A growing number of bank customers in Nigeria have voiced concerns over what they described as excessive charges on their transactions, threatening the country’s financial inclusion drive.
Top Nigerian banks recorded an increase in fees and commission income last year, a BusinessDay analysis of their 2021 financial statements show.
Many customers have reached out to some banks on Twitter to complain of “outrageous” charges deducted from their various accounts.
“I will liken the various deductions in every transaction done with our banks as multiple tragedies on Nigerians trying to survive this ugly economic situation,” a bank customer told BusinessDay.
While sharing his experience, he described two of the tier 1 banks as the most unfriendly bankers in the country.
“Late February, I had to close my current account due to the unnecessary deductions; even the bank’s staff could not explain,” the customer said.
“I discovered that after a transaction, I was charged ‘transfer commission’ of N20.00; I was also charged telco plus VAT N7.5 and USSD telco session charge, all in one transaction,” another customer, who lives in Ikorodu, said.
A middle-aged woman who lives in Festac, Lagos showed BusinessDay how she was charged N9.98 and N133.03 on April 1, 2022, without any indication of what the charges were for.
“The excessive charges will slow down the rate of financial inclusion as customers will avoid operating a bank account. It’s been established by several surveys that customers are very sensitive to charges,” Ayodeji Ebo, an investment professional, said.
He said low transaction charges would be a major selling point for banks in the short to medium term as customers would migrate to banks with the least charges.
In a joint statement issued on March 16, 2021 by the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission, financial service providers were directed to charge N6.98 per transaction for USSD services.
Another customer complained on Twitter that a bank had been charging him for SMS alerts for over six years, even though he did not subscribe for the service.
“I have complained to the point that I am tired. I did not subscribe to SMS alerts and I don’t receive any SMS alerts whatsoever but still get charged for it anyways,” he said.
The financial results for the year ended December 31, 2021 of some of the banks, especially the systemic important banks, showed an increase in their non-interest income.
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Non-interest income is the revenue or income that banks and financial institutions earn from non-core activities that play a significant role in their overall profitability. It includes loan processing fee, late payment fees, credit card charges, service charges, and penalties, among others.
Guaranty Trust Holding Company Plc saw its non-interest income, comprising fees and commission income, net trading gains, and other income, rise by 17.1 percent to N180.9 billion in 2021 compared to 2020, according to its annual report.
The bank explained that the non-interest income growth resulted largely from 39.4 percent growth in fees and commission income, 9.9 percent increase in other income, which was partly offset by 8.6 percent decrease in net trading gains.
Access Bank recorded a net fee and commission income of N118.59 billion in 2021, rising by 26.73 from N93.57 billion in 2020.
Zenith Bank’s non-interest income increased by 23 percent from N251.7 billion in 2020 to N309 billion in 2021.
FBN Holdings, the holding company for First Bank of Nigeria, saw its fees and commission income increase by 18.47 percent to N103.77 billion in nine months of 2021 from N87.59 billion in the same period of 2020.
The net fees and commission income of United Bank for Africa rose to N158.64 billion in 2021 from N126.94 billion in 2020, according to its annual report.
When a customer transfers below N5,000, a bank is expected to charge N10; N5,001 -N50,000 attract a charge of N25, and above N50,000 attracts N50 as electronic fund transfer charge, according to the CBN.
But some banks are charging higher than what is stipulated by the CBN. BusinessDay gathered that one of the tier two banks charges N26.88 for fund transfers of between N10,000 and N50,000, and N53.75 for transfers above N50,000.
“To worsen it, these deductions are taken from both the sender and receiver. The CBN should also tell Nigerians who is supposed to pay the charge of any transfer – is it the sender or receiver? But our banks and telcos are currently taking it from both sides,” a customer said.
He added, “The problem here is that the regulator may not be aware of these deductions, as the bankers claim. Also, the government programme on financial inclusion is being gradually suffocated by these multiple deductions, especially now that the banks have no interest to add to any savings. And the issue of mobile banking is also being seriously threatened.
“The CBN should come in at this time to curb these deductions in order to bring sanity to our banking sector.”
