Nigerian Banks Lead Africa in Rising Interest Income Within Emerging Markets – Report

Nigerian banks are playing a crucial role in driving an interest income surge that has positioned Africa at the forefront of growth among emerging markets for the first half of 2025, according to a recent report by Fitch.

The average net interest margin (NIM), which reflects the gap between interest earned on loans and interest paid to depositors, was noted to exceed that of all emerging markets combined during this period, as highlighted in Fitch's 'Emerging Markets Largest Monitor Banks Monitor' report released on Tuesday.

The report stated, "Net interest margins (NIMs) for EM banks generally remained stable at 4.2% in the first half of 2025."

It further explained, "Although average NIMs slightly declined in various regions, they climbed for African banks to 6.2%, up from 5.7% in 2024, primarily attributed to Nigerian banks."

Despite European institutions reporting the highest loan growth at 31%, Africa's net interest margin surpassed its emerging market counterparts, emphasizing the considerable influence of generally elevated policy rates across the continent on banking revenues.

As of the conclusion of the first half of last year, Nigeria's benchmark interest rate stood at 27.5%, following six successive rate hikes throughout 2024 amounting to a total increase of 875 basis points.

This stringent policy approach created a lucrative environment for lenders, allowing them the flexibility to charge higher interest rates on loans, although it also compelled numerous businesses to resort to borrowing under these steep rates, thereby rapidly inflating their financing costs.

The five leading banking institutions in Nigeria reported an average net interest income growth of 59.8% compared to the previous year, as per calculations made from their earnings reports by PREMIUM TIMES.

In detail, Access Holdings experienced a remarkable 91.8% increase in net interest income, followed by Zenith Bank at 89.5%, First HoldCo at 75.7%, Guaranty Trust Holding Company at 28.6%, and United Bank for Africa at 14.6%.

In the latter half of 2025, monetary authorities in Nigeria opted for a modest interest rate reduction of 0.5 percentage points and have indicated a willingness to adopt gradual easing this year to foster economic growth in response to declining inflation.

During its first meeting this year, the Central Bank of Nigeria decided to lower the reference rate by 0.5% to 26.5%, aiming to strike a balance between promoting growth and maintaining price stability.