Banking
Nigerian Banks’ Earnings, NPL Risk Still Under Pressure—Moody’s
By Modupe Gbadeyanka
Renowned global credit rating company, Moody’s, has warned that the earnings and Non-Performing Loans (NPLs) of banks operating in Nigeria are still under pressure despite having outlook as an improving operating environment.
In its latest outlook for the nation’s banking sector, Moody’s said, “Nigerian banks’ profitability will nevertheless decline on account of lower yields on government securities, as well as a likely reduction in income from derivatives.”
In the report released yesterday, the rating agency said explained that outlook for the Nigerian banking system remains stable as their foreign currency liquidity risks moderate due to rising oil prices and a more liberal foreign exchange policy.
Business Post reports that the yields on Treasury bills (T-bills) have been declining in recent months as major economic indicators turn positive. The yields have dropped from over 18 percent in the last one year to 10.60 percent as at Wednesday.
Likewise, returns on Federal Government of Nigeria (FGN) Bonds have also nosedived to around 13 percent from over 14 percent previously.
Analysts explained that as the economy recovers and attracts more confidence of foreign investors, earnings on government securities drop.
This is supported by recovering global oil prices and a more liberal foreign exchange market.
However, Moody’s expects banks’ earnings to come under pressure, capital metrics to decline marginally, and asset quality to remain weak between the next 12-18 months, resulting from declining yields on government securities, the introduction of new IFRS 9 accounting standards, and increase in NPLs of the banks.
“Operating conditions for the Nigeria’s banks will continue to gradually improve over the next 12 to 18 months, but remain challenging,” the Vice President and Senior Credit Officer at Moody’s, Mr Akin Majekodunmi, disclosed at a conference in Lagos.
“Nigeria’s growth prospects remain vulnerable to global oil prices, as crude oil will remain the nation’s largest export commodity and its main generator of foreign currency for the foreseeable future,” he added.
However, Moody’s expects the pressure on the Nigerian banks’ profitability to be offset partially by a recovery in loan growth and transaction income from the expansion of digital platforms, and the ease of foreign currency shortages.
Foreign currency loans accounted for 40.7 percent of the system wide loan book at the end of the third quarter of 2017, down from 50 percent at year-end 2016.
A significant proportion, some 10 percent to 20 percent, has been dispersed to borrowers with little or no foreign currency income.
These borrowers are vulnerable to fluctuations in the naira/dollar exchange rate as a depreciation of the naira reduces their repayment capacity, Moody’s said.
Moody’s conducted a scenario analysis to gauge the solvency of banks under both a base-case and a low-probability highly stressed scenario that is roughly equivalent to a 1-in-25 year event.
“Under our base-case (or most likely) scenario, we expect the system-wide capital ratio to remain roughly stable over a two-year horizon. This is driven by an increase in loan losses, due to an increase in system-wide non-performing loans and in risk-weighted assets, driven by loan growth.
“This impact would be offset by pre-provision income leaving the capital ratio virtually unchanged at 17.0%,” Moody’s said.
In the report titled ‘Banking System Outlook: Nigeria,’ Moody’s forecasts a recovery in real Gross Domestic Product (GDP) growth over the next two years, up from 0.8 percent last year, helping lending growth rise to around 10 percent after a 15.4 percent contraction in 2017.
On the weakening of asset risk, Moody’s expects only a moderate deterioration in loan performance given the lagging effect of subdued economic growth – continued asset risk vulnerability from banks’ large exposures to the oil and gas sector and foreign currency borrowers in general capital weakening .
The banks’ capital levels are projected by the rating body to decline moderately on account of the introduction of IFRS 9. While it expects provisioning costs to be absorbed by pre-provision income.
On the stability of funding and liquidity, the Banks are projected to continue to benefit from stable deposit funding and solid liquidity buffers in local currency.
The agency also expects banking system income to be supported by both a recovery in loan growth to 10 percent over 2018 and an increase in noninterest income/transactional income through the promotion of e-banking platforms.
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says Nigeria anticipates remittances from citizens living abroad to increase by two-thirds in 2026 as it seeks to bolster its foreign-exchange reserves to $1 billion monthly.
“We are expecting that by the end of the year, we will hit about a billion Dollars a month from diaspora remittances,” he said at the 14th Annual BusinessDay CEO Forum in Lagos on Thursday, themed From Stability to Shared Prosperity.
Mr Cardoso said remittances are expected to be boosted from more than $600 million currently, banking on the CBN’s deliberate target at remittances to diversify reserve sources beyond oil earnings.
According to him, the apex bank engaged Nigerians abroad, banks and international partners to identify barriers to official remittance flows.
He said the lender subsequently reviewed policies to ensure easier movement of funds into and out of the country.
Mr Cardoso described the approach as providing free entry and free exit for foreign exchange.
