Nigerian Banks are scrambling to create new non-interest revenue streams as the massive foreign exchange gains they enjoyed after the FX market harmonisation fade away. Analysts at Meristem Securities drew this conclusion in their November 2025 Banking Sector Highlights, noting that lenders now face a very different earnings landscape.
When President Bola Tinubu harmonised the FX market in 2023, the naira depreciated sharply. That crash handed banks huge FX revaluation gains, pushing their profits to unusual highs. The National Assembly quickly responded by imposing a windfall tax through the amended Finance Act 2023. Six major banks eventually paid about N205.59bn in windfall taxes in the 2024 financial year.
Meristem believes 2025 will end with banks adjusting fully to a more normal earnings environment. The firm expects banks’ gross earnings to grow at a slower pace, driven mainly by interest income. With the Monetary Policy Rate still at 27 per cent and the widened asymmetric corridor now at +50/–450 basis points, banks can borrow more cheaply from the CBN. This gives them room to expand their balance sheets and lend more to the real sector.
The analysts pointed out that banks are aggressively pushing to grow non-interest income now that the FX windfall era has ended. They said more banks are strengthening fee-based activities, using digitalisation and customer demand to expand revenue from commissions, payments, collections, e-business, and other non-lending channels.
By the end of the third quarter of 2025, nine banks had earned about N2.81tn from account maintenance charges, collections, e-business, and other fees—up from N2.27tn in the same period of 2024, a 24.10 per cent jump.
Access Holdings’ results reflected the broader pattern. Its non-interest income dipped by 2.32 per cent year-on-year to N996.86bn, dragged down by a 53.43 per cent fall in FX revaluation gains. Despite that setback, the bank saw sharp growth in fees and commissions (+49.53 per cent YoY) and other operating income (+110.31 per cent), as it doubled down on its core banking activities.
Sterling Financial Holding Company recorded similar trends. Its earnings from fees and commissions grew by 17.12 per cent, while trading income surged by 78.19 per cent year-on-year. These gains outweighed its N1.88bn FX revaluation loss. At UBA, however, non-interest income fell to N488.63bn from N599.11bn, mainly because FX revaluation gains plunged by 83.34 per cent. That drop hit trading income hard, pushing it down by 77.34 per cent and wiping out the FX-driven boost the bank enjoyed the previous year.
Wema Bank also felt the pressure. As of September 2025, its FX revaluation gain had fallen by 70.21 per cent to N4.23bn, dragging other income down by 58.03 per cent year-on-year.
Meristem analysed the decisions of the Monetary Policy Committee and explained how the new interest-rate corridor is shaping bank behavior. With the Standing Lending Facility now at 27.50 per cent—down from 29.50 per cent—banks can borrow more cheaply from the CBN. The Standing Deposit Facility now sits at 22.50 per cent, which reduces the incentive to park idle funds but still offers a return higher than most fixed-income yields, which hover around 16 per cent. The removal of the N3bn cap on the SDF makes it even more attractive, especially for banks that want to earn risk-free income.
Even with the increase in liquidity, Meristem does not expect banks to cut lending rates significantly. Banks must still meet the 50 per cent loan-to-deposit ratio while keeping non-performing loans under control. They also need to protect their interest margins. The analysts highlighted banks like Access Holdings, Stanbic IBTC, and Zenith Bank, which maintained current and savings account ratios of over 60 per cent. This low-cost funding base gives them strong protection against yield pressure and more flexibility to lend or place funds in the interbank market.
Meanwhile, the CBN confirmed that 16 banks have now met the recapitalisation requirements, an improvement from 14 banks at the MPC meeting in September.
At the 2025 Parthian Economic Discourse in Lagos, Financial Derivatives Managing Director Bismarck Rewane warned that the banking sector is undergoing a major shift. He explained that the bargaining power of traditional banks is weakening as fintechs gain ground. He pointed to brands like OPay, Moniepoint, MoMo, and MTN, which now dominate prime-time advertising slots. He said this visibility reflects the scale of money flowing into fintech and the size of the opportunities ahead.
Rewane argued that nothing about the shift is accidental. He said the banking system has long depended on “rent” activities such as allocation and round-tripping, similar to the inefficiencies in the petroleum downstream industry. According to him, the new era will focus on efficiency, value creation, and responding to increasingly sophisticated customers who resist price hikes and expect better service.
With FX gains gone, competition rising, and fintechs reshaping customer expectations, the sector now stands at a crossroads. Banks must innovate or risk losing relevance—a reality analysts say will define the next phase of Nigeria’s financial landscape.
