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Tier 1 banks’ deposits up by 24% amid covid 19 pandemic

Amid the global health crisis that took its toll on the Nigerian economy, the deposits the tier 1 banks – Access Bank Plc, First Bank of Nigeria (FBN), Guaranty Trust Bank (GTB), United Bank for Africa (UBA) and Zenith Bank mobilized from customers and other financial institutions grew by 24 per cent from N18.6 trillion in Q1 2019 to N23 trillion in Q1 2020.

Banks deposits are common occurrence in which customers deposit funds into their accounts, and if it not withdrawn; banks use the funds to create additional funds through investments or loans to other customers.

The growth recorded shows a significant level of resilience, indicating a positive shift to bank deposits during the lockdown. The five big banks which control not fewer than 70 per cent of the total banks’ deposits continue to dominate the banking space amid the recent global pandemic that disrupted economic and financial services sectors.

Access Bank recorded the highest deposits from all tier 1 banks to the tune of N5.6 trillion for the period ended March 30th 2020. This represents a 20 per cent increase when compared with the preceding year 2019.

Growth in the bank’s deposits can largely be attributed to the acquisition of the defunct Diamond Bank, as that move increased the bank’s customer base and profit for the reference period. A breakdown of the bank’s deposits shows that term deposit, a type of deposit account held at financial institution where money is locked up for period of time usually on a short-term basis with maturities ranging from one month and few years, constitutes the major chunk of the bank’s deposits accounting for 33 per cent of the total deposit. It is followed by the demand deposit, a type of account where deposited funds can be withdrawn at any time, accounts for 31 per cent of the total deposits, while money deposit amounts to N1 trillion and represents 19 per cent of the bank’s deposits for the period ended March 2020. The savings deposits and trade related obligations to foreign banks accounted for 15 per cent and 2 per cent of the total deposit for the reference period respectively.

 

FBN had a 29 per cent growth in its deposits from N4.2 trillion in March 2019 to N5.4 trillion in March 2020. Customers’ deposits of N4.18 trillion, up by 6.8 per cent ytd (December 2019: N3.91 trillion). Savings deposits accounted for 33 per cent of the total deposits for the period which is the most among other classes of deposits – current deposits, 27 per cent; term deposits, 22 percent, and domiciliary 18 per cent in the same period, and N12.2 billion were deposited to electronic purse.

Findings show that the bank recorded an impressive growth in its key financial ratios. Commenting on the financial results, UK Eke, the Group Managing director said: “The current situation demonstrates the importance of the deployment of appropriate technology and effectively validates our recent investment in enhancing our capacity in technology innovation and digitalization of our products and services”
A review of the GTB’s financial results for the first quarter of this year shows a positive performance across all key metrics. The bank’s deposits rose by 14 per cent from N2.5 trillion in Q1 2019 to approximately N2.9 trillion in the corresponding quarter in 2020. Breakdown of the bank’s deposits shows that the current deposits had the largest share accounting for 55 per cent of the total deposits; saving deposits, 26 per cent; term deposits, 15 per cent; other deposits from banks, 3 per cent, and money market deposits slipped by 45 per from N9.9 billion in Q1 2019 to N5.4 billion in first quarter of 2020.

Commenting on the financial results, Segun Agbaje, Managing Director/CEO of Guaranty Trust Bank Plc said: “These are very difficult and uncertain times, not just for the financial services sector and the economy as a whole, but also for hundreds of millions people around the world whose lives and livelihoods have been put at risk by the COVID-19 pandemic. We know the impact may sustain for months to come but we remain positive that, by staying nimble and continuing to build on the strength of our businesses.

We are appropriately positioned to cope with emerging economic realities, as it is reflected in our first quarter results”

Financial results of many businesses showed a downward trend due to the recent pandemic that almost halted businesses. UBA, among others, shows positive appreciation in its books of account judging by the performance of its key financial ratios. Total deposits increased by 27 per cent from N3.6 trillion in Q1 2019 to N4.6 trillion in Q1 2020. Retail deposits accounted for 72 per cent of customers’ deposits while cost -of-funds moderated to 3.3 per cent.

Commenting on the performance of bank during the referenced period, Kennedy Uzoka, the Group Managing Director/CEO expressed satisfaction, despite the challenging business environment.
“We are pleased with our top and bottom lines in the first quarter of 2020”, Uzoka said.

A review of the unaudited financial statement of Zenith Bank shows a 25 per cent increase in customers’ deposits to N4.46 trillion in Q1 2020 from N3.57 trillion in the corresponding quarter in 2019. Customers’ deposits increased by 5 per cent when compared to N4.26 trillion recorded in December 2019.

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