Data gathered by Markets and Intelligence shows Zenith Bank Nigeria Plc has deployed technology in generating fees and commission income compared to peers.
For instance, from December 2013 to 2017, Zenith Bank realized N345.01 billion in fees and commission income, this compares with Guaranty Trust Bank’s commission income of N216.12 billion, United Bank for Africa (UBA); N271.11 billion, First Bank Holdings Plc, N291.76 billion; and Access Bank, N207.08 billion.
Analysts say lenders will have to invest in latest technology that will help underpin non-interest income as a precipitous drop in yields have put an halt to free money.
A cross section of experts interviewed by Markets and Intelligence are of the view that banks will see improvement in full year fees and commission income. They expect the trend to continue in 2019 since interest income on loans and advances are ebbing because lenders have refused to turn on the tap on lending.
Banks and companies are increasingly tapping into Nigeria’s digital potential as the economy recovers.
Mobile phone subscribers in the nation almost 200 million people reached 162 million in September, according to the Nigerian Communication Commission.
Nigeria’s gross domestic product grew 2.38 percent in the last quarter of 2018 compared with 2.11 percent in the same quarter a year before, the National Bureau of Statistics said on Tuesday.
Slow loan growth and low yield environment has been a clog in the wheels for banks as margins were pressured while interest income reduced.
To further exacerbate the already anaemic position of players in the industry is the uncertainties surrounding the just concluded election and the vagaries of global macroeconomic headwinds such as the trade spate between China and the United States and the incessant hike in rates by the United States Feds that forced foreign investors to dump developing and emerging market stocks.
For the first nine months through September 2018, 13 largest banks made N384.47 billion in fees and commission income, which is 55.87 percent of cumulative non-interest income.
Combined non-interest income of N687 billion is 30.69 percent of cumulative interest income of N2.23 trillion as at September 2018.
“Interest income has reduced across banks in third quarter of 2018 and what has supported gross earnings in the period under review was non-interest income. The major driver of non-interest income was fees and commission income,” said Ifedayo Olowoporoku , equity research at Vetiva Capital Management Limited.
“Stronger commercial activities have driven commission income and we see surge in non-interest income drive gross earnings,” said Olowoporoku.
