Five Banks Rake N479.9bn From Customers’ Accounts Maintenance, Others
Despite Fintech companies’ inducement with zero charges on customers’ deposits and transfers, five banks generated a total of N419.12 billion for maintaining customers’ accounts, and electronic- banking fees, among other fees in the 2023 financial year.
This is an increase of N108.93 billion over the N310.19 billion accruals from such commissions in the 2022 financial year, representing 35 per cent.
This shows the lure of zero charges on fund transfers by Fintech companies such as Opay, Palmpay, and others has limited appeal to depositors who still maintain a preference for traditional banking owing to its ability to advance credit and other financial intermediation services to its customers.
The five banks, FBN Holdings Plc, Stanbic IBTC Holdings Plc, Fidelity Bank Plc, Wema Bank Plc, and Sterling Financial Holdings Company Plc, generated huge growth in fees and commission on the backdrop of growth in customer base.
InsidebusinessNG gathered that the key contributing factors to banks’ fees and commissions are credit-related fees and commissions, account maintenance charges and handling commissions, electronic banking income, and commissions on foreign exchange deals, among others.
The reported growth in fee and commission income impacted these banks’ Non-Interest Income (NII).
In the period under review, FBN Holdings announced N204.9 billion in fees and commission income in 2023, a growth of 42 per cent from N143.98 billion in 2022, while Stanbic IBTC Holdings reported N117.84 billion in fees and commission income, representing 23 per cent from N96.07 billion reported in 2022.
Fidelity Bank reported N44.91 billion in fees and commission income in 2023, a growth of 44 per cent from N31.15 billion reported in 2022.
In addition, Sterling Bank fees and commission grew by 17.6 per cent to N26.32 billion in 2023 from N22.28 billion in 2022, while Wema Bank announced N25.14 billion fees and commission income in 2023, a growth of 51.5 per cent from N16.59 billion declared in 2022.
From the unaudited result and accounts for the year ended December 31, 2023, InsidebusinessNG gathered that FBN Holdings generated N22.08 billion from account maintenance as against N19.88 billion reported in 2022 and N66.04 billion from electronic-banking fees in 2023 from N55.1 billion reported in 2022.
Financial market analysts said the management of some of the banks before now lacked ideas on how to find alternative sources to fees and commissions, alleging that many commercial banks engage in exorbitant charges on customers and that the Central Bank of Nigeria (CBN) had failed to sanction such banks.
Speaking with InsideBusinessNG, the Vice President of Highcap Securities Limited, David Adnori said the growth in this five banks commission was largely underlined by income from increased transaction velocity across all channels and other e-businesses as well as credit-related fees and commissions.
According to him, “banks gain traction on income from these lines as they extend retail and loan offerings.”
The CBN in 2013 commenced the phased reduction of the CoT, which terminated with the zero CoT charge this year.
However, another circular to banks recently in which the CBN replaced the CoT with CAM but subject to a maximum of N1 per N1,000 mille, showed the apex bank had indirectly reintroduced the commission on the Turnover fee as the Current Account Maintenance fee.
The circular was titled, “Introduction of Negotiable Current Account Maintenance Fee Not Exceeding N1/mille.
It stated, “The revised guide to bank charges which came into effect on April 1, 2013, provides for a phased elimination of the 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 the double coincidence of charges.
It stated, “The CBN is not oblivious of the impact of declining crude oil prices, operation of Treasury Single Account, and other market turbulence on the viability and stability of the banking system.
“In furtherance of the mandate to promote and safeguard a sound financial system in Nigeria, banks are by this circular reminded that the 2016 Zero COT regime as jointly agreed during the 311th Bankers Committee meeting of February 12, 2013, has come into effect. In the interest of the stability of the banking system, a Negotiable Current Account Maintenance Fee not exceeding N1 per mille may be charged in respect of all customer-induced debit transactions. Please ensure strict compliance.”
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