The African Export-Import Bank (Afreximbank) has reported a robust financial performance in the first quarter of 2025, with net interest income reaching US$411.2 million, marking a 4.53 per cent year-on-year increase. This growth underscores the bank's strategic initiatives and its pivotal role in facilitating trade across the African continent.

The bank's strong Q1 2025 performance also reflects its effective asset management and strategic focus on trade facilitation instruments like letters of credit (L/Cs), and commitment to supporting Africa's economic development through targeted initiatives.

Drivers of strong growth

Several factors contributed to Afreximbank's impressive Q1 2025 results, including an expansion of interest-earning assets. The bank effectively grew its portfolio of interest-earning assets, which, coupled with prudent management of borrowing costs, helped offset the marginal decline in total interest income due to softening global benchmark rates.

Afreximbank's liquidity profile meanwhile strengthened considerably, with liquid assets comprising 20 per cent of total assets, up from 13 per cent at the close of FY 2024. This improvement was attributed to successful fundraising efforts and timely loan repayments.

Significant L/C impact

L/Cs played a significant role in Afreximbank's Q1 2025 performance, headlined by a growth in fee income: income from L/Cs increased by 36 per cent, contributing to the bank's total unfunded income of US$26.9 million for the quarter.

The bank reported an expansion of off-balance sheet assets, with the volume of L/Cs and guarantees, categorised as off-balance sheet assets, rising by 19 per cent to reach US$5.7 billion at the end of Q1 2025.

Strategic focus on unfunded business

The strong performance in L/Cs aligns with Afreximbank's strategy to grow its unfunded business, thereby diversifying its income streams and reducing its reliance on traditional lending.

Beyond financial metrics, Afreximbank continued to advance its strategic objectives through support for industrial development and expansion of pan-African payment systems.

The rollout of the Pan-African Payments and Settlement System gained momentum, with banks in Kenya and Rwanda launching the platform to facilitate seamless, instant, and affordable cross-border payments in local currencies.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.