Eight Nigerian banks increased their holdings in investment securities to a combined total of N41.78tn in the first quarter of 2025, up from N41.10tn recorded at the end of December 2024,
The figures, derived from the consolidated and separate financial statements of top-tier financial institutions including Ecobank, Guaranty Trust Holding Company, Zenith Bank, Wema Bank, Access Holdings, First HoldCo, FCMB Group, and United Bank for Africa, indicate a growth of approximately 1.65 per cent within the three-month period.
Investment securities are financial assets that banks and other financial institutions purchase primarily to earn a return or to meet regulatory requirements, rather than for active trading.
United Bank for Africa led the pack with N13.13tn in investment securities in March, consisting of N6.21tn at fair value through other comprehensive income and N6.92tn at amortised cost, compared to N12.53tn in December 2024.
Ecobank also recorded investment securities worth N11.01tn as at March 31, 2025, compared to N10.68tn in December 2024.
GTCO’s investment securities rose to N4.62tn as of March 2025, reflecting an increase from N4.15tn reported at the end of December 2024. The March 2025 figure includes N2.81tn in fair value through other comprehensive income, N1.79tn held at amortised cost, and N5.51bn classified as fair value through profit or loss, compared to N2.50tn, N1.65tn, and N5.51bn respectively in December 2024.
Wema Bank’s securities stood at N1.05tn, a rise from N900.2bn. The bank’s investment securities were segmented into N14.76bn fair value through other comprehensive income, N40.37bn fair value through profit or loss, and N991.9bn held at amortised cost as of March 2025.
Zenith Bank reported N5.11tn in investment securities for March 2025, marginally up from N5.10tn in December 2024.
First HoldCo reported N5.68tn in Q1 2025, compared to N6.54tn at the end of 2024, reflecting a decline.
Access Holdings posted N10.79bn in investment securities as at March, slightly lower than the N11.34bn it reported in December.
FCMB Group declared N1.18tn as at March, down slightly from N1.19tn in December.
Speaking with our correspondent, economist and investment specialist, Vincent Nwani, said Nigerian banks have demonstrated their clear preference for profit-driven ventures, even though they were primarily established to lend to the real economy.
“What this means is that banks have clearly told us that they are profit-making organisations, and they will always go where the money is. Even though banks were created to lend, they are now more focused on seeking returns. These days, it is fees and treasury instruments that give banks money, not interest from loans,” Nwani said.
He added that banks are increasingly shifting away from lending, choosing instead to invest in low-risk instruments like bonds, treasury bills, and commercial papers, which offer guaranteed returns. “Businesses are meant to take risks, but banks believe that regardless of inflation, they can monitor the risks and still earn safely,” he noted.
Nwani advised investors not to let their deposits lie idle in banks, noting that “when you keep money in the bank, banks are using your funds to invest, so investors should also seek opportunities to earn from their money.”
On his part, Chief Economist and Managing Editor of Proshare, Teslim Shitta-Bey, explained that the attraction of government securities with high coupon rates has crowded out credit to the private sector.
“If the securities are treasury securities and bonds, it means that the high coupon rates have made them more attractive than lending to the private sector. These are instruments with virtually no risk of default,” he said.
Shitta-Bey added that despite the Central Bank of Nigeria’s 50 per cent cash reserve ratio, banks are managing the remaining liquidity prudently. “Some of the recapitalisation funds may go into commercial papers. The higher interest rates signal high default risks, so banks are simply being prudent, not necessarily under economic pressure,” he said.
He noted that banks are expanding their balance sheet operations while pulling out of high-risk lending segments, resulting in a slower growth of credit to the private sector.
“The implication is that private sector credit will remain relatively sluggish in terms of growth,” Shitta-Bey concluded.