Proshare, Nigeria’s leading financial information platform, has released its latest Tier 1 banks report titled “Getting Bigger, Braver, and Dominant The Class of 2025”, which argues that the now “bigger-sized” banks need to be imaginative, agile, and flexible if they are going to support the scaling up of the Nigerian economy into a US$1trn continental behemoth by 2030 as envisioned by the Federal Government of Nigeria (FGN).

According to the report, scaling up banking sector activities over the next half decade will align with the growth aspirations of the FGN, 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 sub economies 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.

The Tier 1 banks ranking, based on the Proshare Bank Strength Index (PBSI), which aggregates key banking metrics using a scientific and statistical model, identified ETI, ACCESSCORP, FIRSTHOLDCO, ZENITH BANK, UBA, and GTCO as Tier 1 banks.

The 2025 PBSI builds its model, with emphasise 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.

While ETI knocked core Nigerian banks off the top of the tier 1 totem, MUCH of ETI’s improvement came from operations in francophone West Africa and a few Anglophone countries, excluding Nigeria. Its 67.11% asset growth was a significant push factor that improved its ranking.

The report also examined the banks’ recapitalisation efforts and their performance between 2023 and 2024 in meeting the Central Bank of Nigeria (CBN) capital threshold of common equity tier 1 capital (CET 1), specifically N200bn for nationally licensed banks and N500bn for banks with international licenses. All Tier 1 banks are licensed for international operations.

However, tier 1 borderline banks (the highest ranked tier 2 banks) have also chosen to achieve N500bn share capital to compete aggressively in the emerging global and continental banking markets.

FIDELITY Bank falls into this category and is expected to be a full-fledged member of the Tier 1 tribe by the end ofthe financial year 2025.

Admittedly, the bank has experienced a recent setback due to a Supreme Court judgment;amidst this drawback, FIDELITY Bank can negotiate a managed cash flow scheduling that would not adversely affect its liquidity or corporate existence.

The report argues that certain factors will separate Nigeria’s banking sector best from the rest:

• 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.

• Co-opetition 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 (AI) 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.

• Tier 1 banks will ramp up digital faster and for longer. Their immense investment in technology and intense competitiveness mean that over the next half-decade. At the same time, banks, as we know them, will slowly fade away, and banking will evolve to act as a smooth and well-oiled intermediary between different customer needs and available financial resources.

Proshare is a professional practice focused on delivering research and information services to bridge the gap between investors and markets; by delivering credible, reliable, and timely engagements through its service areas Impact Research, Market Intelligence, Strategic Advisory, Stakeholder Relations & Digital Media.

Its services are designed to ensure data driven decisions, fact based interventions and collaboration with regulators, operators, associations, institutes, and individuals help to facilitate the information needs of a vibrant, productive, and growing Nigerian economy.

They also help the marketplace to shape conversations, advocate on key change imperatives and provide evidence-based insights that holds the system accountable in a collaborative manner.