Nigerian banks' profits surge 12-fold since Soludo's 2005 recapitalisation

Nigeria's surviving banks have experienced a remarkable 12-fold increase in profits since the pivotal 2005 banking recapitalization initiative, which was spearheaded by then-Central Bank of Nigeria Governor Chukwuma Soludo. An analysis by THE PUNCH reveals that these institutions collectively saw their profits soar to N5 trillion by the close of 2025, a dramatic rise from N43 billion in 2005.

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There has been tremendous expansion by banks in the last 20 years in terms of balance sheets, mergers, acquisitions, assets and new markets.

The 2005 reform mandated a minimum capital requirement of N25 billion, a move that triggered a wave of consolidation. This led to the number of banks shrinking from 89 to just 25 through mergers, acquisitions, and capital injections. Over the subsequent two decades, further consolidation and regulatory actions have reduced this number to approximately 13 banks that originated from the post-recapitalization era.

Among the prominent surviving institutions are Access Bank, Ecobank Nigeria, Fidelity Bank, First Bank, FCMB, Guaranty Trust Bank (GTB), Stanbic IBTC, Standard Chartered Bank Nigeria, Sterling Bank, United Bank for Africa (UBA), Wema Bank, Citibank Nigeria, and Zenith Bank. The analysis highlights substantial profit growth for many of these banks. GTB's profits climbed from N5.36 billion to N866 billion, while Zenith's increased from N7.2 billion to N1.04 trillion. UBA saw an 82-fold rise to N404.7 billion, and First Bank's profits reached N139.9 billion from N12.18 billion. Access Bank's profits jumped to N743 billion from N501 million in 2005, significantly boosted after its merger with Diamond Bank in 2018, establishing it as Nigeria's largest bank by assets.

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We have seen the mergers of Access Bank and Diamond Bank, Standard Trust Bank and UBA, Stanbic Bank and IBTC Chartered Bank, Ecobank and Oceanic Bank, FCMB and FinBank, Sterling Bank and Equitorial Trust Bank, among many others.

Experts attribute this growth to tremendous expansion in balance sheets, strategic mergers, acquisitions, asset growth, and entry into new markets. The reforms are credited with expanding balance sheets, enhancing systemic resilience, and improving banks' capacity to fund large projects and stimulate economic growth. Furthermore, the phasing out of smaller banks and the adoption of zero-tolerance policies on infractions have accelerated the deployment of robust technological infrastructure. However, concerns remain about potential downsides, such as increased concentration of power within the banking sector.

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We have seen Nigerian banks like UBA, Zenith, GTB, Fidelity and First Bank expanding to new markets. We have seen more trust by bank customers and better regulations.