access Holdings, and UBA hold the largest investment portfolios. Banks are capitalizing on the high-yield environment to grow earnings, supported by ongoing monetary policies that increase fixed-income returns. In the context of inflationary pressures and a volatile exchange rate, banks are prioritizing these lower-risk assets, reflecting a strategic pivot within Nigeria’s financial landscape.
