African banks outperform peers as margins rise to 6.2%

…Nigerian lenders drive the uptick

African banks strengthened their lead over Emerging Market (EM) peers in the first half of 2025, with Net Interest Margins (NIMs) rising to 6.2 percent from 5.7 percent in 2024, even as margins in most other regions softened, according to Fitch Ratings.

In its latest Emerging Markets Largest Banks Monitor, the global rating agency said EM banks’ average NIMs were broadly stable at 4.2 percent in H1. However, Africa stood out as the only region to record a meaningful improvement, largely driven by Nigerian lenders benefiting from a high-interest-rate environment.

The report analysed 142 large EM banks — major debt issuers in international capital markets — with combined assets exceeding $48 trillion.

“EM banks remain mostly deposit-funded, with an average loans-to-deposits ratio of 103 percent at end of the first half,” the report said. Latin American banks recorded the highest average ratio at 127 percent, up from 117 percent in 2024, while African banks posted the lowest at 66 percent, reflecting relatively stronger deposit buffers.

Across the sample, average loan growth was 12 percent (annualised), led by EM European banks at 31 percent, predominantly in Türkiye. Latin American lenders posted average loan growth of eight percent, driven largely by Brazilian banks, even as deposits in the region declined slightly by about two percent.

The margin expansion in the continent mirrors the sharp earnings momentum among Nigerian lenders. Net interest income for the country’s biggest banks surged to about N6.9 trillion in 2024, more than double the N3.12 trillion recorded in 2023.

Zenith Bank, United Bank of Africa, FirstHoldco and Access Holdings accounted for the bulk of the increase, supported by elevated yields following aggressive monetary tightening by the Central Bank of Nigeria (CBN).

Policy signals are now shifting. The CBN began a cautious easing cycle last September with its first rate cut in five years after inflation showed early signs of moderation. At its first Monetary Policy Committee meeting of 2026, the apex bank trimmed the benchmark rate by another 50 basis points to 26.5 percent, attempting to balance growth support with price stability.

Fitch said it rates 122 of the 142 banks in the sample. The average Viability Rating — which reflects standalone creditworthiness — stood at ‘bb+’ as of February 4, 2026. Most rated banks (99 of 122) benefited from either government or shareholder support, while the average Long-Term Issuer Default Rating was ‘BBB-’.