The marine and blue economy, entertainment and arts and hospitality sectors have been identified as some of the main beneficiaries of the ongoing banking sector recapitalisation.
This was disclosed in the fourth edition of the Tier 1 Banks Report by Proshare titled “Getting Bigger, Braver and Dominant, the Class of 2025, ’which was launched on Wednesday.
Nigerian commercial banks have been raising additional funds to meet the new capital threshold from the Central Bank of Nigeria ahead of the 2026 deadline.
The report suggested that banks need to be imaginative, agile, and flexible if they are going to support the $1 tn economy envisioned by the government by the end of this decade. According to the report, strengthening banking sector activities over the remaining half-decade will align with the growth aspirations of the Federal Government but would require local banks to deconstruct Nigeria’s 46 sectors into what Proshare researchers have identified as 14 sub-economies.
“With increasingly larger equity bases and untroubled by liquidity and the cost of bank deposits, banks are expected to find more creative ways of offering medium- to long-term financing options to emerging growth sectors as they rebalance their lending portfolios.
“Proshare analysts believe that subeconomies that may benefit from the recapitalisation of banks include, but are not limited to, the Marine and Blue Economy, the Entertainment and Arts Economy, the Hospitality and Real Estate Economy, and the Mineral Mining and Energy Economies,” part of the statement accompanying the report read.
The report also unveiled the Proshare Bank Strength Index, which aggregates key banking metrics using a scientific and statistical model. The index ranked Ecobank Transnational Incorporated, Access Corp, FirstHoldCo, Zenith Bank, United Bank for Africa and the Guaranty Trust Holding Company as Tier 1 banks.
The 2025 PBSI builds its model with emphasis on (i) capital adequacy and sizes, given the ongoing regulatory recapitalisation; (ii) asset quality and growth as elevated yields and macroeconomic volatility necessitate a focus on loan asset quality, NPL ratios, and sustainable asset growth; (iii) digital transformation as e-banking income as a proportion of gross earnings underscores digital integration and readiness; (iv) profitability and efficiency, since cost-to-income ratio (CIR), net interest margin (NIM), and earnings growth reflect operational resilience; and (v) key governance metrics.
ETI took the top spot on the index due to improvement in its operations in francophone West Africa and a few Anglophone countries, excluding Nigeria. ETI’s 67.11 per cent asset growth was a significant push factor that improved its ranking.
As part of its recommendations, the report argued that certain factors will separate Nigeria’s banking sector from the rest, and they include “Zoning in on the behavioural habits of different corporate and retail customers will be a key factor in service delivery excellence, utilising AI as a significant tool for product and service design. Remaining agile and flexible regardless of corporate size will enable leading banks to meet evolving customer expectations. In the new banking reality, elephants must dance or learn to.
“Coopetition with fintechs will distinguish the winners from the losers in the money market, as the digital agility of fintechs will offer customers the frontend convenience they seek. Concurrently, the backend rigour of banks in the lending process will guarantee high-quality loan portfolios and sound credit decisions. However, this may raise the question of who truly owns the customer: the bank or the fintech? The jury is still out on this matter. Strong arguments exist for both types of lending institutions.
“The age of artificial intelligence will change the banking landscape, making deposit and loan services a routine digital entry of codes. The loan approval process will be linked to a customer’s cash-to-cash cycle, assessed for risk and reliability, or payment based on their past transaction history stored in the encrypted data cache of a bank or fintech’s cloud storage. The decoupling of many financial decisions from human biases may improve the credit process exponentially, depending on which side of the fence you are sitting on.”
In his opening remarks, the Founder/Chairman, Proshare Nigeria, Olufemi Awoyemi, said, “For the country to grow between seven and eight per cent and for the banking system to push towards new frontiers of balance sheet size, I believe it requires what I have called a ‘GSM moment’ or a market-creating burst of economic activity. We saw this happen with the General System for Mobile technological revolution, which started in Nigeria between 2000 and 2001.”
He added that the Tier 1 bank report shows that by mid-2025, Nigerian banks had raised over N13tn in new share capital, implying that the recapitalised banks have significantly higher Capital Adequacy Ratios, lower Cost of Risk, a larger asset size, higher capital buffers against non-performing loans and a relatively modest Cost-to-Income Ratio.