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The high inflationary environment has been a boon for banks who are making money from short term investment securities which is one of the major drivers of earnings.
Zenith Bank, Access Holdings, United Bank for Africa, Guaranty Trust Holdings Plc or “GTCO”, FirsHoldco, Stanbic IBTC Holdings, Sterling Bank, all collectively realised N5.05 trillion income from investment securities in the first nine months of 2025, which is 42.28 percent higher than 2024’s N3.55 trillion, according to data gathered by MoneyCentral.
Earnings from investment securities are set to go down while the effective tax rate for banks rise as the relevant tax authority imposed 10 percent tax on income from government securities as it seeks to bolster tax revenue needed to fund infrastructure projects and welfare.
Nigeria’s tax agency the Federal Inland Revenue Service (FIRS) has directed banks, stockbrokers and other financial institutions to deduct a 10% withholding tax on interest earned from investments in short-term securities.
Prior to this directive short-term bills were tax-exempt to boost return for investors. The new directive requires tax to be deducted at the point of payment on instruments such as treasury bills, corporate bonds, promissory notes, and bills of exchange.
Yield hunters had put their money in short term government bonds when yields were high as banks have always been ingenious enough to take advantage of monetary policy.
The yield on Nigeria 10 year bond yield held steady at 15.58 percent on October 30, 2025. Over the past month, the yield has fallen by 0.63 points and is 5.21 points lower than a year ago, according to over-the-counter interbank yield quotes for this government bond maturity.
However, yields could drop further if the continuous fall in inflation spurs the central bank to cling to a dovish policy.
The Monetary Policy Committee (MPC) of the apex bank cut the Monetary Policy Rate (MPR) by 50 basis points to 27 percent from 27.5 percent.
Nigeria’s annual inflation rate eased for the sixth month to 18.02 percent in September 2025, marking the softest reading since May 2022.
Zenith Bank realised N1.14 trillion from income from short term government securities, which is 55.49 percent higher than 2024’s N734.14 billion.
Access Bank made N1.13 trillion income from investment securities as at September 2025, which is 36 percent higher than 2024’s N838.14 billion.
GTCO realised N547.77 billion income from government bonds, which is 45.68 percent higher than 2024’s N376 billion.
United Bank for Africa income from short term government securities ws up 29.77 percent to N973.12 billion the period under review from N750.48 billion the previous year.
FirstHoldco income from investment securities increased by 33.70 percent to N720.15 billion in September 2025 from N538.59 billion as at September 2024.
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