Discover how Zenith Bank made a record-breaking ₦1.3 trillion profit in 2024, turning your savings into major earnings. Learn how banks profit from your money and how you can take control of your finances..
So, you’ve saved up a bit of money and deposited it in the bank. It’s secure, right? But what if I told you that while you’re patiently earning pennies in interest, your money is being put to work somewhere else; somewhere that’s making someone else rich? Case in point: Zenith Bank’s recent announcement of a record-breaking ₦1.3 trillion profit for 2024. What’s the secret behind this massive earnings spree? Spoiler alert: it’s your money.
Let’s break down how banks, especially Zenith, make their money — and how you’re involved in this lucrative game, whether you know it or not.
The Money Game: How Banks Really Make Money
At first glance, banks seem like places where you just store your hard-earned cash. But what they’re really doing with it is turning your savings into profit – a lot of profit. Here’s the breakdown of Zenith Bank’s operations:
Lending: The Heart of Bank Profits
The main way banks earn money is through lending. Think about it: When you take out a loan, the bank makes money from the interest you pay. But the catch is – you’re probably not the bank’s top priority when it comes to loans. Here’s how Zenith distributed its loans in 2024:
- Regular customers: Only ₦336.5 billion (just 3% of the total loans)
- Oil & Gas companies: ₦4.1 trillion (37% of the total)
- Manufacturing companies: ₦2.6 trillion (24%)
- Government: ₦1 trillion (9%)
So, for every N100 you deposit, just ₦3 goes to loans for people like you. The rest? It goes to big companies and government projects. Seems a little unfair, doesn’t it?
Deposits: Your Savings Are Funding Their Business
Now let’s talk about where your money is going. Zenith Bank’s retail customers (you and me) provided 43% of the bank’s total deposits in 2024, but received only 3% of the loans. That means your savings are being used to fund loans to big corporations, while you get a tiny interest return. It’s the bank’s sweet spot: you provide the cash, they make the big loans.
The Interest Rate Spread: The Secret Sauce
This is where the bank gets its magic power. The interest rate spread is the difference between what the bank pays you on your savings and what it earns from lending out that money.
In 2024, Zenith paid you just 2.10%* on savings, but charged borrowers a whopping 16.01% on loans. That’s a 13.91% spread, which is where most of their ₦1 trillion profit comes from. Basically, while you earn pennies on your savings, the bank is raking in the cash from big borrowers.
*Interest Rate on Savings Accounts: Zenith Bank paid a total of ₦156.4 billion in interest on savings accounts in 2024, up from ₦85.6 billion in 2023. The calculation of the increase in the interest rate from 1.72% in 2023 to 2.10% in 2024 is derived from these two figures, which appear in Note 7: Interest and similar expense on page 146 of the annual report.
Fees: The Hidden Goldmine
We all know banks charge fees. From ATM withdrawal fees to transfer fees, they’re constantly finding ways to make a little extra money off of us. Zenith Bank made ₦356 billion (₦206.867 billion net) from fees alone in 2024; that’s double what they made the year before (₦177.515 billion). Every time you pay an SMS charge or a transfer fee, you’re helping pad their profits.*
*₦1 billion was collected in transfer fees alone. That’s money coming straight out of your pocket for services that cost the bank almost nothing to provide. To put it in perspective: That’s enough to pay the full university tuition for 10,000 Nigerian students.
Government Lending: The Ultimate Safety Net
Zenith also makes a solid chunk of its money by lending to the government. In fact, almost half of their interest income in 2024 came from government securities like treasury bills. These investments are low risk for the bank, but they also take your savings and turn them into secure returns, while inflation eats away at the value of your deposit.
The Breakdown: How Zenith Made Their Record-Breaking Profit
To put the numbers into perspective, here’s a quick breakdown of how Zenith Bank made its over ₦1 trillion profit in 2024:
- ₦1.5 trillion from interest on loans
- Over ₦1 trillion from government securities (like treasury bills)
- ₦1.1 trillion from trading and other investments
- ₦356 billion from fees and charges (yup, those pesky fees)
Together, these figures pushed Zenith’s profit before tax to ₦1.3 trillion in 2024 – an impressive 67% increase from the year before.
What Does This Mean for You?
Now that you know how Zenith Bank is making its money, let’s talk about you. As a customer, your savings are fueling their business. But in return, you’re getting minimal interest while the big players (corporations and governments) get the bulk of the loans and returns.
It’s a system that works great for them, but not so much for you.
Smart Money Moves: How to Take Control of Your Savings
Here’s the thing: while the bank is profiting from your deposits, you don’t have to sit idly by. There are ways to make your money work harder for you:
- Explore High-Yield Savings Accounts: Some savings options offer better interest rates than traditional accounts. Shop around for the best deal.
- Diversify Your Investments: Consider other investment options, like mutual funds, stocks, or even government bonds, which might offer higher returns than what you’re getting from your bank.
- Understand Bank Fees: Don’t just accept every fee your bank charges. Look for banks with fair and transparent fee structures.
- Negotiate Better Rates: If you have a large deposit, you can sometimes negotiate for better interest rates. It’s worth asking.
Are You in Control of Your Money?
Zenith Bank’s record ₦1.3 trillion profit shows just how much money can be made from managing customer deposits. They’re lending to big businesses and the government, charging fees, and earning substantial returns while paying you little in interest.
But here’s the kicker: your money doesn’t have to sit idle in a savings account. You can take control of where your money goes and how it grows. It’s time to ask the tough questions, look into smarter financial moves, and make sure your savings are working harder for you, not just the bank.
Your money has the power to shape economies. The question is: are you in control, or is it controlling you?
