FBN, Zenith, Four Others Get N202.5bn From Charges On Customers
A total of six leading banks in Nigeria reported a total of N202.5billion as income from fees and commission charged on customers in the first quarter of 2021 (Q1) that ended March 31, 2021, InsideBusinessNG can report.
The six banks are Ecobank Transnational Incorporated (ETI), Access Bank Plc, FBN Holdings Plc, United Bank for Africa Plc (UBA), Zenith Bank Plc and Guaranty Trust Bank Plc.
The declared figure is a 35per cent increase over the N150.37billion reaped from fees & commission from their customers in Q1 2020.
Nigerian banks have aggressively engaged in non-banking activities to grow profits to the detriment of numerous customers and analysts, said this may be checked now, as the emergence of Kuda Bank and V-Bank with a strong financial base having attracted significant funding in recent months, may push the big banks into a stiffer competition.
These banks offer zero fees as an attractive selling point which they hope will sway customers from the big banks which have long been monetising their platforms.
Findings also revealed that these banks’ growth in fee & commission are primarily driven by customers’ current account maintenance and Electronic-banking.
Specifically, ETI in the period under review reported the highest fee & commission income of N45.62billion in Q1 2021, a 19 per cent increase over N38.48billion reported in Q1 2020.
Following ETI is Access bank with a N38.95billion fee & commission income over the N27.94 in Q1 2020, representing an increase of 39.4 per cent, while UBA’s fee & commission rose by 24 per cent, to peak at N34.96billion in Q1 2021, upward from N28.23 billion in Q1 2020.
In the period, FBN Holdings reported N34.03billion fee & commission from N25.81 billion reported in the prior period under review.
In addition, Zenith bank reported a 103.5 per cent increase in its fee & commission, moving up to N31.42billion from N15.44billion in Q1 2020 while GTBank’s fee & commission income hits N17.57billion in Q1 2021, a 22 per cent increase over N14.46billion reported in Q1 2020.
However, InsideBusinessNG’s cursory check revealed that five out of the six Tier-1 banks in Nigeria generated N59.8billion from E-business income in Q1 2021, a 54.5 per cent increase over N38.7billion reported in Q1 2020.
Notably, Access Bank followed by FBN Holdings top the chart in E-business Income in the first three months of 2021. Income from digital channels is also classified as electronic business or banking income by the majority of banks.
Access Bank in the period generated N17.92billion in Q1 2021 from N11.45billion in Q1 2021 while FBN Holdings reported a 31 per cent increase in its E-business income, moving up to N14.4billion from N11.02billion reported in Q1 2020.
While UBA’s E-income statement grew by 50.37 per cent to N12.48billion in Q1 2021 from N8.3billion in Q1 2020, Zenith Bank reported N11.13billion as its E-business income, representing a 104.6per cent increase from N5.4billion reported in Q1 2020.
In addition, GTBank’s reported N3.85billion from E-business income, 54.4 per cent growth from N2.49billion reported in Q1 2020.
Analysts have expressed that the newly USSD fees that customers will pay a flat fee of N6.98 per transaction every time they use USSD services tend to increase 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.”
In addition to E-business income, our correspondent can report that five banks generated N24.46billion from Account maintenance charges in Q1 2021 from N18.4billion reported in Q1 2020.
Zenith bank with N7.88billion in Q1 2021 from N5.73billion in Q1 2020 leads others on account maintenance charge in the period under review, followed by Access Bank with N5.2billion in Q1 2021 from N3.89billion reported in Q1 2020.
GTBank in Q1 2021 generated N4.2billion from account maintenance charges from N3.29billion reported in Q1 2020 while FBN Holdings reported N4.04billion account maintenance charges in Q1 2021 from N3.14billion reported in Q1 2020.
In addition, UBA reported N3.15billion from account maintenance charges in Q1 2021 from N3.29billion reported in Q1 2020.
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 the 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.
The Director, Financial Policy & Regulation Department, Kevin Amugo, in a circular replaced the CoT with CAM but subject to a maximum of N1 per N1,000/ mille.
The circular was titled, “Introduction of Negotiable CAM fee Not Exceeding N1/Mille.
It stated, “The Revised Guide to Bank Charges (RGBC) which came into effect on April 1, 2013, provides for a phased elimination of COT charges in the Nigerian banking industry. Under the Guidelines, a zero COT regime was to come into effect from January 2016.”
The CBN noted that while the gradual phase-out was being observed, some banks continued to charge Account Maintenance Fees in addition to the reduced COT rate, which in effect amounted to a double coincidence of charges.
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