As the extraordinary foreign exchange gains that banks enjoyed following the harmonisation of the FX market taper off, analysts note that lenders are increasingly exploring alternative non-interest revenue channels.

This perspective comes from experts at Meristem Securities in their November 2025 edition of Banking Sector Highlights.

The harmonisation of the FX market in 2023, implemented shortly after President Bola Tinubu assumed office, led to a significant depreciation of the naira, generating substantial FX revaluation gains for banks. Subsequently, the National Assembly imposed a windfall tax through amendments to the Finance Act 2023, with six banks paying approximately N205.59bn in the 2024 financial year.

Looking ahead, Meristem Securities highlighted that as the 2025 fiscal year closes in December, the growth in banks’ gross earnings is expected to moderate as the sector fully transitions into a normalized earnings environment. Interest income will remain the primary driver of growth, supported by the still-high Monetary Policy Rate (MPR) at 27.00%.

The sector will also benefit from the expansion of the balance sheet capacity following the widening of the asymmetric corridor to +50/-450 bps from +250/-250 bps, which reduces effective borrowing costs at the Central Bank of Nigeria (CBN) and strengthens banks’ ability to extend credit to the real economy.

Meristem further noted that banks are increasingly focusing on growing non-interest income after extraordinary FX gains over the past two years. Revenue from fees, commissions, and digital services, driven by heightened demand and digitalisation, is expected to bolster this revenue stream.

By the third quarter of 2025, nine financial institutions earned about N2.81tn from account maintenance charges, collection commissions, e-business, and other fees—a 24.10% increase from N2.27tn in the same period of the previous year.

An analysis of nine-month results filed with the Nigerian Exchange Limited showed that Access Holdings recorded a slight decline in non-interest income by 2.32% YoY to N996.86bn, primarily due to FX revaluation losses of N255.40bn (-53.43% YoY). However, robust growth in other operating income (+110.31% YoY) and fees and commission income (+49.53% YoY) provided support.

Similarly, Sterling Financial Holding Company saw growth in fees and commission income (+17.12% YoY) and trading income (+78.19% YoY), offsetting FX revaluation losses of N1.88bn. At United Bank for Africa, non-interest income fell to N488.63bn from N599.11bn in 9M:2024 due to an 83.34% YoY drop in FX revaluation gains, which significantly dampened trading performance.

At Wema Bank, FX revaluation gains declined by 70.21% YoY to N4.23bn as of September 2025, contributing to a 58.03% YoY drop in other income.

Experts also assessed the impact of the CBN’s monetary policy decisions, including holding the benchmark rate at 27%. The revised asymmetric corridor sets the Standing Lending Facility at 27.50% (down from 29.50%) and the Standing Deposit Facility at 22.50%, offering banks a lower borrowing cost while still providing an attractive option for risk-free returns. The removal of the N3.00bn cap further enhances its appeal.

Despite increased liquidity capacity, lending rates to the real sector are expected to remain elevated as banks maintain the 50% loan-to-deposit ratio while managing non-performing loans. The high-interest environment is projected to sustain banks’ earnings, with strong low-cost funding supporting net interest margins. In 9M:2025, banks such as Access Holdings, Stanbic IBTC Holdings, and Zenith Bank maintained current account and savings account ratios above 60%, giving them flexibility to channel liquidity into lending or interbank placements.

Meanwhile, the CBN confirmed that 16 banks have now met recapitalisation requirements, up from 14 in the September MPC meeting.

Bismarck Rewane, Managing Director of Financial Derivatives, highlighted a shift in the banking sector during the 2025 Parthian Economic Discourse in Lagos:

"The bargaining power of the banking system is weakening. Companies like Chinese OPay and Moniepoint are taking more visibility, with advertising dominance during peak hours. The banking sector is evolving toward efficiency and client value, as clients become more sophisticated and resistant to traditional pricing increases."