Kayode Tokede
Following the growing demand for Electronic transactions in the Nigerian banking sector, FBN Holdings Plc, Access Holdings Plc and eight other banks spent a whopping sum of N81.8 billion on customer’s fees and commission expenses in the first quarter ended March 31, 2022, analysis of the banks’ unaudited result and accounts for Q1 2022 has revealed.
This is an increase of 30per cent from N63.02 billion reported in Q1 2021.
Fees and commissions expenses are fees charged for the provision of services to customers transacting on alternate channels platform of a bank and on the various debit and credit cards issued for the purpose of these payments.
The unaudited result and accounts for the period under review revealed showed that the banks incurred the expenses from electronic transfers and E-banking charges.
Further analysis of the unaudited result and accounts for the period ended March 31, 2022, showed that FBN Holdings, followed by Access Holdings Plc were the two financial institutions that incurred highest fee and commission expenses, given to their expansion across Africa.
Other were; United Bank for Africa Plc (UBA), Zenith Bank Plc, Stanbic IBTC Holdings Plc, Guaranty Trust Holding Plc (GTCO), Union Bank of Nigeria Plc, Fidelity Bank Plc, Sterling Bank Plc FCMB Group Plc and Ecobank Transnational Incorporated (ETI).
In the period under review, FBN Holdings reported N23.94billion fees & commission expenses, an increase of 23.1 per cent from N19.45billion in 2021, while Access Holdings reported N13.4billion fees & commission expenses in Q1 2022 from N8.22billion reported in Q1 2021, representing an increase of 63 per cent.
A breakdown of FBN Holdings’ fees & commission charges revealed that N11.81billion was spent on acceptance cost (Alternative channels) in Q1 2022 from N10.86billion in Q1 2021, while N7.44billion was incurred as SMS charge in Q1 2022 from N5.5billion reported in Q1 2021.
The Holdings added that it spent N4.64billion on agent banking expenses in Q1 2022 as against N2.7billion in Q1 2021, while internet/web expenses dropped to N44million in Q1 2022 from N365million in Q1 2021.
According to FBN Holdings, “Fee and commission expense primarily relates to charges raised by switching platforms on holders of First Bank Limited ATM cards, who make use of the other banks machines while transacting business, and SMS alert related expenses.”
On its part, UBA Plc’s fee & commission expenses grew by 22.05 per cent to N17.81billion in Q1 2022 from N14.59billion reported in Q1 2021, driven by 84 per cent expenses on E-Banking expense that moved from N13.53billion in Q1 2021 to N14.9billion in Q1 2022.
Meanwhile, with emergence of Fintech companies’ aggressiveness with customers’ deposit and withdrawal, the 10 banks in the period under review generated N399.06 billion fee & commission from customers, representing an increase of 24 per cent from N321.6 billion reported in the prior period.
Key contributing factors to banks fee and commission are credit related fees and commissions, Account maintenance charge and handling commission, electronic banking income, commission on foreign exchange deals, among others.
The reported growth in fee and commission income impacted on these banks Non-Interest Income (NII).
Extract from Q1 2022 unaudited result and accounts revealed that FBN Holdings generated N140.57billion fees & commission income from customers in Q1 2022, an increase of 24.16 per cent from N113.2billion reported in Q1 2021, followed by Access Holdings that generated N56.3billion as fee, commission from customers in Q1 2022, an increase of 45 per cent from N38.95billion in Q1 2021.
FBN Holdings in a presentation to analysts/investors explained that E-banking revenue grew by 15.8per cent to N56.4 billion from N48.7 billion reported in full year ended December 31, 2021, driven by higher transactional volume in a highly competitive environment
“Account maintenance stemming from our global and large customer base continue to increase Annuity income from Asset Management, Trustee and Custodian grew 17.7per cent to N13.9 billion (Dec 2020: N11.8 billion billion) further supporting our revenue diversification drive
“Focus remains on sustaining non-interest revenue drive through innovations, synergies and collaboration across our businesses, ”FBN Holdings said in a presentation.
Fees from channels and other electronic- business income contributed 35.7per cent to Access Holdings fee & commission to N20.13billion in Q1 2022 from 46 per cent to N17.92 billion reported in Q1 2021.
Access Holdings in 2021 financial year generated N159.2 billion fees and commissions from customers’ transactions, representing an increase of 36 per cent compared to N116.7 billion in 2021.
Speaking with investors/analysts, the Group Executive Officer, Access Holdings, Mr. Herbert Wigwe had said the growth was largely underlined by income from increased transaction velocity across all channels and other e-businesses as well as credit related fees and commissions which grew by 33per cent.
According to him, “We will continue to gain traction on our income from these lines as we extend our retail and loan offerings.”
ETI’s fee and commission from customers grew by 21.6 per cent to N55.48billion in Q1 2022 from N45.62billion in Q1 2021.
The Pan-African bank in a statement explained that : “Non-interest Income was $198 million (N82.23billion) for the first quarter of 2022, increasing by 15per cent or $25 million (N69.29billion), by 25per cent on a constant currency basis, boosted by the continued robustness in client and customer activity following the lifting of most of the Covid-19 pandemic-induced restrictions.
“As a result, net fees and commission income increased by 16per cent or $16 million to $116 million, with fees generated on Cards rising by 30per cent to $24 million, credit-related fees increased by 17per cent to $37 million, and cash management fees rose by nine per cent to $54 million.
“Additionally, NIR benefited from net trading income, which increased by 12per cent or $8 million to $72 million, predominantly driven by a 216per cent increase in fixed-income trading to $34 million, partially offset by a decrease in client-related foreign-currency sales of 29per cent to $38 million.
“As a result, the contribution of non-interest revenue to total net revenue (the NIR ratio) was 45per cent versus 42per cent in the year-ago period.”
As UBA grew fee and commission income from customers to N42.1billion in Q1 2022 from N34.96billion in Q1 2021, Zenith Bank reported N33.49billion fee and commission from customers in Q1 2022 from N28.69billion in Q1 2021.
According to Zenith bank: “Going forward into the rest of the year, the Group will continue to focus on sustainable growth across all its business segments, deploy technology platforms and digital assets intuitively to serve the needs of its various customers in order to deliver enhanced returns to its stakeholders.”
Stanbic IBTC Holdings emerged stronger in the period under review reported N23.13billion fee & commission income from customers in Q1 2022 from N22.17billion reported in Q1 2021.
Fidelity Bank reported 32 per cent fee and commission income from customers increase in Q1 2022 to N7.9billion from N6.01billion in Q1 2021, while Sterling Bank reported N5.13billion fee and commission income from customers in Q1 2022 from N3.65billion in Q1 2021.
The MD/CEO of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe had explained that, “Digital Banking has continued to gain traction YoY driven by our nimble retail strategy. 56 per cent of our customers are enrolled on the mobile/internet banking products and over 90per cent of customer-induced transactions were done on digital platforms with digital banking business contributing 33.2per cent to non-interest revenue.”
In addition, FCMB group reported 34 per cent increase fee and commission income from customers transactions to N10.23billion in Q1 2022 from N7.66billion in Q1 2021, while Wema Bank reported N4.05billion fee and commission in Q1 2022 from N2.56billion in Q1 2021.
