Nigerian lender United Bank for Africa (UBA) has reported a profit after tax of ₦766.6 billion ($493 million) in 2024, marking a significant 26% increase from ₦607.7 billion ($391 million) in 2023. However, the bank's latest audited financial statements also reveal a staggering loss of ₦1.14 billion ($744,200) to fraud, underscoring the persistent threat of fraud in Nigeria's banking sector.

The losses, primarily from electronic fraud and unauthorized transfers, account for a small fraction of UBA's record-breaking annual profit. Nevertheless, they highlight the vulnerability of even the most profitable financial institutions to fraud. According to UBA's disclosure, ₦4.9 billion ($3.15 million) worth of transactions were linked to fraudulent activities in 2024, with 23% translating into actual losses.

Electronic fraud accounted for the largest portion of the losses, costing the bank ₦805 million ($518,000), while fraudulent transfers led to ₦314 million ($202,000) in losses – 88% of the value involved in such cases. The bank emphasized that there was no fraud involving management or other employees who could have any significant role in the bank's internal control.

UBA's disclosure comes at a time when Nigerian banks are under increased pressure to fight fraud. According to a Financial Institutions Training Centre (FITC) report, Nigerian banks lost ₦10.1 billion ($6.7 million) to fraud in Q3 2024, a 76.4% decline from the previous quarter. However, the rising sophistication of fraudsters continues to pose a challenge to even the most robust security systems. The FITC report notes that outsider involvement in fraud cases surged by 70.4% between Q2 and Q3 2024, while staff-related fraud increased by 54% during the same period.

The rise in fraud incidents comes amid broader financial pressures in Nigeria's banking sector. In January, the Central Bank of Nigeria directed NIBSS to debit the settlement accounts of commercial banks that receive fraud proceeds, a move aimed at forcing banks to tighten internal controls and curb illicit financial flows. UBA's disclosure marks a shift toward transparency in Nigeria's banking sector, where many institutions still choose to downplay fraud risks for fear of suffering reputational harm.

Only 60 of 163 financial institutions in Nigeria reported fraud cases in 2023, according to a Nigeria Inter-Bank Settlement System (NIBSS) report. As financial crime grows more sophisticated, regulators and banks have their work cut out: strengthen controls while maintaining customer trust. UBA's willingness to disclose its fraud losses may set a positive precedent for the industry, encouraging other banks to follow suit and prioritize transparency in their fight against fraud.