Eight Nigerian banks increased their holdings in investment securities to N41.78tn in the first quarter of 2025, a 1.65% rise from December 2024, as they prioritize profit-driven ventures over lending

[dropcap]A[/dropcap] recent report by The PUNCH reveals that eight major Nigerian banks significantly increased their investments in securities, reaching a combined total of N41.78tn in the first quarter of 2025.

Also read: Zenith Bank shareholders approve ₦195.67bn dividend at 34th AGM, applaud record-breaking 2024 results

This represents a notable increase from the N41.10tn recorded at the end of December 2024, marking a growth of approximately 1.65 per cent over the three-month period.

The analysis is based on the consolidated and separate financial statements of leading financial institutions including Ecobank, Guaranty Trust Holding Company (GTCO), Zenith Bank, Wema Bank, Access Holdings, First HoldCo, FCMB Group, and United Bank for Africa (UBA).

Investment securities, which encompass financial assets acquired by banks primarily for generating returns or meeting regulatory requirements rather than for active trading, saw varying levels of increase across the analyzed banks.

United Bank for Africa held the largest share with N13.13tn in investment securities by the end of March 2025, up from N12.53tn in December 2024.

Ecobank also reported an increase, holding N11.01tn in investment securities as of March 31, 2025, compared to N10.68tn at the end of the previous year.

GTCO’s investment securities rose to N4.62tn in March 2025 from N4.15tn in December 2024. Wema Bank’s holdings increased to N1.05tn from N900.2bn.

Zenith Bank reported a marginal increase to N5.11tn in March 2025 from N5.10tn in December 2024.

However, not all banks followed this upward trend. First HoldCo reported a decline in investment securities to N5.68tn in Q1 2025, down from N6.54tn at the end of 2024.

Access Holdings also saw a slight decrease to N10.79bn in March from N11.34bn in December, and FCMB Group’s holdings marginally decreased to N1.18tn in March from N1.19tn in December.

“What this means is that banks have clearly told us that they are profit-making organisations, and they will always go where the money is,” said economist Vincent Nwani.

Commenting on this trend, economist and investment specialist Vincent Nwani noted that Nigerian banks are increasingly prioritizing profit-driven ventures, even though their primary mandate is to lend to the real economy.

He stated, “What this means is that banks have clearly told us that they are profit-making organisations, and they will always go where the money is.

Even though banks were created to lend, they are now more focused on seeking returns. These days, it is fees and treasury instruments that give banks money, not interest from loans.”

Nwani added that banks are increasingly shifting away from lending, opting for low-risk instruments like bonds, treasury bills, and commercial papers that offer guaranteed returns.

Chief Economist and Managing Editor of Proshare, Teslim Shitta-Bey, attributed this preference to the high coupon rates on government securities, which have become more attractive than lending to the private sector due to their low risk of default.

He also noted that despite the CBN’s high cash reserve ratio, banks are managing their liquidity prudently, with some recapitalization funds potentially flowing into commercial papers.

Also read: Nigerian banks raise transaction alert fee to N6

Shitta-Bey concluded that this trend of banks expanding balance sheet operations while reducing high-risk lending will likely result in a continued slow growth of credit to the private sector.