• Tuesday, March 05, 2024
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BusinessDay

Cash crunch raises banks’ fees, commission to N254bn in Q1

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The cash crunch experienced in the country in the wake of the Central Bank of Nigeria’s naira redesign policy has pushed Bank’s earnings from fees and commissions to N254.05 billion in the first quarter of 2023.

Findings by BusinessDay showed Access Bank, Fidelity Bank, Zenith Bank, Guaranty Trust Holding Company (GTCO), Ecobank, Wema Bank, Stanbic IBTC bank and FCMB recorded a total fee and commission income of N254.05 billion in the first three months of 2023.

Oyinkosola Aregbesola, an Investment Research Analyst at Asset & Resource Management Holding Company attributed the spike in fee and commission income to the cash crunch that happened in the first quarter of 2023.

“Majority of people have transitioned from using cash to online transactions, which in turn has had an impact on the bank’s e-banking income,” Aregbesola said.

Fees and commissions account for a significant percentage of non-interest income for banks and represent income from account maintenance fees, electronic banking fees, and other credit-related commissions.

Net fee and commission income is the actual revenue generated from these charges after expenses incurred from providing the services have been deducted.

Aregbesola also noted that for banks, the more customers, the more transactions, the more their fees and income commission rose.

Uju Ogubunka, the President of the Bank Customers Association of Nigeria, lamented the issue of excess charges paid by bank customers, describing it as a major concern.

He said, “The issue of excess charges has been a major source of concern to us as an association. We have since been fighting it and we will not stop.”

Here is the breakdown of the bank’s source of fee and commission income.

Access Holding Plc

Access Bank fees and commission income rose to N61.26 billion in the first quarter of 2023, up by 8.8 percent from N56.3 billion recorded in the same period of last year.

It rose on the back of credit-related fees and commissions, channels and other e-business income, account maintenance charges and handling commissions, among other charges.

Fees and commission expenses increased to N15.88 billion from N13.4 billion in the same period last year.

Under the fees and commission expenses, E-banking expenses rose to N13.32 billion in the first quarter of 2023 from N11.38 billion recorded in the same quarter of last year.

Given the consecutively increase in interest rate, interest income calculated using effective interest rate rose to N250.99 billion in the first quarter of 2023 from N160.31 billion in the same quarter of last year, a 56.56 percent increase.

Profit after tax also increased to N71.66 billion in the period under review from N57.83 billion recorded in the same period last year.

Fidelity Bank

Fidelity’s Bank fees and commission income rose to N11.9 billion in the first quarter of 2023, up by 50.3 percent from N7.93 billion recorded in the same period of last year majorly on the back of ATM charges and account maintenance charges.

ATM charges accounted for N2.79 billion from N1.83 billion recorded in the same period of last year, and account maintenance charges accounted for N1.61 billion from N1.23 billion recorded in the same period of last year.

Fee and commission expenses also saw an increase of 21 percent to N3.77 billion in the first quarter of 2023 from N3.1 billion in the same quarter of 2022.

Profit after tax stood at N15.61 billion in the first three quarters of 2023 from N7.9 billion in the same period of 2022.

Interest and similar income using effective interest rate methods recorded in the period under review increased by 42.5 percent to N86 billion from N60.4 billion in the same period of last year, on the back of an increase in loans and advances to customers to N73.9 billion.

Zenith Bank

Zenith’s bank fee and commission income saw a decrease of 3.94 percent to N39.76 billion in the first quarter of 2023 from N41.39 billion recorded in the same period.

This is a result of a decrease in fees on electronic products to N12.1 billion from N15.78 billion recorded in the same period last year.

Fee and commission expenses also saw a decrease of 29 percent to N5.61 billion in the first quarter of 2023 from N7.91 billion in the same quarter of 2022.

However, interest and similar income saw an increase of 51.6 percent to N191.63 billion recorded in the first three months of the year from N126.38 billion recorded in the same period of last year.

Profit after tax increased to N66.01 billion in the period under review from N58.198 billion recorded in the same period of last year.

Guaranty Trust Holding Company (GTCO)

GTCO’s fees and commission income for the first three months of 2023 increased by 33.2 percent to N32.43 billion from N24.35 billion recorded in the same quarter of last year on the back of e-business Income, account services, maintenance, and ancillary banking charges and transfers related charges.

Furthermore, fees and commission expenses saw a decrease of 3.4 percent to N2.492 billion recorded in the period under review from N2.58 billion recorded in the same quarter of last year.

Interest income calculated using the effective interest method also increased to N96.57 billion in the period under review from N63.93 billion recorded in the same period of last year.

Profit after tax also increased to N58.17 billion in the first quarter of the year from N43.21 billion recorded in the same quarter of last year.

Ecobank Transnational Incorporated Plc

Fee and commission income increased to N63.36 billion in the first three months of the year from N55.48 billion recorded in the same period of last year.

Fee and commission expenses decreased to N5.72 billion in the period under review from N7.04 billion in the same period of 2022.

Interest income calculated using the effective interest method also increased to N206.7 billion in the first quarter of 2023 from N156.10 billion in the same quarter of 2022.

Profit after tax increased to N40.41 billion in the first quarter of 2023 from N38.32 billion recorded in the same quarter of 2022.

Wema Bank

Net Fees and commission income increased to N4.93 billion in the first three months of the year from N4.05 billion recorded in the same quarter of last year, a 21.7 percent increase

The increase was on the back of fees on electronic products which increased to N1.52 billion from N789 million recorded in the same quarter of 2022.

Interest income also rose to N33.87 billion in the quarter under review from N25.2 billion recorded in the same quarter of 2022.

Simultaneously, Profit after tax increased by 88.1 percent to N5.38 billion recorded in the first three months of the year from N2.86 billion recorded in the same period of last year.

Stanbic IBTC Holdings Plc

Stanbic IBTC bank saw its fees and commission income grow by 12.55 percent to N26 billion in the first quarter of 2023 from N23.1 billion recorded in the same period of 2022 on the back of fees generated from electronic banking.

Interest income increased to N50.42 billion in the quarter under review from N32.9 billion recorded in the same quarter of 2022.

It also recorded an increase in profit after tax to N28.86 billion in the first three months of the year from N15.01 billion recorded in the same period of 202.

First City Monument Bank (FCMB)

Fees and commission income recorded an increase of 40.86 percent in the first quarter of 2023 to N14.41 billion from N10.23 billion recorded in the same quarter of 2022.

Fee and commission expenses slightly increased by 0.77 percent to N2.63 billion in the period under review from N2.61 billion recorded in the same period of last year.

Interest income also increased to N66 billion from N46.69 billion recorded in the first quarter of 2022.

Profit after tax also increased by 79.69 percent to N9.29 billion in the first three months of the year from N5.17 billion recorded in the same quarter of 2022.