Nigerian digital lender FairMoney reported a robust 62% growth in gross revenue, reaching ₦121.9 billion in 2024, according to its unaudited financial results. The company also posted a significant leap in profit after tax, surging from ₦780 million in 2023 to ₦7.9 billion.
A major driver of this performance was the company’s shift in funding strategy. For the first time since it began accepting deposits in 2021, customer deposits accounted for over 55% of FairMoney’s loan book. This figure marks a dramatic rise from ₦2.9 billion in deposits in 2021 to ₦72.9 billion in 2024. As a result, the company reduced its reliance on external borrowings from more than 80% in 2020 to less than 10% last year.
The fintech attributes its deposit growth to a combination of rising customer trust, expanded product offerings, and attractive deposit rates that help shield users from inflation. By tapping into customer deposits rather than higher-cost borrowing instruments like commercial papers, FairMoney lowered its funding costs and boosted profit margins.
FairMoney noted its ongoing strategy is to maintain a diversified funding structure including retail, high-net-worth individual (HNI), and corporate deposits while also leveraging other financing sources such as debt notes and commercial papers.
The bulk of FairMoney’s revenue came from interest earned on loans, which rose by 57% to ₦116 billion in 2024. With revenue growth outpacing expenses, the company improved its profit margin from 1% in 2023 to 6.5% in 2024—meaning it now retains ₦6.5 for every ₦100 in revenue.
While non-interest income remained modest at ₦5 billion (including ₦3.8 billion from fees and ₦1.7 billion in other operating income), the company’s operating expenses totaled ₦41 billion. This resulted in a relatively high cost-to-income ratio, as FairMoney spends ₦78 to earn every ₦100. Its interest expense also rose to ₦10 billion from ₦8.3 billion the previous year.
Despite stabilizing in 2023, loan impairments rose by 30% to ₦59.4 billion in 2024 the first increase in two years. This was driven in part by the company’s conservative accounting approach, where all loans are considered impaired until they are fully repaid. As such, the reported impairment ratio of 45.7% could drop once repayments are factored in.
FairMoney stated it begins provisioning immediately upon loan disbursement and continues to enhance its underwriting models, data-driven risk assessments, and ethical loan recovery methods. These efforts have contributed to an improved impairment-to-revenue ratio and a cost of risk that now stands at -49.7%, though this remains elevated by industry standards.
The company’s net interest margin (NIM) stands at a high 81.7%, emphasizing the profitability of its high-yield, short-tenor loans many with monthly interest rates around 10%. While this model boosts returns, it also increases exposure to credit risk, as evidenced by rising impairments.
FairMoney’s total assets rose 56% year-on-year to ₦101.7 billion, primarily driven by a ₦30.4 billion expansion in its loan portfolio. However, cash holdings fell slightly to ₦8.3 billion, while prepayments grew from ₦1.3 billion to ₦8.36 billion.
With rapid growth, strong interest margins, and increasing customer adoption, FairMoney is positioned for further expansion. However, sustained success will depend on improving operational efficiency, strengthening credit risk controls, and maintaining a balanced funding mix.
