Zenith Bank Plc, one of Nigeria’s largest lenders by assets, reported a record post-tax profit of N311.83 billion for the first quarter of 2025, a strong 20.7 percent year-on-year growth that cements its status as one of the country’s most profitable banks.
The performance was largely driven by a sharp rise in interest income, which hit N837.6 billion, the highest quarterly figure in the bank’s history.
The bank’s performance reflects a wider trend across Nigeria’s banking industry, where lenders are extending last year’s earnings momentum into 2025, thanks to sustained high interest rates, rising government borrowing, and improved asset quality.
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Zenith’s interest income of N837.64 billion is a sharp 71.46 percent surge from the N488.7 billion posted in Q1 2024. This impressive growth in interest earnings, the money the bank makes from lending and investments in securities, powered the bank’s bottom line and accounted for nearly 90 percent of its gross earnings of N949.86 billion.
Zenith is not the only bank recording the massive growth. Other Tier-1 banks, including Access Holdings and GTCO, are also reporting double-digit profit growth in the first three months of 2025, driven largely by similar dynamics: strong loan expansion, bumper treasury bill investments, and rising customer deposits.
Zenith’s pre-tax profit rose 9.56 percent year-on-year to N350.82 billion, while its net interest income, which strips out the cost of funds, grew by a staggering 92.9 percent to N591.19 billion. This came despite a notable increase in interest expense, which climbed 35.34 percent to N246.45 billion, a reflection of the higher rates paid to attract and retain customer deposits.
Over 70 percent of interest expenses came from deposit liabilities, a consequence of the bank’s aggressive deposit mobilization in a high-rate environment. Customer deposits jumped by 35.14 percent year-on-year to N22.68 trillion, a boost of nearly N5.9 trillion in just three months.
However, even with higher funding costs, Zenith maintained robust margins. The bank’s net interest margin was supported by the efficient deployment of assets, with loans and advances to customers increasing by 16.19 percent to N10.05 trillion. Despite the rapid credit growth, impairment charges fell by 27.81 percent to N35.95 billion, pointing to an improvement in loan quality or stricter lending standards.
The balance sheet also swelled, with total assets climbing to N32.41 trillion, a 33.5 percent increase from Q1 2024. The expansion was largely driven by growth in deposits and increased investments in fixed-income securities, particularly Nigerian Treasury Bills, which Zenith ramped up by N2.68 trillion in the quarter. These instruments delivered a windfall — income from treasury bills alone jumped 113.24 percent to N328.8 billion, making up 39.23 percent of total interest income.
Zenith also earned N47.87 billion from cash balances placed with other banks, an uptick of 41 percent, though this remained the smallest of its three major interest income contributors.
In terms of non-interest income, Zenith posted only marginal gains. Overall, this segment rose just 0.98 percent year-on-year to N78.98 billion. Notably, electronic banking income dropped by 19 percent to N16.17 billion, likely due to changes in fee structures or reduced transaction volumes. But account maintenance charges rose 18.74 percent to N20.06 billion, partially offsetting the decline.
One notable outlier in the performance report is the drop in earnings per share (EPS), which fell by 7.66 percent to N7.59. The drop appears counterintuitive given the bank’s improved profitability, and is likely linked to the bank’s capital raise in late 2024 that increased the number of outstanding shares — a move aimed at bolstering its capital base amid planned expansion.
Also worth mentioning is the sharp rise in restricted deposits held with the Central Bank of Nigeria (CBN), which jumped by N2.24 trillion. This reflects the impact of the Cash Reserve Ratio (CRR) policy — a monetary tightening tool by the CBN that compels banks to leave a portion of their deposits with the regulator, limiting how much they can lend or invest.
Nonetheless, the bank retained strong liquidity. Cash and cash equivalents stood at N9.54 trillion, a 16.89 percent increase year-on-year.
Zenith’s Q1 performance continues a trend first established in 2023 when Nigerian banks began reporting windfall profits as interest rates soared and Treasury yields became more attractive. The Central Bank’s tighter monetary stance aimed at taming inflation and supporting the naira has worked to the advantage of lenders, even as other sectors grapple with high borrowing costs.
Analysts expect Zenith and its peers to continue riding this wave in the short to medium term, especially if the policy environment remains restrictive. However, they expect the longer-term outlook to depend on how banks manage credit risk as they expand their loan books amid a fragile economy.