— Zenith, UBA, First HoldCo top list as provisions reflect rising credit risks
Eight leading Nigerian banks recorded a combined ₦156 billion in impairment charges on credit and financial assets in the first quarter of 2025, reflecting a cautious approach to growing economic uncertainties.
The figure, obtained from the banks’ unaudited financial statements filed with the Nigerian Exchange Limited and analysed by The PUNCH, represents a 5.2 per cent decline from the ₦164.53 billion reported during the same period in 2024. Impairment charges, often referred to as loan or credit losses, are provisions made by banks to cover potential defaults and deterioration in the value of financial assets.
The Q1 2025 numbers highlight the ongoing impact of Nigeria’s volatile macroeconomic landscape—characterised by high inflation, a depreciating naira, and constrained liquidity—on the country’s financial institutions.
Zenith Bank Leads in Provisions
Zenith Bank posted the highest impairment charge among the eight banks, with ₦49.38 billion for the quarter ending March 31, 2025. This marked an 11.8 per cent drop from the ₦55.97 billion it reported in the same period of 2024. The reduction was attributed to improved asset quality and more aggressive loan recovery strategies. Despite the high provisioning, Zenith reported a profit after tax of ₦311.83 billion, a 20.7 per cent year-on-year increase.
First HoldCo followed with ₦37.25 billion in provisions, down by 11.2 per cent from ₦41.93 billion in Q1 2024. Most of the impairment stemmed from provisions on customer loans. However, the group’s profit after tax dropped to ₦171.10 billion from ₦208.11 billion a year earlier.
Access Holdings reported an impairment charge of ₦21.77 billion, representing a 4.5 per cent decline from the ₦22.79 billion recorded in Q1 2024. The bank attributed the improvement to better credit monitoring and fewer charges on investment securities. Its profit after tax rose 14.7 per cent to ₦182.75 billion.
Guaranty Trust Holding Company (GTCO) declared an impairment charge of ₦13.42 billion, slightly lower than the ₦13.49 billion posted in Q1 2024. Most of the charge stemmed from Stage 3 (credit-impaired) loans. Despite the relatively stable impairments, GTCO’s profit dropped significantly by 43.6 per cent, falling to ₦258.03 billion from ₦457.02 billion.
United Bank for Africa (UBA) saw the sharpest increase in impairment charges, rising by 332.2 per cent to ₦14.18 billion from ₦3.28 billion in the previous year. The rise was attributed to increased provisions on customer loans and investment securities. Nonetheless, UBA’s profit after tax rose to ₦189.84 billion, a 33.1 per cent increase from ₦142.58 billion in Q1 2024.
First City Monument Bank (FCMB) recorded a significant 59.9 per cent decline in impairment charges, posting ₦9.52 billion compared to ₦23.71 billion in Q1 2024. The drop was driven by recoveries on previously written-off loans. The bank’s profit rose to ₦32.23 billion from ₦28.77 billion.
Fidelity Bank reported an impairment charge of ₦8.66 billion, up sharply by 285.8 per cent from ₦2.25 billion in the previous year, citing broader asset write-downs during the quarter.
Wema Bank posted ₦1.82 billion in impairment charges, marking a 64.7 per cent increase from ₦1.10 billion in Q1 2024. The rise was linked to higher provisions on loans, investment securities, and other financial assets.
Sector Insight
Speaking on the development, Chief Executive Officer of Cowry Treasurers Limited, Charles Sanni, said the figures reflect each bank’s appetite for risk and the strength of their internal credit control frameworks.
“Some banks are deliberately aggressive in writing off non-performing loans—what I call biting the bullet,” he said. “It often signals stronger credit monitoring and a willingness to clean up loan books early.”
Sanni explained that as interest rates began to rise in 2024, proactive banks shifted focus to sectors more sensitive to rate changes, such as manufacturing and oil and gas, where borrowers tend to be highly leveraged.
He added that early recovery efforts and strategies like loan securitisation could help reduce impairment costs, but banks prioritising revenue growth over asset quality may risk less sustainable earnings.
“Loan volumes have increased due to inflationary pressures. While this supports earnings in the short term, banks must strike a balance between growth and risk exposure,” he noted.
Outlook
While the overall impairment charges showed a modest decline, individual bank performances varied significantly. Analysts say this divergence underscores the uneven impact of macroeconomic instability on the sector, and the different strategies banks are employing to manage credit risk.
As Nigeria’s economy continues to face inflationary and currency-related headwinds, how banks manage their loan portfolios in the coming quarters will be key to maintaining profitability and investor confidence.
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