Bank charges on alerts, withdrawal others hits ₦138 billion

Bank customers paid ₦138 billion as electronic payment charges in 2016 to the top ten banks in the country. This represented 26 per cent increase when compared to the ₦109.1 billion paid to the banks in 2015.

The charges, as stipulated in the Guide to Bank Charges of the Central Bank of Nigeria (CBN) include: ATM card issuance, replacement and renewal charges; Hardware token and soft token issuance charges; ATM withdrawal charges; Funds transfer charges; bulk payments such as salary; and SMS alerts. Commenting on this development, President, Bank Customers Association of Nigeria (BCAN), Mr. Oju Ogubunka said that: “The hiked cost will impact negatively on wider adoption of e-payments in the country. Banks, at the detriment of consumers, will further enrich themselves. Non e-payment channels that are cheaper are likely to witness higher patronage with some obvious implications.”

Meanwhile, the phenomenal growth in e-payment transactions recorded in March was reversed in April, with 11 per cent decline.

The decline was driven by slow down in Mobile, Instant transfer, and Electronic funds transfer transactions.

– Boom in e-payment –

The banking industry enjoyed boom in e-payment business in 2016.

Statistics from the Central Bank of Nigeria (CBN) showed that the volume and value of epayment transactions in 2016 shot up by 132 per cent and 82 per cent respectively, to 942 million transactions worth ₦71 trillion.

As a result the top ten banks were able to increase income from charges paid by customers on the e-payment transactions by 26 per cent to ₦137.9 billion in 2016, from ₦109.1 billion in 2015.

The banks are Access Bank, Diamond Bank, FCMB, FBN Holdings, Fidelity Bank, GTBank, Stanbic IBTC, UBA, Union Bank and Zenith Bank.

Analysis of the 2016 financial statements of the banks show that the e-payment income recorded by the banks accounted for 30 per cent of their total income from fees and commission of ₦467.4 billion in 2016.

This indicates slight increase when compared with 29 per cent achieved in 2015, when e-payment income hit ₦109.1 billion on a total fees and commission of ₦393.1 billion.

Tier-1 Vs Tier-2 banks

Further analysis reveal that Tier-1 banks, occupying the top five positions in size metrics of the Nigerian banking industry, dominated income flow from e-payment charges, as they accounted for 68 per cent of e-payment income of the 10 banks in 2016 (slightly up from 67 percent in 2015).

The top five banks are Access, GTBank, FBN Holdings, UBA and Zenith Bank. The five banks collectively increased their e-payment income by 29 per cent from ₦72.89 billion in 2015 to ₦94.4 billion in 2016.

– Smaller banks advance –

However, as percentage of total income from fees and commission earned by the five banks, e-payment income dropped to 37 per cent in 2016 from 38 per cent in 2015.

On the other hand, though the e-payment income of T-2 banks increased by 26 per cent from ₦36.2 billion in 2015 to ₦43.47 billion in 2016, their share in the top 10 banks’ e-payment income dropped slightly to 28 per cent from 29 per cent in 2015.

But the share of epayment income in total income from fees and commission for the Tier 2 banks remained stable at 30 per cent.

The five T-2 banks are Union Bank, FCMB, Diamond, Stanbic IBTC and Fidelity Bank.

In the overall the figures of the T-1 and T-2 indicates that other smaller banks’ share of the market are on the increase.

– Leaders & Laggards –

In absolute figures, UBA led the e-payment income chart with ₦35.2 billion, followed by FBN Holdings with ₦27.2 billion, and Access Bank with ₦21.3 billion.

Union Bank recorded the lowest e-payment income of ₦2.2 billion, followed by Stanbic IBTC with ₦5.17 billion and Fidelity Bank with ₦9.3 billion. But in terms of growth, Access Bank led with 446 per cent growth, followed by Union Bank with 214 per cent growth, and UBA with 81 per cent.

The growth laggards were led by FCMB which recorded decline of 8 per cent, followed by GTBank with decline of five percent, and Zenith Bank with growth of 7 per cent.

