Big Banks’ ₦1.45 Trillion Wage Bill Prompts Shift Toward AI Investment

Banks who jerk up wages and salaries to cushion the effects of rising inflation and the effects of subsidy removal are groaning under spiraling operating expenses, which begs for the adoption of artificial intelligence (AI) and the implementation of cost-saving measures to address profitability challenges.

“The integration of AI into banking holds the potential to enhance traditional financial services across multiple dimensions. Often, repetitive tasks at the front office can be automated through AI, leading to increased efficiency,” said Temitope Abimbola, analyst at Proshare.

“Additionally, AI can streamline the process of addressing customer inquiries, resulting in more effective interactions. Furthermore, leveraging AI in the banking and financial sector offers the prospect of reducing operational expenses, heightening the overall efficiency of financial establishments, and eradicating mundane daily tasks. This, in turn, expedites the cycle of innovation,” said Abimbola.

For instance, just 10 lenders incurred staff costs of N1.45 trillion in the first nine months of 2025, which is 29.71 percent higher than 2024’s N1.12 trillion, according to data gathered by MoneyCentral.

Total operating expenses (both staff costs plus other operating expenses) for these banks hit N4.97 trillion as at September 2025, from N4.15 trillion the previous year.

Growing cost of doing business, aggravated by the removal of subsidy on fuel that ballooned price rises, devaluation of the local currency, and intensifying competition for skilled talent in Africa’s most populous country, forced many financial institutions to expand their wage bills between 2023 and 2024.

In 2024, Nigeria’s headline inflation hovered around 33 percent, but it has significantly moderated to 16.10 percent as at October 2025, according to data from the National Bureau of Statistics (NBS).

Even as inflation is moderating on the back of a positive economic outlook buoyed by relative stability in the foreign exchange market driven by transformative reforms of the current administration, expenses such as regulatory induced costs and a reduction in profits caused by the fading of foreign exchange revaluation gains as well as the adoption of a dovish stance by the central bank means operating costs may continue to grow faster than operating income.

The average cost to income ratio of Zenith Bank, Access Holdings, Guaranty Trust Holding Company (GTCO), United Bank for Africa, and FirstHoldCo, increased to 44.64 percent as at September 2025, from 41.88 percent as at September 2024.

The cost income ratio (or efficiency ratio) measures operating costs as a percentage of operating income. The ratio, which will vary across the bank, should be as low as possible (but not so low that it compromises customer service).

Analysts are of the view that banks should intensify their cost control measures and accelerate the adoption of artificial intelligence as it appears the end of free money for lenders who had been benefitting from monetary policies to underpin earnings.

UBA Leads Nigerian Banks in AI Adoption

United Bank for Africa (UBA) plc is currently the undisputed leader among the tier-one Nigerian Banks in AI adoption, given its comprehensive integration of AI across retail and enterprise banking services.

UBA ranks first due to its proven track record of implementing a large-scale, customer-facing AI solution.

UBA is the only bank to have a named, operational AI product with documented user numbers. It pioneered an AI Banking Chatbot in Africa, Leo, in 2018, which now serves over 5 million users.

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