Transcorp Power Plc (formerly Transcorp Power Limited) delivered a powerful first-quarter performance in 2025, reporting a pre-tax profit of N43.283 billion — a 50.43% rise from N28.772 billion in Q1 2024. Profit after tax soared even higher, climbing 62% to N32.637 billion.

The strong results reflect not just Transcorp Power’s operational efficiency, but also broader tailwinds across Nigeria’s electricity market, following the introduction of the Band A tariff regime last year.

The Band A tariff system came into effect in 2024 to allow power distribution companies (DisCos) and generating companies (GenCos) to charge premium rates for customers enjoying a minimum of 20 hours of electricity supply per day.

Transcorp Power, one of Nigeria’s largest power generators, has clearly been a major beneficiary of these reforms. The company’s Q1 2025 revenue surged to N105.442 billion, up 55.38% from N67.862 billion in the corresponding period last year. This quarterly revenue already represents 34.5% of its full-year 2024 revenue, setting a strong pace for 2025.

Energy delivery remained the backbone of Transcorp’s revenue mix, contributing 73% of turnover. Importantly, international market revenue climbed from 18% to 26.82%, suggesting Transcorp Power is not just riding domestic tariff improvements but also strategically expanding its footprint outside Nigeria.

Margins Stay Strong Despite Rising Costs

Cost of sales grew by 52.38% year-on-year to N50.412 billion, largely driven by higher natural gas and fuel costs — which together make up 91% of production expenses. Nevertheless, this cost increase was outpaced by revenue growth, lifting gross profit to N55.031 billion, a 58.23% increase. The gross margin stood firmly at 52%, highlighting Transcorp’s ability to protect profitability even amid higher input costs.

Administrative expenses rose sharply by 74.14% year-on-year to N7.453 billion, reflecting wage increases, inflationary pressures, and expansion costs. Still, the company maintained a healthy operating profit margin of 42%, despite a slight compression of about 2.5 percentage points.

Meanwhile, net finance costs rose moderately by 15.26% to N1.012 billion, demonstrating effective debt management in a high-interest environment.

Earnings and Balance Sheet Strength

Transcorp Power’s earnings per share (EPS) rose to N4.35 — up 61.71% year-on-year — already surpassing 40% of its full-year 2024 EPS. This trajectory reinforces expectations of record earnings for the full year, buoyed by higher tariffs and stronger collections across the power industry.

The company’s balance sheet expanded by 13% to N447 billion within the first quarter alone. Trade and other receivables still account for about 79.8% of total assets, a lingering structural challenge typical in Nigeria’s power sector where payment bottlenecks persist, despite improving collections.

Market Response and Sector Outlook

On the stock market, Transcorp Power has posted a year-to-date gain of 1.39% in 2025, after closing 2024 with a strong 36.33% full-year gain that lifted its market capitalization to N2.7 trillion.

Analysts suggest that investor sentiment is still cautious, pending broader reforms in the sector, but that Transcorp’s fundamentals are pointing towards sustained profitability. The ongoing implementation of the Band A tariff structure and improving sector liquidity could catalyze a market rerating in the months ahead.

The Band A reform, aimed at improving cost recovery and encouraging investment in the sector, is expected to yield more results for the sector players. Earlier this month, Nigeria’s Minister of Power announced that the electricity sector generated a record N700 billion in revenue in 2024 — a figure that stands as the highest annual collection in the sector’s history. This represents a major improvement from the chronic liquidity crises that have plagued the industry for years.

If the broader policy framework holds, and the Band A tariff regime continues, Transcorp Power could be entering a period of accelerated and sustained growth, much to the delight of its investors.

United Bank for Africa Plc (UBA) has announced plans to raise N144.8 billion ($90.2 million) in additional capital this year as part of its strategy to meet the Central Bank of Nigeria’s new recapitalization requirements and drive expansion into new international markets.

This latest capital raise comes on the heels of an N240 billion rights issue concluded earlier this year, which, together with the new funds, is expected to lift UBA’s paid-up capital above the N500 billion minimum now required for banks with international licenses. The bank’s Group Managing Director and CEO, Oliver Alawuba, said in a statement that the new capital would be “duly invested in additional technologies and business growth initiatives across Nigeria, Africa, and the globe.” He added that UBA was preparing to extend its footprint further by opening operations in France and Saudi Arabia, complementing its existing presence in 24 countries.

The push by UBA is part of a wider shake-up across Nigeria’s banking sector following the Central Bank’s announcement of a major recapitalization directive in March 2024. Under the new rules, banks were given two years, until March 31, 2026, to shore up their minimum paid-up share capital. For international banks, like UBA, the bar was set significantly higher at N500 billion, compared to the previous N50 billion.

The CBN said the tougher requirements were necessary to fortify Nigeria’s financial system against persistent economic headwinds, including high inflation, sluggish economic growth, and the naira’s steep devaluation following the 2023 currency reforms. Those reforms, which saw the unification of Nigeria’s multiple exchange rates and a sharp fall in the naira’s value, had exposed banks to significant foreign exchange risks and impacted their capital adequacy ratios. The regulator stressed that stronger capital buffers would enable banks to better absorb future shocks and continue lending to the real economy.

UBA’s drive to raise fresh capital mirrors similar moves by other top-tier Nigerian banks scrambling to comply with the new thresholds. Access Holdings Plc, the country’s largest lender by assets, announced last week that it had successfully raised N351 billion through a rights issue, making it the first of the Tier-1 banks to comfortably surpass the N500 billion benchmark. Access said its recapitalization leaves it well-positioned for further regional and global expansion.

Zenith Bank also confirmed it had concluded its capital-raising program, securing approximately N350.4 billion through a combination of rights and public offerings, boosting its paid-up capital to N614.6 billion — well above the minimum requirement.

Guaranty Trust Holding Company Plc (GTCO) adopted a phased approach, securing N209.4 billion in a first-round public offer earlier this year, with plans to launch a second phase targeting foreign institutional investors to complete its capital-raising drive before the deadline. GTCO’s management emphasized that the two-stage fundraising was aimed at not just meeting the regulatory mandate but also diversifying its investor base for long-term stability.

FBN Holdings, the parent company of First Bank of Nigeria, also rolled out an ambitious recapitalization plan. The group raised N150 billion through a rights issue in late 2023 and is seeking shareholder approval to raise an additional N350 billion. If successful, it would take FBN Holdings’ capital base to over N730 billion, giving it a sizable buffer above the regulatory minimum and additional firepower to finance technology upgrades, lending, and international expansion.

The 2024 recapitalization exercise is the second major sector-wide drive since the historic 2004 banking consolidation under former CBN governor Charles Soludo, which reduced the number of banks from 89 to 25 and created a stronger banking landscape. However, this latest round comes against a far more turbulent backdrop of macroeconomic instability.

Banks are under pressure not just to raise fresh capital but also to navigate a tough operating environment characterized by spiraling inflation, rising borrowing costs, and weakened consumer spending. In addition, the aftershocks of the 2023 currency liberalization — including heavy foreign exchange losses and a backlog of unsettled FX obligations, have further complicated the financial outlook for the sector.

Despite these challenges, industry analysts say well-capitalized banks will be better positioned to withstand economic shocks, finance critical sectors like infrastructure and agriculture, and support Nigeria’s ambition to achieve sustained economic growth.

UBA’s aggressive move to strengthen its balance sheet and expand into new territories reflects the broader shift among Nigerian lenders aiming not just to meet regulatory mandates but to seize new growth opportunities across Africa, the Middle East, and beyond.