• Tuesday, May 28, 2024
businessday logo

BusinessDay

Banks’ e-payment revenue up 39% on CBN’s cashless policy

Banks’ e-payment revenue up 39% on CBN’s cashless policy

The combined revenue from electronic banking of 10 listed banks grew by 38.9 percent last year on the back of the Central Bank of Nigeria (CBN)’s cashless drive.

BusinessDay analysis from the banks’ latest financial statement shows that their total revenue rose to N427 billion from N309 billion in 2022.

The banks are Access Holdings Plc, Zenith Bank Plc, United Bank for Africa (UBA) Plc, FBN Holdings Plc, Guaranty Trust Holding Company (GTCO) Plc, Fidelity Bank Plc, FCMB Group Plc, Stanbic IBTC Holdings Plc, Sterling Financial Holdings Company Plc, and Wema Bank Plc.

“The rise in electronic banking income is a factor of the amount of volume that banks have transacted with during the first half of 2023. People are doing more transactions online rather than using cash,” Tesleemah Lateef, a bank analyst at Cordros Securities Limited, said.

She said the volume of online transactions has increased because the cashless policy in the first quarter of 2023 has led to more people doing more transactions online.

“If charges remain the same and volume of transaction increase then banks will rake in more money from electronic banking.”

UBA recorded the highest electronic banking revenue of N125.5 billion, followed by Access Holdings with N101.6 billion. FBN Holdings, Zenith Bank, and GTCO had N66 billion, N51.8 billion and N40.8 billion respectively.

The CBN has been driving its effort to establish a cashless society with several initiatives to promote digital payments and reduce the country’s dependence on cash.

The 2012 digital payments directive, issued by the apex bank, was a significant milestone in this journey. The directive required financial institutions to increase their investment in digital payment infrastructure, promote digital payments among their customers, and work with the regulator to develop a strong regulatory framework.

As more Nigeria embraced digital financial channels, financial inclusion rose to 74 percent in 2023 from 68 percent in 2020, according to the 2023 Enhancing Financial Innovation and Access survey.

In October 2022, Godwin Emefiele, the then CBN governor, announced the naira redesign policy, which aimed to improve Nigeria’s monetary policy, promote digital alternatives like the eNaira, and enhance the currency’s integrity.

The policy has led to the expansion of various payment channels across the country. For example, according to reports the number of Automated Teller Machines (ATMs) rose from 11,000 in 2011 to 22,600 in 2021 where it has remained as of December 2023.

Also, the number of PoS terminals rose from around 155,000 to 1.1 million as of April 2022. And the number of active banking agents is over 1.9 million according to data from SANEF.

Gloria Fadipe, head of research at FCMB, the policy increased the value and volume of transactions through payment systems such as electronic/internet banking, mobile apps, ATM, Cards/PoS, eNaira, and agent banking.

Reports disclosed that Nigerian banks faced intense pressure on their electronic platform as some people flocked to fintech payment providers like Opay, and Moniepoint, among others as a way out of the quagmire.

“Fintechs have been able to make their transfer services more efficient because they’ve been built recently, using the latest advancements in technology. This allows them to do some things differently than big banks, making their services more reliable. Additionally, since fintechs are smaller, they can quickly change and adapt when needed,” according to sources.

However, findings showed financial institutions are using Fintech products to boost their operations and enhance customer satisfaction through the introduction of applications that ensure transactions are carried out expeditiously.

These investments by brick-and-mortar banks are paying off as lenders have recorded a remarkable growth in electronic business commissions and fees which invariably show an increase in their total fees and commissions income.

Further findings from the banks’ statements also revealed that the total fees and commissions amounted to N1.36 trillion last year, a 33 percent increase from N1.02 trillion in 2022.

Analysis of individual firms

UBA

UBA’s electronic banking revenue of income increased by 59 percent to N125.5 billion in 2023 from N78.9 billion in 2022.

The bank’s total fees and commission income amounted to N307.3 billion from N210.5 billion while account maintenance earnings increased to N20 billion from N15 billion.

Access Holdings

Access Holdings’ electronic banking income surged to N101.6 billion last year from N59.6 billion in 2022.

The group’s electronic banking income growth rate rose to 70.4 percent during the period under review. Its total fees and commission income amounted to N277.4 billion from N197.5 billion.

FBN Holdings

FBN Holdings’ electronic banking income surged to N66 billion last year from N55 billion in 2022.

The group’s electronic banking income growth during the period increased by 20 percent.

FBN Holdings’ fees and commission income increased to N204.9 billion from N143.9 billion while account maintenance earnings increased to N22 billion from N19.8 billion.

Zenith Bank

Zenith Bank’s electronic banking income increased to N51.8 billion in 2023 from N45.7 billion in 2022. The bank’s fees and commission income increased to N177.5 million from N157.2 billion while account maintenance earnings rose to N47.2 billion from N41.5 billion

GTCO

GTCO recorded electronic banking income of N40.8 billion last year from N37.7 billion in 2022. Its electronic banking growth rate increased by 8.2 percent within the period in review.

GTCO’s fees and commission income increased to N124.1 billion from N105.1 billion while its account maintenance earnings rose to N22.8 billion from N19.3 billion.

FCMB Group

FCMB’s electronic banking income increased to N17.6 billion in 2023 from N13.9 billion in the same period of 2022.

The group’s fees and commission income increased to N60.7 billion from N44 billion while account maintenance earnings rose to N8.6 billion from N6.8 billion.

Sterling Financial Holdings Company

Sterling Holdings’ electronic banking income stood at N8.5 billion in 2023, up from N7.2 billion in 2022.

Its fees and commission income increased to N26.3 billion from N22.3 billion while account maintenance earnings grew to N4.8 billion from N4.1 billion.

Wema Bank

Wema Bank’s electronic banking income grew to N7.4 billion in 2023 from N6.1 billion in 2022.

The bank’s fees and commission income rose to N10.03 billion from N7.48 billion while account maintenance earnings increased to N1.64 billion from N1.29 billion.

Stanbic IBTC Holdings

Stanbic IBTC Holdings’ electronic banking increased to N4.4 billion in 2023 from N2.5 billion in 2022.

Its fees and commission income increased to N117.8 billion from N96 billion while account maintenance earnings grew to N6.7 billion from N5.4 billion.

Fidelity Bank

Fidelity Bank’s electronic banking income increased to N3.6 billion in 2023 from N2.8 billion in 2022.

The bank’s fees and commission income increased to N44.9 billion from N31.1 billion while account maintenance earnings rose to N8.5 billion from N5 billion.