NIGERIA’S banking sector recorded a strong 39.6 per cent year-on-year growth in 2024, with total assets rising to N170.02 trillion from N121.8 trillion in 2023. This remarkable expansion was fueled by surging remittance inflows, the widespread adoption of digital financial services, and broader sector reforms, according to the State of Enterprise (SOE) Report 2025.

Despite economic pressures—including high inflation and a sharp depreciation of the naira—banks demonstrated resilience and adaptability. The industry leveraged technology, foreign inflows, and structural reforms to deepen its role in the economy and enhance profitability.

The SOE report highlighted the sector’s performance in the wake of the foreign exchange (FX) unification policy introduced by President Bola Tinubu in May 2023. The reform eliminated Nigeria’s multiple exchange rate system and triggered a significant depreciation of the naira, from N450 to N1,600 per U.S. dollar.

While the currency shift added volatility, it also opened up new revenue opportunities for banks through FX transactions and remittance inflows. The banking sector quickly adapted to the new environment, boosting foreign earnings and enhancing risk-adjusted returns.

A major driver of growth was the continued rise of digital financial services. Consumers increasingly moved away from traditional banking halls toward mobile and online platforms.

Point-of-Sale (POS) transactions soared to N18.15 trillion in 2024—up 69.6 per cent from N10.7 trillion in 2023—reflecting widespread acceptance of cashless payment methods. Even more striking was the jump in electronic payment transactions, which more than doubled from N600 trillion to N1.078 quadrillion in the same period.

The rise in digital usage reflects deeper financial inclusion and the success of fintech innovations in bridging gaps in access and convenience across Nigeria’s urban and rural areas.

Remittance inflows remained a strong pillar of banking sector liquidity. Total remittances through formal banking channels increased slightly from $19.55 billion in 2023 to $19.8 billion in 2024, as Nigerians in the diaspora continued to send money to support families and invest in local opportunities.

These funds, typically more stable than portfolio inflows, are critical in helping banks build foreign exchange buffers and fund consumer lending.

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The financial services sector expanded its contribution to Nigeria’s economy in 2024. According to the SOE report, banks and other financial institutions now account for N6 out of every N100 of GDP, up from N5 per N100 in 2023.

Additionally, total banking assets now represent 63.1 per cent of Nigeria’s nominal GDP, compared to 52 per cent the previous year—an indication of the sector’s growing centrality to national economic performance.

Between 2015 and 2024, the value of banking assets grew at a compound annual growth rate (CAGR) of 22.1 per cent, with part of the nominal increase attributed to currency depreciation.

Looking ahead, the report identifies key growth drivers for the banking industry, including: Loan portfolio expansion, especially to sectors like manufacturing, agriculture, and technology; Fixed-income investment gains, amid changing interest rate environments; Growth in non-interest income, as banks continue to diversify revenue streams through fees, digital services, and FX operations.

At the same time, the report flags emerging risks, particularly banks’ rising credit exposure to the oil and gas sector. This increases vulnerability to shifts in global oil prices and exchange rate pressures. However, one positive sign is that impairment charges—provisions set aside for loan defaults—are expected to decline, suggesting improving macroeconomic conditions and stronger credit quality.

For consumers, the sector’s growth translates into broader access to digital services, improved lending opportunities, and increased efficiency. However, the digital shift also brings cybersecurity concerns, while the reliance on FX-based income may expose banks to global shocks.

Still, industry analysts believe the banking sector is entering a new era of scale, agility, and innovation, driven by data, technology, and stronger regulation.

Nigeria’s banking sector is transforming into a digitally driven, globally connected industry. With asset growth nearing 40% in 2024, banks are becoming central players in Nigeria’s economic recovery and expansion. Continued investment in digital platforms, sound risk management, and strategic innovation will be crucial in sustaining this momentum into 2025 and beyond.