Foreign subsidiaries of Nigeria’s tier-one banks contributed 28 per cent of total after-tax profits in 2024, highlighting the importance of cross-border operations in cushioning domestic economic volatility, currency devaluation, and regulatory challenges.
In 2024, the Nigerian economy faced a tough year, accompanied by rising interest rates by the Central Bank of Nigeria (CBN) to curb the high inflation rate, BusinessDay reports.
Despite this, banks remained unfazed as they led to foreign exchange gains and substantial growth in interest income.
For example, four Tier-1 banks, Access Holding, GTCO, UBA, and Zenith Bank, saw their interest income grow by 121.6 per cent year-on-year, reaching ₦9.51 trillion in 2024.
According to BusinessDay’s analysis of four tier-one banks—Access Holdings Plc, Zenith Bank Plc, United Bank for Africa (UBA) Plc, and Guaranty Trust Holding Company (GTCO) Plc, foreign subsidiaries reported an after-tax profit of ₦1.09 trillion in 2024, an increase from ₦496 billion in 2023.
This is as foreign operation contributions grew by 110.7 per cent compared to a 45 per cent growth in domestic earnings, showing a clear divergence in momentum.
“Banks are responding to Nigeria’s economic volatility by rebalancing their exposure. Foreign subsidiaries now serve as a stabilising force,” said Amaka Ojei, a Lagos-based bank analyst.
Tesleemah Lateef, a research analyst, said that Nigerian banks’ expansion into the African market lacks a specific major driving force.
“Instead, most of these banks have it stated in their objective plan to expand to the African market as a growth initiative, not necessarily for immediate profit,” Lateef said.
According to Lateef, “The management sees the expansion as a positive step that aids in diversification.
O“By expanding, banks are not only growing but also able to diversify their operations. This diversification serves as a protective measure against shocks, which is another reason why Nigerian banks are making strides in the African market.”
