Eromosele Abiodun and Darasimi Adebisi
With more Nigerians increasingly relied on mobile banking for transactions while avoiding banking halls for fear of contracting Covid-19, Nigerians banks are raking in immense gains with six Tier-2 banks earning a whooping N59.7 billion in the first quarter of 2021 alone.
In line with the banks focus on revenue diversification, analysts said banks have continued to grow their non-interest income, as they progressively become more transaction-led institutions while implementing technological driven measures to improve efficiency.
Data collected by THISDAY revealed that FBN Holdings and five other Tier-2 banks operating in the country generated a total of N59.7billion from their customers' current account maintenance and electronic-banking income in first half (H1) of 2021.
These six financial institutions in prior first half of 2020 generated N44.55billion from the account maintenance and Electronic-banking income.
The Tier-2 banks are Sterling Bank Plc, Union Bank for Nigeria Plc, Wema Bank Plc, FCMB Holdings Plc and Unity Bank Plc.
Analysis of the banks results in the period under review revealed that they aggressively engaged in non-banking activities to grow profit at the detriment of numerous customers.
However, analysts believe that banks will face stiffer competition on fees and commission income this year as challenger Banks such as Kuda Bank, V-Bank, among others have capital to contest favourably.
These banks offer zero fees as an attractive selling point, which they hope will sway customers from the big banks who were monetizing their E-banking platforms, among others.
Further analysis revealed that the six financial institutors growth in fee & commission in the first six months of 2021 was primarily driven by customers' current account maintenance and Electronic-banking.
The Central Bank of Nigeria (CBN) in its guide to charges by banks, other financial and non-financial institution effective January 1, 2020 stated that, "Current Account Maintenance Fee (CAMA) is applicable to current accounts only in respect of customer-induced debit transactions to third parties and debit transfer. Lodgements to the customer's account in another bank."
The apex bank explained that CAMF is not applicable to savings accounts, stressing that a negotiable subject to a maximum of N1 per mille.
The Senate had raised concern over current account maintenance fee, stressing that banks are overcharging customers.
The apex bank in 2013 had commenced phased reduction of Commission on Turnover (CoT), which terminated with zero CoT charge.
However, the breakdown revealed that account maintenance fees generated in H1 2021 by these six banks was N14.27billion, an increase of 44.6per cent from N9.86billion reported in H1 2020 while Fees on electronic products grew by nearly 31 per cent to N45.43billion in H1 2021 from N34.69billion reported in H1 2020.
According to finance analysts, the newly Unstructured Supplementary Service Data (USSD) fees in June of 2021 that mandated a flat fee of N6.98 per transaction every time drives banks' E-business income.
According to analysts, "The Covid-19 pandemic also played a major role in bank performance as it affected the expansion of the digital rollout plans earlier on in the year. However, the pandemic will swing in their favour as Nigerians increasingly relied on mobile banking for transactions while avoiding banking halls for fear of contracting Covid-19."
Further breakdown revealed that FBN Holdings reported N28.8billion fees on electronic banking products in H1 2021, 32.7per cent increase over N21.7billion reported in H1 2020 while Account maintenance fees also grew by 42 per cent to N7.9billion in H1 2021 from N5.59billion reported in H1 2020.
The Group Managing Director, FBN Holdings, U.K. Eke had said: "The macro and socio-economic conditions remain challenging given the COVID-19 pandemic and the low interest rates environment. While these points negatively impacted overall revenue generation, we are confident that FBN Holdings can navigate this challenging operating environment and keep delivering sustained innovative solutions that enrich customer experience as well as deepen financial inclusion."
The Chief Executive Officer of First Bank and its subsidiaries, Dr. Adesola Adeduntan had said benefits of the Bank's investments in strong transactional and digital banking capabilities reflected in the solid 50.1per cent growth in non-interest income, and supported the 15.2per cent, 26.4per cent and 12.5per cent growth in customers' deposits, loans and advances to customers and total assets, respectively.
In the same period, FCMB Holdings's electronic banking grew by 54.4 per cent to N6.69billion in H1 2021 from N4.33billion reported in H1 2020 while Account maintenance closed H1 2021 at N2.17billion, 31 per cent increase from N30.54billion in H1 2020.
The Managing Director, FCMB Limited, Mrs. Yemisi Edun noted that the bank's Non-interest income increased by 25.5 per cent QoQ and 5.4 per cent YoY, attributable to increase in fees and commission due to an increase in transacting customers' activities and alternate platform reliability.
In her presentation to investors and analysts, she disclosed that digital payment's revenue was N6.7billion, representing 11 per cent of gross revenue and 51 per cent of gross fees & commissions.
According to her, mobile, cards and alternate channels payments are driving the strong digital revenues and will continue to see traction.
She added that, "We see a lot of market opportunities from our Merchant solutions and Web payments, as we replicate the retails side's success to our SME, commercial and corporate customers."
However, Sterling bank reported 39 per cent increase in its electronic products commission fees to N3.6billion in H1 2021 from N2.6billion in H1 2020. The lender also grew its account maintenance fees to N1.35billion in H1 2021 from N800million reported in H1 2020.
According to the bank, the growth in earnings was supported by growth in non-interest income that rose by 33.4 per cent, particularly from fees & commission that was up by 57.7 per cent.
Interestedly, Union bank of Nigeria reported nearly three per cent drop in Fees on electronic products to N3.55billion in H1 2021 from N3.66billion reported in H1 2020 while Account maintenance fees grew significantly by 736 per cent to N1.03billion in H1 2021 from N736million in H1 2020.
In addition, Wema bank's fees on electronic products rose by seven per cent to N1.22billion in H1 2021 from N1.14billion in H1 2020 as account maintenance fees closed H1 2021 at N943.3million in H1 2021 from N488.16million in H1 2020.
Unity bank in the period grew its electronic banking Income by 23.3 per cent to N1.57billion in H1 2021 from N1.27billion while account maintenance fee to N850,8 million in H1 2021 from 597.29million in H1 2020.
Recently, the Governor of CBN, Mr. Godwin Emefiele said electronic transaction volumes increased by about 67 per cent during the COVID-19 lockdown with increased transactions at agent networks.
Emefiele at the 20th edition of the National Seminar on Banking and Allied Matters for Judges stated that the payment system infrastructure accommodated the surge as more citizens moved to electronic channels.
Emefiele was represented by the Deputy Governor of CBN, Aisha Ahmad, at the seminar, said that the banking and payments system was able to retain its operational resilience, maintaining availability of electronic payment and mobile banking channels.
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