Lower loan-loss charges lift Nigerian banks’ profits as interest earnings shrink

Lower credit impairment charges emerged as the biggest source of profit support for eight Nigerian Exchange-listed banking groups in the nine months ended September 2026, even as their combined net interest income declined.

An analysis by Nairametrics Research of the 9M 2026 financial statements of the eight banking groups shows that combined profit before tax rose 14.2% to N5.29 trillion from N4.63 trillion in the corresponding period of 2025.

However, net impairment charges fell by 48.1% to N977 billion from N1.88 trillion, a reduction of about N906 billion that exceeded the N659 billion increase in combined pre-tax profit.

The analysis covers Zenith Bank, Ecobank Transnational Incorporated, First HoldCo, Guaranty Trust Holding Company, Access Holdings, Stanbic IBTC Holdings, Wema Bank and Sterling Financial Holdings.

The reduction in credit impairment charges provided the largest collective support to profitability across the eight banking groups, although it was not the principal driver of earnings growth at every bank.

This was particularly significant because combined net interest income, the largest source of banking revenue, declined 1.8% to N7.88 trillion from N8.02 trillion.

Net fee and commission income, however, increased 13.2% to N2.26 trillion, providing another source of earnings support.

The results show that lower impairment charges can materially support earnings, but they do not automatically translate into higher profit when other income sources weaken or expenses rise.

While Zenith and Access benefited significantly from lower credit losses, First HoldCo and Stanbic IBTC relied more heavily on trading and other non-interest income. Wema Bank and Sterling Financial Holdings, by contrast, recorded stronger growth in net interest income.

These differences show that the source of earnings growth varied considerably across the eight banking groups.

The contrasting performances underline how different combinations of credit costs, interest margins, fees and trading income shaped profitability across the banking sector.

Interest income remained the largest source of revenue across the eight banking groups, increasing marginally by 0.7% to N12.83 trillion from N12.73 trillion. However, interest expenses grew faster, rising 5.1% to N4.95 trillion from N4.71 trillion.

Across the eight banks, the N906 billion reduction in impairment charges therefore became an important factor in preserving earnings as core operating income growth remained modest.

Management commentary accompanying the nine-month results also points to different sources of earnings growth, with executives emphasizing lower credit costs, diversified income and operating efficiency.

The statements suggest that bank executives remain confident about earnings resilience. However, the results show that the improvement was uneven, with lower impairments and trading income providing significant support to profitability, while rising funding costs and operating expenses continued to weigh on underlying earnings.

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