…Recapitalisation, profit pressure, foreign exits reshape continental banking
As global lenders retreat from Africa, some of Nigeria’s biggest banks have begun accelerating their expansion across the continent, using fresh capital raised from a recapitalisation drive to diversify earnings, manage risk and sustain profitability.
With higher capital buffers now in place, banks are reassessing how to deploy new funds at a time when earnings at home are normalising after two years of windfall boom.
For institutions with international licences, the continent is emerging as the natural destination — offering growth opportunities, improving margins and strategic space vacated by foreign competitors in the past decade.
“The recapitalisation exercise has forced banks to raise fresh capital, and the next question naturally is how they deliver value to shareholders,” said Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co. “One answer is to look beyond Nigeria. If your licence allows you to operate outside the country, why not explore those opportunities, especially where returns can enhance shareholder value?”
That thinking is increasingly shaping capital allocation decisions across the sector. At the Fitch on Nigeria 2025 forum in Lagos last November, Chukwukadubia Okoye, chief financial controller at United Bank for Africa (UBA), said lenders were prioritising regional growth. “On capital deployment, I see banks focusing on regional and market expansion,” he said.
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Domestic profit pressures drive diversification
The renewed continental push follows a shift in Nigeria’s operating environment. After two years of bumper earnings driven by naira devaluations and aggressive monetary tightening, profits at many large banks began softening last year as currency volatility eased and interest rates peaked.
Many banks benefited heavily from reforms introduced in mid-2023 and early 2024, which saw the naira sharply devalued. The Central Bank of Nigeria (CBN) data show the average official exchange rate rose to N1,450/$ in 2024 from N645.10/$ in 2023.
In the first eight months of 2025, the naira traded between N1,500 and N1,600/$ before strengthening to N1,480.3/$ by late September. On January 19, 2026, it closed at N1,419.3/$.
The CBN also raised the Monetary Policy Rate (MPR) by 875 basis points to 27.5 percent between July 2023 and May 2025, boosting interest income across the sector. That cycle turned in September, when the apex bank cut rates by 50 basis points for the first time since 2020 and has maintained the rate in November.
The policy pivot coincided with a marked earnings slowdown. A BusinessDay analysis shows Guaranty Trust Holding Company (GTCO), Zenith, First HoldCo and Access Holdings recorded a combined after-tax profit of N2.49 trillion ($1.64 billion) in the first nine months of last year, down from N3.07 trillion ($1.94 billion) in the same period of 2024.
UBA posted modest growth of 2.3 percent, well below its 17 percent expansion a year earlier.
Recapitalisation strengthens balance sheets
In March 2024, the CBN raised minimum capital requirements, compelling banks to comply through equity injections, mergers or licence reclassification. International banks must now hold N500 billion ($345 million), national banks N200 billion ($138 million) and regional banks N50 billion ($34.5 million) by March 2026.
By January 2026, about 22 banks — including all Tier-1 lenders — had met the new thresholds. According to Agusto & Co., the sector raised N1.7 trillion ($1.15 billion) in 2024 and another N800 billion ($523 million) in the first seven months of 2025.
“Banks are trying to deploy capital more efficiently to generate stable and sustainable returns as Africa’s most populous nation remains a volatile market,” said Mobifoluwa Adesina, an investment research analyst at Afrinvest West Africa, adding that expansion across Africa helps spread risk.
Read also: How Nigeria’s big banks scaled recapitalisation hurdle ahead March
Access and Zenith expand continental footprints
Among Nigeria’s international banks, Access and Zenith are leading the African expansion drive.
The country’s biggest bank by assets, Access raised N351 billion ($242 million) in December 2024, becoming the first lender to meet the N500 billion threshold.
Zenith followed in January 2025, raising N350.4 billion ($242 million) and lifting its paid-up capital to N614.6 billion ($425 million).
For both banks, recapitalisation has reinforced an existing strategy: reducing dependence on Nigeria by scaling African and international operations.
Access Holdings’ latest investor presentation shows Nigeria’s contribution to group pre-tax profit fell to 37 percent in the first nine months of last year from 61 percent in the same period of 2023. Last year’s figure was the lowest in at least three years.
Earnings from other African subsidiaries rose to 35 percent, while the UK and other international operations contributed 28 percent.
On the balance sheet, Africa’s share of group assets climbed to 21 percent from 12 percent, while international assets rose to 32 percent from 13 percent. Nigeria’s share dropped to 47 percent from 75 percent.
“Given the exposure of its business to Nigeria’s macroeconomic environment, Access is deliberately diversifying its income base,” Olubunmi of Agusto & Co said, noting that operating in countries with stronger sovereign ratings helps lower overall risk.
Nigeria’s fading dominance in group earnings
Nigeria, long the dominant profit engine for Nigerian banks, is gradually ceding ground. In April last year, Roosevelt Ogbonna, managing director and CEO of Access Bank Nigeria, told investors that the group had invested about $1.2 billion across subsidiaries.
“We are creating real value and long-term wealth through our subsidiary operations,” he said.
Data support that view. In the first half (H1) of last year, Access Bank Nigeria recorded a 30.7 percent drop in after-tax profit — the steepest across the group — while subsidiaries in Ghana, the Democratic Republic of Congo, Rwanda, Zambia and several other markets posted strong growth.
Previously loss-making units in Mozambique, Kenya and South Africa also returned to profitability.
Zenith Bank is pursuing a similar strategy from a different starting point. Historically, Nigeria accounted for up to 90 percent of its profits. That dominance is now being diluted.
The country’s second biggest lender by market value plans to expand into Ethiopia and aims to generate up to half of profits outside Nigeria over the medium term. Data cited by The Africa Report show foreign subsidiaries’ profit contribution rose to 27 percent in the first nine months of 2025 from 14 percent in 2024.
“Expansion outside Nigeria is primarily a diversification strategy,” said Gloria Fadipe, head of research at CSL Stockbrokers. “The Nigerian banking market is deeply regulated, which can limit performance.”
Global lenders exit, Nigerian banks step in
The pullback of global banks has accelerated this shift. Over the past decade, lenders, including Barclays, HSBC and Société Générale, have exited or scaled back African operations, leaving gaps in trade finance, payments and corporate banking.
Last week, Standard Chartered announced plans to pursue a full exit from Botswana, potentially ending a 164-year presence.
“Multinational exits reflect global risk optimisation, not African decline,” Zambia-based SB Corporate Hub said in a recent report. “Pan-African banks are winning because their capital structures and operating models fit local realities.”
AfCFTA reinforces long-term strategy
The African Continental Free Trade Area (AfCFTA) is strengthening the case for pan-African banking. As intra-African trade expands, demand for cross-border payments, trade finance and treasury services is rising — favouring banks with continental footprints.
Afreximbank data show intra-African trade rose to $20.3 billion in May last year from $18.4 billion a month earlier.
“Compared with many banking systems on the continent, Nigerian banks are significantly more advanced in innovation, scale and product development,” Olubunmi said. “Replicating these capabilities across Africa deepens financial development and supports integration.”
For Nigeria’s biggest lenders, African expansion is no longer optional. With stronger balance sheets, moderating domestic returns and foreign competitors retreating, the continent is emerging as both a buffer against volatility and a new frontier for growth.
“We are likely to see more banks pursue pan-African banking strategies, particularly after recent capital raises,” Adesina of Afrinvest added.