He said the reforms helped double diaspora inflows within one year and exceeded initial expectations, also projecting annual remittances could reach about $8 billion if the current momentum was sustained, adding that the development reflected growing confidence in Nigeria’s financial system and foreign exchange market.
Mr Cardoso said reforms introduced by the apex bank had restored stability in the foreign exchange market and improved investors’ confidence.
He identified exchange rate unification as one of the central bank’s major achievements under the reforms programme.
According to him, replacing multiple exchange rate windows with a market-driven system eliminated distortions and improved transparency.
Mr Cardoso said improved foreign exchange liquidity and stronger reserves were among the gains from the reforms.
He said Nigeria’s net external reserves had risen from about $3 billion at the start of the reforms to above $40 billion currently, noting that gross external reserves had grown to about $52 billion, representing about 10 months of import cover.
According to him, the reserves are designed to shield the economy from external shocks and excessive market volatility.
He said the reserves were not meant for routine interventions or day-to-day exchange rate management.
By Modupe Gbadeyanka
The flagship banking subsidiary of Guaranty Trust Holding Company (GTCO) Plc, Guaranty Trust Bank (GTBank) Limited, has been announced as the winner of Nigeria’s Best Digital Bank award at the Euromoney Awards for Excellence 2026.
The lender clinched this accolade at the Euromoney Awards for Excellence 2026 ceremony, held on July 17, 2026, at The Peninsula London, England, for its outstanding performance, innovation, customer service, and leadership.
GTBank’s recognition as Nigeria’s Best Digital Bank reflects its continued leadership in digital innovation and its commitment to delivering seamless, secure, and customer-centric financial solutions.
As the banking franchise of GTCO, GTBank has consistently set industry benchmarks in digital transformation, pioneering solutions that have redefined how individuals and businesses access, manage, and experience financial services.
Over the years, GTBank has transformed the banking experience through a suite of innovative digital platforms, including the GTWORLD mobile app and solutions that provide millions of customers with seamless, secure, and convenient access to financial services.
The bank continues to strengthen its digital capabilities by introducing products and services that meet evolving customer needs while maintaining the highest standards of security, reliability, and service excellence.
This latest recognition underscores the company’s position as a market leader and reflects its sustained investment in technology, operational excellence, and innovation.
“This recognition is a testament to the legacy upon which GTBank was built and the vision that continues to guide us today.
“From inception, our goal has been to deliver on the Group’s vision to make end-to-end financial services accessible to everyone by leveraging technology to remove barriers, simplify experiences, and create meaningful value for our customers,” the chief executive of GTBank, Mrs Miriam Olusanya, stated.
“While we are honoured by this recognition, we see it as an acknowledgement of what we have achieved and a motivation to do even more.
“We remain focused on raising the bar for digital banking, investing in innovative solutions, and delivering exceptional experiences that create lasting value for our customers.
“As the financial services landscape continues to evolve, we will continue to innovate, adapt, and lead with the same commitment to excellence that has defined our franchise for decades,” she added.
The Euromoney Awards for Excellence 2026 convened leading financial institutions, industry executives, and policymakers from across the globe to celebrate excellence, innovation, and leadership in the financial services sector.
By Aduragbemi Omiyale
A collaboration to enable fast money transfers into Nigeria has been entered into between Flutterwave and Xoom, PayPal’s international digital money transfer service.
The partnership allows Xoom transfers to be converted by Flutterwave and settled locally in Naira, enabling quick transfers directly into recipients’ bank accounts at Access Bank, UBA, Zenith Bank, First Bank, GTBank, and additional participating banks across Nigeria.
The deal also enables Xoom’s global network with Flutterwave’s local payout infrastructure, allowing users globally to send funds directly into Nigerian bank accounts with improved speed and efficiency.
Nigeria is the leading remittance recipient in Sub-Saharan Africa, receiving over $20 billion in personal remittances in 2024. Despite this volume, receiving international payments has historically remained complex due to FX constraints and settlement delays. This collaboration helps address those challenges in a market of more than 232 million people, where the ICT sector is projected to contribute 21 per cent of GDP by 2027.
By combining Xoom’s expansive reach with Flutterwave’s local compliance and banking partnerships, the two companies are providing a more accessible financial corridor for the continent.
Xoom, a PayPal service, is a fast and secure international digital money transfer service that enables consumers to send money, pay bills, and reload phones for friends and family in approximately 160 markets globally.
As part of PayPal’s global payments ecosystem, Xoom leverages advanced fraud protection, compliance capabilities, and a trusted global network to help millions of customers move money quickly and securely across borders.
“We’re excited to have been chosen by Xoom for their Nigeria expansion. Millions of Nigerians rely on money from abroad to support everyday needs, whether it’s families receiving help from loved ones, freelancers getting paid for their work, or individuals earning income from the global economy. This helps make it easy and more reliable for people in Nigeria to receive funds and stay connected to opportunities beyond borders,” the chief executive of Flutterwave, Mr Olugbenga GB Agboola, stated.
