FOUR commercial banks posted N774.46 billion in foreign exchange (FX) revaluation gains in the first six months of the year due to the Central Bank of Nigeria’s (CBN) exchange rate unification policy.
This sharply contrasted with the manufacturing sector, where most firms reported losses.
The CBN floated the naira on June 14 and ended the multiple exchange rate regime to check illegal economic activities like arbitrage, round-tripping, and rent-seeking.
On August 1, The ICIR reported that most manufacturing companies with foreign currency-denominated obligations posted negative performances, which stemmed from their inability to hedge against revaluation losses.
The companies were Nestle Nigeria, Dangote Sugar Refinery, International Breweries, Nigerian Breweries, and Cadbury Nigeria.
According to The ICIR findings, the companies incurred N339.29 billion in net finance costs (a difference between finance income and finance expense), impacting their operational performance to suffer N224.299 billion pre-tax loss.
On the contrary, checks by The ICIR show that most banks, including Guaranty Trust Holding Company (GTCO) Zenith Bank, United Bank for Africa (UBA) and Fidelity Bank, declared significant FX revaluation gains in the review period.
The ICIR analysis of the four banks’ financial statements for six months ended June 30 showed that the banks made massive profits from FX revaluation gains.
In the six months under review, GTCO gained N357.47 billion from FX revaluation compared to N1.87 billion reported in June 2022.
“This relates to unrealised gain,” GTCO stated in its financial statement, not clarifying what made up that sum.
Zenith Bank also declared a massive FX revaluation gain of N355.59 billion from N6.25 billion loss in June 2022.
According to the bank, “Foreign currency revaluation gain represents net gain on the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books.
“This also includes the effective portion of the gains on the derivatives designated in the fair value hedge of the foreign currency risk.”
It revealed that its closing and average dollar rate, as of June 30, was N756.24/$1 and N511.3/$1, respectively.
The UBA posted N29.24 billion FX revaluation from N2.08 billion in June 2022.
The bank noted, “Foreign exchange income comprises trading income on foreign currencies and gains and losses from revaluation of trading position,” UBA stated in its financial statements.”
From a net foreign exchange loss of N1.51 billion in June 2022, Filedity Bank reported a gain of N32.16 billion in June 2023.
It said, “Net foreign exchange gains represent unrealised gains from the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books.”

Simply put, FX revaluation gains refer to the increase in the value of the banks’ assets and liabilities denominated in foreign currency when there is a change in the exchange rate between the foreign and local currencies.
CBN directs banks to stop spending foreign exchange revaluation gains
Concerned over the gains made by the banks, CBN has directed commercial banks to stop using FX revaluation gains for operational expenses or dividend payments and use the gains as buffers to safeguard against potential adverse exchange rate fluctuations.
The directive was conveyed in a September 11 letter signed by the Director of the Banking Division Department, Haruna Mustafa, Punch reported on Tuesday, September 12.
The directive, CBN said, should be implemented with immediate effect.
The apex bank said it had assessed the consequences of the recent foreign exchange rate change on the banking system and identified its potential to substantially impact the naira values of banks’ foreign currency (FCY) assets and liabilities.
The CBN posited that foreign exchange revaluation gains must serve as a “counter-cyclical buffer” to safeguard against potential adverse exchange rate fluctuations.
It noted that banks should utilise the revaluation gains to reinforce their capital reserves, thus enhancing the banking sector’s capacity to endure volatility and economic shocks.
According to the report, the letter reads that the CBN approved the following prudential guidance and directives for immediate implementation by banks.
Treatment of FX Revaluation Gains:
Banks must exercise utmost prudence and set aside the FCY revaluation gains as a counter-cyclical buffer to cushion any future adverse movements in the FX rate. In this regard, banks shall not utilise such FX revaluation gains to pay dividends or meet operating expenses.
Single Obligor Limit (SOL):
Banks that inadvertently breach the Single Obligor Limit (SOL) due to the FX policy will be granted forbearance upon application to the CBN. The forbearance shall apply only to existing facilities as of the effective date of this policy. Such banks shall be exempted from the regulatory deductions on the excess above the SOL limit in their CAR computation.
Net Open Position (NOP) Limit:
Banks that exceed the NOP prudential limits due to the FX revaluation shall be granted forbearance for the breach upon application.
Existing prudential regulations on capital adequacy, dividend payments, and FCY borrowing limits shall continue to apply.