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Banks’ staff salaries rise 26% amid soaring inflation

Banks’ staff salaries rise 26% amid soaring inflation

The total salaries of eight Nigerian banks rose by 26 percent within one year, a BusinessDay analysis of data from their financial statements show.

The combined personal expenses of the banks increased to N277.2 billion in the first half of 2023 from N219.8 billion in the same period of last year.

Personnel expenses encompass all of a company’s expenditures in relation to staff remuneration and welfare within a specific financial reporting period. Such expenses may include salaries/wages, other benefits like health insurance costs, pensions, and training.

Further analysis of the financial statements show that United Bank for Africa (UBA) reported the highest personnel expenses of N69.4 billion in H1. Followed by FBN Holdings with N65.2 billion, Zenith Bank (N56.3 billion) and Stanbic IBTC Holdings (N29.5 billion).

Others are Guaranty Trust Holding Company (GTCO) (N20.8 billion), Fidelity Bank (N17.3 billion),Wema Bank (N11.9 billion) and Unity Bank (N6.8 billion).

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The Federal Government reforms, such as the removal of petrol subsidy and naira devaluation, implemented in the second quarter of the year, increased the cost of living of cash-strapped consumers.

According to the National Bureau of Statistics, the country’s inflation rate rose to a 18-year high of 25.80 percent in August from 24.08 percent in the previous month.

The World Bank said in June that inflation pushed an estimated four million more Nigerians into poverty in the first five months of this year.

The removal of the fuel subsidy tripled the petrol price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise transportation fares.

This situation affected those who rely on public transportation, particularly workers in the private sector.

With higher transportation fares, many employees are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.

This move made some banks re-evaluate their employee benefits by increasing salaries and wages. Some of the banks were Wema, Zenith, GTCO, UBA and Union Bank.

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In June, GTCO announced an increase in salaries for its junior and contract staff to help them cope with the increasing cost of living. The following month, Zenith announced the implementation of a company-wide salary increment for its entire staff.

That same month, UBA said its board of directors had immediately implemented a cost of living adjustment for its staff.

The bank had previously implemented a cost of living adjustment for staff on October 1, 2021 and on April 1 as a result of the persistent economic challenges.

“We are aware of the impact of recent economic policy pronouncements on prices and your capacity to meet your financial commitments to family and personal needs,” Oliver Alawuba, chief executive officer at UBA, said.

“As an organisation focused on the well-being of our people, I am pleased to inform you that the Board of UBA Plc has approved a Welfare Allowance for all employees,” he added.

Read also: Nigerian banks increase salaries to cushion economic downturn

Apart from GTCo and Zenith, Fidelity also commissioned more staff buses to ease the burden of commuting for employees.

In a recent article, HR Daily Advisor, a global multi-platform media company said that higher wages may improve the public’s perception of an organisation and lead to an improved reputation.

“Employees will be more likely to stay if the pay level is better than your competition’s, reducing recruiting costs due to fewer turnovers and resulting in having to train fewer new people,” it said.

It added that better-paid employees may mean more satisfied employees, boosting employee morale. “And higher wages may mean employees can meet their financial obligations with less stress and less stress is better for both the employee and the employer.”