Banks Explore New Revenue Channels as FX Gains Decline
As foreign exchange gains that banks enjoyed in recent years begin to fade, lenders in Nigeria are now looking for new ways to generate revenue beyond traditional interest income. Experts at Meristem Securities highlighted this trend in their November 2025 Banking Sector Highlights.
The gains originally came after President Bola Tinubu harmonised segments of the foreign exchange market in 2023, which led to a sharp depreciation of the naira. Banks benefited greatly from FX revaluation gains during this period. However, following the National Assembly’s windfall tax imposed through the Finance Act 2023, six banks paid about N205.59 billion in 2024, reducing the overall benefit.
Meristem Securities explained that as 2025 comes to a close, banks’ earnings growth is expected to normalise. While interest income will remain strong due to the high Monetary Policy Rate (MPR) at 27 percent, banks are focusing more on non-interest revenue sources, such as fees, commissions, and digital services. These areas have shown strong growth in recent periods and are increasingly important for overall profitability.
Nine banks reported earning about N2.81 trillion from account maintenance charges, collection commissions, e-business, and other fees by the third quarter of 2025. This represents a 24 percent increase from the same period in 2024. Access Holdings saw a small decline in non-interest income due to FX losses, but other operating income and fees grew significantly, supporting overall earnings.
Sterling Financial Holding Company also reported gains in fees, commissions, and trading income that offset FX revaluation losses. United Bank for Africa, however, saw a drop in non-interest income due to a decline in FX gains, which also affected its trading performance. Wema Bank experienced a similar dip in other income due to falling FX revaluation gains.
The Central Bank of Nigeria’s recent monetary policy decisions, including maintaining the benchmark rate at 27 percent and revising the asymmetric corridor, are expected to lower borrowing costs for banks. This allows them to expand lending capacity and channel funds more effectively, though loan rates to customers are unlikely to decrease significantly. Banks continue to rely on low-cost funding from current and savings accounts, which provides flexibility for lending and investment.
Industry experts warn that the banking sector is transforming. Bismarck Rewane, Managing Director of Financial Derivatives, noted that digital payment platforms like OPay and Moniepoint are challenging traditional banks, highlighting the need for banks to improve efficiency and focus on client value. The shift reflects growing competition and evolving consumer preferences, which demand faster and more reliable financial services.
Overall, banks in Nigeria are actively seeking new revenue channels to adapt to a changing market, focusing on non-interest income, digital innovation, and improved customer service. This strategy is expected to help them maintain profitability in a more normalised FX environment while preparing for future growth.
