business
2024: Nigeria’s Banking Sector Transformation

In 2024, Nigerian banks reported impressive profits, driven by a combination of a new recapitalisation exercise and regulatory shifts, including the dissolution of boards/management and license revocations, writes OLUWAKEMI ABIMBOLA.
The buzz surrounding the 58th Annual Bankers’ Dinner in 2023 was unmistakable when the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, revealed that banks would be required to raise fresh capital in 2024 to meet President Bola Tinubu’s $1tn economy target.
As anticipated, the banking sector’s agenda for 2024 was set, with stakeholders beginning to raise additional funds, and proactive players acknowledging their preparedness.
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The next step was to determine the new capital thresholds for different categories of banking licenses. By late March 2024, the CBN announced updated capital requirements, including the components of the capital base, available fund-raising options, and the deadline for compliance.
The CBN’s circular to commercial, merchant, and non-interest banks outlined the revised capital requirements for these banks. Citing domestic and global economic pressures, the apex bank emphasized the need to increase banks’ capital base. Specifically, commercial banks with international authorization were required to raise their capital base to N500bn, national banks to N200bn, and regional banks to N50bn. Non-interest banks with national and regional authorization were directed to raise N20bn and N10bn, respectively.
According to the circular, only the paid-up capital and share premiums on banks’ balance sheets were to be considered for this round of recapitalisation, excluding Additional Tier 1 capital.
The deadline for meeting these requirements was set for March 31, 2026, within 24 months of the announcement. The CBN also reminded banks to maintain compliance with the capital adequacy ratio (CAR) requirement applicable to their respective licenses.
A report estimated that 26 banks, including commercial, merchant, and non-interest banks, would need to raise around N4tn in the next two years. Fitch Ratings projected that the increased capital requirements could lead to mergers and acquisitions, with smaller banks potentially struggling to raise the necessary capital. This, in turn, would create a more consolidated banking sector with better economies of scale and higher long-term profitability.
So far, the merger between Unity Bank and Providus Bank has been announced, and CBN approved a N700bn loan to support the newly formed entity. The financial support aims to strengthen the stability of Nigeria’s banking system and mitigate potential systemic risks.
Since the recapitalisation process began, Nigerian banks have raised about N1.7tn from the capital market. According to the Securities and Exchange Commission (SEC), banks have successfully raised N1.7tn via rights issues and public offers, facilitated by the NGX’s E-offering platform.
Among the banks that raised funds include Fidelity Bank, Zenith Bank, Sterling Financial Holding Company, FCMB Group, Guaranty Trust Holding, and Access Holdings. These banks utilized a mix of rights issues and public offerings. Both FBN Holdings and United Bank for Africa (UBA) completed their rights issues, while Stanbic IBTC Holdings is expected to enter the market soon.
Notably, Access Holdings raised N351bn through a rights issue, making Access Bank the first bank to meet the CBN’s N500bn minimum capital requirement for banks with international authorization, well ahead of the March 2026 deadline. Access Bank’s share capital now stands at N600bn, exceeding the regulatory minimum by N100bn.
FCMB Group raised N147.51bn through its share allotment in December 2024, while Sterling Financial HoldCo raised an additional N75bn via private placement.
However, concerns have arisen regarding the slow pace of the CBN’s share verification process, which some market observers feel may deter other banks from approaching the market for capital raising. Investment banker Tajudeen Olayinka pointed out that delays in share allotment could lead to investor apathy and dissuade foreign investors.
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Charles Sanni, CEO of Cowry Treasurers Limited, emphasized the need for quicker capital verification to prevent further delays in the capital raising process, which could hinder banks’ ability to access funds for working capital.
As 2025 marks the full year for recapitalisation, more banks are expected to enter the market or return for further capital raising, keeping recapitalisation a key issue in the sector.
Bumper Profits Amidst Regulatory Challenges
Despite the ongoing recapitalisation efforts, Nigerian banks experienced robust profits, largely driven by successive interest rate hikes and the monetary policy rate increases. Six major banks—Zenith Bank Plc, Guaranty Trust Holding Company Plc, Access Holdings Plc, United Bank for Africa Plc, FBN Holdings Plc, and Ecobank Transnational Incorporated—recorded a combined profit before tax of N4.15tn for the first nine months of 2024. This marked a 100% increase from N1.97tn in the same period in the previous year.
Their profit after tax also surged to N3.91tn, reflecting a 104% growth compared to N1.92tn in 2023.
Since the start of 2024, the Monetary Policy Committee (MPC) of the CBN has consistently raised the benchmark interest rate to tackle inflation and stabilize prices. In November 2024, the MPC increased the benchmark rate by 25 basis points to 27.50%, marking the sixth consecutive rate hike of the year.
While the real sector struggled under the weight of these interest rate hikes, banks benefitted significantly. However, the Federal Government proposed a windfall tax targeting banks’ foreign exchange profits, which was incorporated into the revised 2023 Finance Bill and extended through 2025. This new tax measure came after the CBN barred banks from distributing dividends derived from foreign currency gains.
Regulatory Actions and Shocks
The year 2024 also saw significant regulatory moves by the CBN, signaling a new era of stricter oversight. In January 2024, the CBN dissolved the boards and management of Union Bank, Keystone Bank, and Polaris Bank for non-compliance with banking regulations and corporate governance failures.
The CBN acted swiftly, appointing new executive directors to oversee the banks. Additionally, the CBN revoked the license of Heritage Bank in June 2024, appointing the Nigeria Deposit Insurance Corporation (NDIC) as the liquidator. This move demonstrated the CBN’s willingness to let underperforming banks fail to maintain financial stability.
Outlook for 2025 and Beyond
As recapitalisation continues, analysts at Afrinvest predict that the banking sector’s performance in 2025 will be critical for the broader economic landscape, particularly regarding financial inclusion, credit access, and diversification beyond oil.
While the recapitalisation exercise may lead to mergers, acquisitions, and potential job losses, analysts remain optimistic that it will result in a more resilient banking industry. However, continued foreign exchange and inflation pressures may affect the dollar value of the capital raised by banks, complicating the sector’s long-term outlook.