Guaranty Trust Bank Plc (GTBank), the largest lender by market capitalization in Africa’s largest economy is more optimal in using its workforce in generating higher profit, as a low yield environment cast a pall on industry earnings.
For instance, GTBank’s 3,396 staff generated N43.28 million each in profit (based on nine months net income), which shows it is more productive in using people in achieving the organization goal congruence.
That compares with Zenith Bank’s 6,253 staff strength that generated profit per employee of N24.10 million; Access Bank’s employees that generated N14,25 million each.
Interestingly, United Bank for Africa (UBA) has the largest number of workforce (12,999), but it staff strength generated profit of per employee of N6,323 million.
Net Income per employee (NIPE) is a company’s net income divided by the number of employees. This number shows the company how efficient or productive its employees are.
Theoretically, the higher the net income per employee the better. Aside from increasing the productivity of employees, this number could be increased by a number of other factors.
The company can become more efficient by using better and more advanced technology than before. The company could also have released a commercially successful product that they made huge profits off of.
However, there is way in which the NIPE could be increased directly from the employees. This could be from employees getting a higher education or having better skill sets in their particular job.
Industry sources tell BusinessDay Markets and Intelligence that banks have sought to find ways to manage costs, one of which is a reduction in staff costs.
Thus, while the banking sector staff strength has grown by 29.5 percent over the past three years, many of the hired staff have been contract staff.
According to National Bureau of Statistics (NBS) data, over the past three years, there has been a 14.6 percent decline in the number of senior staff, an 8.9 percent increase in the junior staff number while the number of contract staff is up 104.8 percent.
Data from the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) showed that the percentage of banking sector workers who fall within the casual, contract and outsourced category stands at 65.0 percent.
The cumulative total operating expenses of the largest lenders stood at N1.13 trillion in September 2019, an increase of 11.41 percent.
A breakdown of the figure showed they incurred N368.69 billion in staff costs in the period under review.
Bank’s Net Income Per Employee
| Staff | Net income (N’m) | NIPP (N’m) | |
| ZENITH BANK | 6,253 | 150,723 | 24,104 |
| ACCESS | 6367 | 90,739 | 14,251 |
| FIDELITY | 2,908 | 21,462 | 7,380 |
| GT BANK | 3,396 | 146,989 | 432,583 |
| STANBIC IBTC | 2,933 | 55,552 | 18,940 |
Source: Companies Financials; M and I
While the proportion of expenses to revenue is shrinking for most banks, total operating expenses have been growing.
Access Bank’s total operating expenses were up by 34 percent to N194.2 billion in the period under review, reflecting the impact of the enlarged franchise. A sum of N7 billions of total operating expenses relates to merger cost, comprising of professional fees, regulatory charges and branding.
Bank’s Net Income Per Employee
| Staff | Net income (N’m) | NIPP (N’m) | |
| UBA | 12,909 | 81,628 | 6,323 |
| UNION BANK | 2,645 | 15,192.00 | 5,743 |
| STERLING | 2,401 | 7579 | 3,156 |
| UNITY BANK | 1,734 | 1,482 | 854 |
| WEMA BANK | 1021 | 4,088 | 4,004 |
Source: Companies Financials; M and I
FBN Holdings’ total operating expenses were up 16.59 percent to N215.16 billion in September 2019, as the lender attributed rising costs to increase in regulatory costs and business growth as it adopted a revised AMCON charges.
FBN Holdings said regulatory cost constituted 13.2 percent of total operating cost in 9M 19 in the period under review.
Fidelity Bank’s operating expenses increased by 14.5 percent to N57.87 billion as at September 2019, driven largely by NDIC|AMCON| Advert which accounted for 60.3 percent of the increase in operating expenses.
Interest income has been growing at a single digit due to a sharp drop in yields that started in 2018, but an aggressive foray into retail banking is driving profit.
The macroeconomic uncertainty and inability of Federal Government to formulate policies that will help propel the economy to growth has been undermining earnings growth across sectors.
The country’s gross domestic product expanded by 1.94 percent in the second quarter of 2019, but the figure is lower than the 2.10 percent expansion in the first quarter, according to a recent data by the NBS.
While inflation rate has reduced to 11 percent, it is still below regulatory range of 6 percent and 9 percent.
