Growth In Spite of Losses


Despite losing two million customers in two years, according to data from the Nigeria Inter-Bank Settlement System, bank deposits from customers have risen, with earnings looking good, reports Bamidele Famoofo

Statistics released by the Nigeria Inter-Bank Settlement System (NIBSS), a 24 years old company responsible for handling inter-bank payments in Nigeria, revealed that banks in the most populous African nation lost two million customers within two years. On the average, the banking industry in Nigeria lost one million customers in the financial years 2016 and 2017. Besides the shrink in the number of customers, active bank accounts dropped by 1.5 million, from 65 million in 2016 to 63.5million in 2017.


In spite of the two million shrink recorded in customer base, the industry does not appear to be under any pressure in terms of mobilising deposits, as quoted banks that have so far submitted their full year 2017 financial results to the Nigerian Stock Exchange (NSE) attracted more funds from customers.

“It would ordinarily be expected that the value of deposits from customers will go down considering the fact that banks are losing customers, with about 1.5 million hitherto active accounts becoming dormant,” a source close to the industry said.

But deposits recorded an increase.

THISDAY analysis based on three key financial performance indices of five top commercial banks, which have made available their audited full year 2017 financial results to the NSE as at Thursday, suggests that the exit of two million customers from the industry does not have any visible negative impact as at the end of the 2017 financial year.

On the average, deposits from customers in the industry increased by 15 per cent as at end of the 2017 financial year.  Likewise, average gross earnings (revenue) grew by 24 per cent, while profit rose by 31 per cent on the average.


Stanbic IBTC Holdings Plc grew deposit from customers by 34 per cent at the end of the 2017 financial year, from N560.97 billion on December 31, 2016 to N753.64 billion as at December 31, 2017, while Gross Earnings shot up  to N212.43 billion from N156.43billion in December 2016, representing 36 per cent growth. The bank recorded a 70 per cent increase in profit, from N28.52 billion in 2016 to N48.38 billion in the audited 2017 financial year period.

Zenith Bank Plc, arguably Nigeria’s largest bank by assets and capitalisation, increased its customer deposit portfolio to N3.44 trillion, from N2.98 trillion in 2016, representing about 15 per cent increase. The bank grew its earnings by 47 per cent, from N508 billion in 2016 to N745.19 billion in 2017, while profit was up 37 per cent to about N178 billion, from about N130 billion posted in 2016.

Ecobank Transnational Incorporated (ETI), a pan-African financial institution listed on the Nigerian Stock Exchange, followed Zenith Bank closely with a 13 per cent growth in customers deposit base in 2017. The bank with a larger deposit base compared to Zenith increased its portfolio to N4.65 trillion, from N4.12 trillion recorded in 2016. Gross earnings grew by 15 per cent, from N655 billion in 2016 to N764 billion in 2017.

While Access Bank, one of Nigeria’s Tier-One banks, recorded a decline in profit to the tune of -13.28 per cent in the review financial year ended December 31, 2017, it managed a seven per cent deposits growth, from N2.09 trillion in 2016 to N2.24 trillion, as earnings also improved by 20.4 per cent to N459.08 billion.

Meanwhile, growth was tight for Guaranty Trust Bank Plc, which grew earnings only by 1.11 per cent, from N414.62 billion to N419.23 billion in 2017. The bank, however, increased customer deposits marginally by 3.52 per cent to N2.06 trillion, from N1.99 trillion in 2016. Apparently, due to cost cut, profit went up by 29 per cent to N170.47 billion in the review period.


The reduction in bank customers has largely been attributed to the anticorruption fight by the federal government.

A source in one of the banks was quoted as saying, “When Buhari assumed office, many people abandoned their accounts, especially civil servants, because of fear of investigation. While some outrightly closed down their accounts, others opted for gradual withdrawal so as not to raise alarm.” The source, who works at one of the top five banks in the country, also blamed the BVN for the low patronage of banking products, especially in the rural areas, where awareness was very low.

However, a bank customer, Mr Olaitan Alagbe, stated that he closed some of his accounts due to unnecessary and illegal charges by banks. “First of all, the interest rate is next to nothing, so there is little reason to keep your money at the bank when you can turn it over doing other businesses,” he said. Another customer, who preferred to remain anonymous, said he opened several accounts during the Ponzi scheme boom in the country, but was forced to abandon them after the scheme’s crashed in late 2016 and early 2017.

But a source at the Central Bank of Nigeria said the reduction in the number of bank customers was caused mainly by the introduction of BVN. The source said, “The reduction may not necessarily be a bad thing. For example, many people opened accounts using different variations of their names. A person bearing Musa Salisu Mohammed may have other accounts as Salisu Mohammed or Musa Salisu. So with the introduction of BVN, such customers were forced to regularise their names. However, some opted to close down their accounts, which resulted in the reduction of active bank accounts and customers.”

Financial Inclusion

Nevertheless, the CBN is optimistic that its financial inclusion strategy would succeed in bringing in more people into the formal banking system. The financial inclusion strategy aims to ensure that the bulk of the money in the economy remains within the banking sector. 

But a major challenge in the financial inclusion process is how to ensure that the poor rural dwellers are carried along, considering the lack of financial sophistication among this segment. The CBN, money deposit banks, micro finance banks, and other stakeholders are currently implementing different policies designed to enhance financial inclusion in the country.

The CBN, Abuja Branch Controller, Elizabeth Agu, said the apex bank was targeting to bring in fresh 8.4 million and 8.6 million adult Nigerians into the formal financial sector by 2019 and 2020, respectively. Agu said banks operating in the Federal Capital Territory (FCT) had a target to open a minimum of 1,500 new accounts and offer fresh credit facility to at least 1,000 customers before the end of 2018.

The CBN Deputy Governor, Financial System Stability, Okwu Nnanna, said at a regional capacity building programme in Abuja recently that all stakeholders were important in achieving the set target. Nnanna said the vulnerable segments in Nigeria remained a major concern for financial inclusion, as they constitute a large proportion of the excluded population.

“For instance in Nigeria, the proportion of females without access to formal financial services was 46.3 per cent in 2016 compared to 36.8 per cent of men,” he stated. “In addition, a world disability study on people living with disability showed that 25 million Nigerians were living with one form of disability or the other and this acts as a hindrance to accessing basic financial products and services.”

Nnanna recommended that to improve access to financial services, affordable savings, credit payment, insurance, and pension products should be designed and targeted at the vulnerable groups in the society. He also urged commercial banks and micro finance banks to increase sensitisation to rural areas on the use of Point of Sale (POS), ATMs, and Cashless mobile money services.