Vetiva Research has published its second half (H2) 2025 Outlook, offering a sector-by-sector analysis of Nigeria’s macroeconomic environment and market dynamics.
The report reflects diverse perspectives across key industries, shaped by a complex interplay of global trends and local policy shifts.
For the banking sector, Vetiva presents a cautiously optimistic view. “Despite
macroeconomic headwinds, we expect the banking sector to remain resilient in H2’25,
buoyed by robust net interest income, sound capital raising strategies, and improving cost
efficiency,” said Oluwayemisi Sunmola, banking analyst.
The Central Bank’s tight monetary policy, keeping the MPR at 27.50 percent, continues to support elevated yields. Net Interest Income is projected to grow 20 percent year-on-year (y/y) in FY’25, aided by loan repricing and attractive returns on government securities.
However, a likely moderation in interest rates as inflation softens may slow income momentum. Banks with strong low-cost deposit bases are expected to maintain margin resilience. In the report, Vetiva Research expects non-interest revenue to remain subdued, with a forecast 17.4 percent y/y growth in H2, following Q1 contractions due to trading losses and weaker market activity.
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A key pressure point is the projected 86 percent increase in impairment charges as regulatory forbearance is phased out and previously restructured loans are reclassified.
“This will weigh on earnings, particularly for banks with high legacy exposures,” Sunmola cautioned.
The report notes that capitalisation efforts are underway across the sector in response to CBN’s recapitalisation directive. While banks like GTCO, Stanbic IBTC, and UBA are well-positioned to sustain dividends, others may face short-term constraints. Vetiva projects an 8 percent y/y decline in sector-wide profit after tax for FY’25, with a recovery expected in 2026 as provisioning pressures ease.
For the oil & gas sector, Vetiva notes a mixed outlook characterised by both opportunities
and challenges.
Divine Olumese, oil & gas analyst at Vetiva, noted that, “The global energy market is at a turning point, with geopolitical tensions, changing demand patterns, and OPEC+ supply dynamics all influencing price volatility and domestic sector stability.”
On the domestic front, Nigeria’s crude production rose modestly in early 2025 but remains below OPEC quotas due to infrastructure constraints and maintenance activity. She indicates that whilst ongoing divestments to indigenous players hold long-term potential, the immediate gains have been moderate.
Looking downstream, market competition has intensified following deregulation, pressuring margins among less efficient marketers.
“Survival in the new regime depends on pricing intelligence, distribution efficiency, and supply chain agility,” Olumese added.
The growing role of the Dangote Refinery, particularly through the naira-for-crude framework, has alleviated local supply pressures, although FX constraints and global sourcing continue to present some challenges.
Rising global oil prices could boost Nigeria’s export revenues but also pose risks of higher petrol prices and foreign exchange strain.
For the Consumer Goods sector, Vetiva projects sustained momentum, driven by improving macro fundamentals.
“This projection is underpinned by notable improvements across three key macroeconomic indicators, inflation, FX volatility, and energy prices,” said Motunrayo Sowunmi, consumer goods analyst.
After a difficult 2024 marked by high input costs and naira depreciation, Q1’25 results showed an average 62 percent revenue growth among coverage companies, largely attributed to cost-reflective pricing.
Also, the report notes that input cost pressures have eased, supported by currency appreciation and expanding local sourcing.
“Local-sourcing initiatives being adopted by
producers to reduce import dependency are expected to continue to reduce cost pressures for the rest of the year,” Sowunmi explained.
Nonetheless, global energy price volatility
poses a downside risk. Looking ahead, Vetiva expects revenue growth to be bolstered by
seasonal demand and a gradual recovery in consumer spending.
Similarly, the telecommunications sector maintains a bullish outlook, driven by strong
demand for data services and increased pricing power.
“Our positive outlook is driven by increased broadband penetration, sustained demand for data services, and renewed capital investments following the January 2025 tariff hike,” said Divine Olumese.
The sector’s contribution to GDP rose to 14.4 percent in Q4’24, up from 13.94 percent in Q3’24, reflecting strong quarterly growth. This also marks a modest year-on-year increase from 14 percent in Q4’23, aided by growing smartphone adoption and improved subscription levels.
The NCC’s 50 percent tariff adjustment across voice, SMS, and data services, while lower than what operators proposed, lifted EBITDA margins for MTN and Airtel. These gains have been reinforced by FX exposure management and cost-saving technologies like site automation and renewable energy adoption.
“With visibility on earnings improving and FX
risks being proactively managed, we believe the sector is well-positioned for sustainable
growth,” Olumese said.
