Banking
Nigerian Banks’ e-Banking Income Drops 27.3% Despite High Transactions
By Dipo Olowookere
A new report by Agusto & Co. Limited has shown that in the 2020 fiscal year, the banking industry in Nigeria recorded a decline in electronic banking income.
In the report by the nation’s foremost research house and rating institution, it was stated that the drop was by 27.3 per cent despite a spike in digital transactions in the pandemic year.
The flagship 2021 Banking Industry Report revealed that last year, some banks recorded as much as a 50 per cent increase in digital banking transaction volumes, but the gains were shortened by the reduction in bank charges from January 2020 by the Central Bank of Nigeria (CBN).
Agusto said this action by the banking sector regulator affected the e-banking income and accounted for a lower 13.2 per cent of non-interest income compared with the 21.1 per cent posted at FY 2019.
It was stated that the pandemic demonstrated how technology can be used to deepen financial services in the country because it was the means most banking institutions used to offer their services to customers during the lockdown in the second quarter of the year and the quarter of the year during the #EndSARS saga.
In the report, it was stated that despite the challenges in the year, the sector showed resilience, leveraging lessons from the 2016/2017 economic recession.
“Proactive measures in the form of forbearance granted by the CBN enabled banks to provide temporary and time-limited restructuring of facilities granted to households and businesses severely affected by COVID-19.
“There was generally a cautious approach to lending in the industry, given difficulties in the operating environment.
“Although gross loans and advances grew by 12 per cent, loan growth was negative when the 19.3 per cent Naira devaluation is considered.
“Underpinned by the forbearance and proactive measures adopted by banks, the NPL ratio improved to 6.6 per cent (FYE 2019: 7.6 per cent),” a part of the summary of the report made available to Business Post read.
Agusto also noted in the report that the CBN’s policies targeted at lowering interest rates have persisted especially given the dire need to stimulate the economy following adversities created by the pandemic.
It stated that given the need to moderate inflation amidst efforts to maintain a stable exchange rate, the cash reserve requirement (CRR) was increased and standardised to 27.5 per cent for both merchant and commercial banks, adding that the standardised CRR was implemented alongside discretionary deductions.
“As at FYE 2020, the industry’s restricted cash reserves exceeded N9.5 trillion and translated to an effective CRR of 37 per cent.
“It is noteworthy that Nigeria has the highest reserve requirement in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRR’s of below 10 per cent.
“We believe the elevated CRR level moderated the industry’s performance and liquidity position during the year under review.
“Assuming the sterile CRR were invested in treasury securities at 5 per cent, N482 billion would have been added to the industry’s profit before taxation.
“This would have increased the industry’s return on average equity (ROE) by 11 per cent to 31.6 per cent in the financial year ended December 31, 2020,” it said.
Agusto said for the report, it analysed the financial statements of 20 commercial banks and five merchant banks, taking into consideration the sector’s structure, financial condition, the regulatory environment in addition to the macroeconomic environment and its impact on Nigerian banking industry.
Business Post learned that the banks reviewed by Agusto were Zenith Bank Plc, Access Bank Plc, First Bank of Nigeria Ltd, United Bank for Africa (UBA) Plc, Guaranty Trust Bank, Fidelity Bank Plc, Ecobank Nigeria, Standard Chartered Bank Nigeria, Union Bank of Nigeria Plc and Stanbic IBTC Bank.
Others were First City Monument Bank, Wema Bank Plc, Sterling Bank Plc, Citibank Nigeria, Polaris Bank, Unity Bank Plc, Providus Bank, Coronation Merchant Bank, FBN Merchant Bank, Nova Merchant Bank, FSDH Merchant Bank, Globus Bank, Rand Merchant Bank, Jaiz Bank and Titan Trust Bank.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.
There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.
But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.
According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.
The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.
She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.
“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.
“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.
“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
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