Nume Ekeghe
A total of eight Deposit Money Banks (DMBs) generated N234.97billion for maintaining customers’ accounts, Electronic-banking commission, and credit-related fees, among other commissions in the first half (H1) of 2022.
This represents an increase of 14.7 per cent from N204.84 billion fee and commission income generated by these eight DMBs in H1 2021.
The eight banks are: Ecobank Transnational Incorporated (ETI), FBN Holdings, FCMB Group Plc, Sterling Bank Plc, Union Bank of Nigeria Plc, Unity Bank Plc, Wema Bank Plc and Jaiz Bank Plc.
A breakdown revealed that ETI generated a sum of N112.21billion or $269.1million fee and commission from customers, representing an increase of 21 per cent from N92.84billion or $228.58million in H1 2021.
The pan-African bank in a recent presentation maintained that increase in fee and commission was driven by significantly higher spending on cards, cash management fees and credit-related fees responsible for hike in fee and commission.
Another Tier-1 DMB, FBN Holdings reported N70.69billion fee and commission in H1 2022, representing an increase of 2.4 per cent from N69.08billion reported in H1 2021.
The Chief Executive Officer, First Bank of Nigeria Limited, the banking subsidiary of FBN Holdings, Dr. Adesola Adeduntan said the financial institution would continue to strengthen dominate digital banking capabilities in provision of best-in-class services to all segments of its customers across all footprint in sub-Sahara Africa and beyond.
Meanwhile, FCMB Group and Sterling Bank generated N22.07billion and N10.5billion as fee and commission income in H1 2022 from N16.62billion and N8.4billion generated in H1 2021, respectively.
FCMB Group in a presentation to investors/analysts stated: “Non-interest income also grew by 29 per cent Year-on-Year (YoY) largely driven by growth in service fees and commissions and trading income despite a decline in Foreign Exchange revenues. Trading income grew 132per cent YoY from higher volumes of fixed income instrument trades during the year.”
The most common commissions DMBs generate for non-interest income includes: Electronic-banking commissions and current account maintenance fees.
Union Bank of Nigeria reported N8.16billion fee and commission in H1 2022; a decline of 8 per cent from N8.83billion in H1 2021, Wema Bank grew its fee and commission by 39 per cent to N7.5billion in H1 2022 from N5.39 billion reported in H1 2021.
In addition, Unity bank reported N3.2 billion fee and commission income in H1 2022 from N3.07 billion in H1 2021, as Jaiz bank announced N662.8million fee and commission income in H1 2022, representing an increase of 2.6 percent from N646.06million reported in H1 2021.
The Central Bank of Nigeria (CBN) in its guide to charges by banks, other financial and non-bank financial institutions” circular released January 2022 stated that Current Account Maintenance Fee (CAMF) is applicable to current accounts only in respect of customer-induced debit transactions to third parties and debit transfers/lodgments to the customer’s account in another bank.
According to the circular, the CAMF is not applicable to Savings Accounts and negotiable subject to a maximum of N1 per mille.
The apex bank defined CAMF as the monthly fee chargeable on current accounts based on the level of customer-induced debit transactions that occurred in the account during the month.
“This fee is not applicable to all bank-induced debits and customer-induced transfers to other accounts in the same name and in the same bank,” the CBN stated.
As regarding Electronic Funds Transfer, the CBN fixed N50 for transactions done above N50, 000, N25 for N5, 000 – N50, 000 and N10 charge for below N5, 000.
Meanwhile, THISDAY can report that electronic-banking transactions and current account maintenance fees are two major drivers of the eight DMBs fee and commission income.
For instance, FBN Holdings in H1 2022 generated N25.5billion from electronic banking fees as against N28.82billion in H1 2021, while income from its account maintenance rose by 15 percent to N9.1billion in H1 2022 from N7.93billion reported in H1 2021.
In the move, FCMB Group reported an increase of 53 percent for maintaining customers’ current accounts to N3.4billion in H1 2022 from N2.2billion in H1 2021, while electronic fees and commissions closed H1 2022 at N6.69billion from N6.68billion in H1 2021.
In addition, Sterling Bank reported an increase of 37 percent in its current account maintenance fee to N1.85billion in H1 2022 from N1.35billion in H1 2021.
The bank’s E-business commission and fees rose by nine per cent to N3.9billion from N3.39billion reported in H1 2021.
Despite the competitive environment as regarding CBN licensing more Fintech companies to operate in the electronic-banking transactions, the eight DMBs have maintained stronger earning from non-core banking operations.
Analysts at Vetiva Research in a report titled, “Nigeria H2’22 Outlook: A strange labyrinth” stated: “We anticipate some erosion of banks’ Non-Interest Revenue once the two leading telcos (MTN Nigeria and Airtel) begin the operations of their Payment Service Banks (PSBs).
“MoMo and Smartcash launched in May and have enjoyed strong early adoption, offering zero transaction fees. We expect the attraction of seamless transactions, with little to no fees, to draw many users of USSD and Digital banking platforms, thus we predict a slowdown in transaction volume growth.
“In order to fight the new competition, some banks may be forced to lower transaction fees or offer free transactions in order to entice customers back to their platforms. However, we do not expect this to be sustainable in the long run. Thus, we expect electronic- Banking income to grow at a slower rate in H2 2022.”