FCMB however led in terms of share of e-payment income in total fees and commission income with its e-payment income accounting for 77 per cent of total fees and commission income. It was followed by UBA with 48 per cent and Fidelity Bank with 45 per cent.

Stanbic IBTC came last with e-payment income accounting for 10 per cent of total fees and commission income.

It was followed by Zenith Bank with 16 per cent and Union Bank with 21 per cent.

– Bank performance –

Access Bank grew its e-payment income by 416 per cent to ₦21.3 billion in 2016, from ₦3.9 billion in 2015.

Its e-payment income ratio of total fees and commission income also increased to 38 per cent from 12 per cent in 2015.

The bank in its annual report explained that: “The increase in channels and other E-business income is a result of increase in volume of e-channel and card transactions.”

Diamond Bank grew its e-payment income by 30 per cent from ₦10.1 billion in 2015 to ₦13.7 billion in 2016.

Its e-payment income ratio of total fees and commission income however remained stable at 28 per cent. The e-payment income of FCMB dropped by 8 per cent to ₦13.7 billion from ₦14.9 billion in 2015.

Also its e-payment income ratio of total fees and commission income dropped to 77 per cent from 79 per cent in 2015.

FBN Holdings, the parent company of Firstbank Limited, grew its e-payment income by 37 per cent to ₦27.2 billion from ₦19.9 billion in 2015.

Also its e-payment income ratio of total fees and commission income rose to 38 per cent from 31 per cent.

Fidelity Bank’s e-payment income rose by 29 per cent to ₦9.3 billion from ₦7.2 billion in 2015, while e-payment income ratio of total fees and commission income rose to 45 per cent from 42 per cent.

The e-payment income of GTBank dropped by five per cent to ₦18.8 billion in 2016 from ₦19.7 billion in 2015, while its e-payment income ratio of total fees and commission income also dropped to 37 per cent from 38 per cent.

On its part, Stanbic IBTC was able to grow its e-payment income by 57 per cent from ₦3.3 billion in 2015 to ₦5.17 billion in 2016.

Its e-payment income ratio of total fees and commission income also increased to 10 per cent from 8 per cent. Industry leader, UBA grew its e-payment income by 81 per cent from ₦19.4 billion in 2015 to ₦35.2 billion in 2016, while its e-payment income ratio of total fees and commission income also rose to 48 per cent from 31 per cent. Union Bank grew its e-payment income by 214 per cent to ₦2.2 billion from ₦715 million in 2015.

Its e-payment income ratio of total fees and commission income also rose sharply to 21 per cent from 9 per cent. On its part, Zenith Bank achieved marginal growth of 7 per cent in its e-payment income which rose to ₦10.7 billion from ₦9.99 billion in 2015, while its e-payment income ratio of total fees and commission income stagnated at 16 per cent.

*E-payment transactions fall by 11% in April

Meanwhile, the phenomenal growth in e-payment transactions recorded in March was reversed in April, with 11 per cent decline. The decline was driven by slow down in Mobile, Instant transfer, and Electronic funds transfer transactions.

According to the Nigeria Interbank Settlement System (NIBSS) report for April, value of e-payment transactions through Point of Sale (PoS) terminals, Mobile payment, NIBSS Instant Payment (NIP) and NIBSS Electronic Funds transfers (NeFT) dropped to ₦5.34 trillion in April from ₦5.99 trillion in March while the volume of the transactions also dropped by 5 per cent to 36.7 million in April from 38.6 million in March.

This contradicts the 13 per cent and 11 per cent growth recorded in value and volume of transactions in March.

The NIBSS report showed that the volume and value of PoS transaction in April rose marginally to 10.8 million and ₦104.8 billion from 10.1 million and ₦104.5 billion in March.

However, the volume and value of mobile transactions dropped by 9 per cent and 5 per cent respectively to 479 million worth ₦16.6 billion from 506 million transactions worth ₦18.2 billion recorded in March.

Also, the volume and value of NIP transactions dropped by 9 per cent and 5 per cent respectively to 24.3 million transactions worth ₦4.3 trillion in April from 25.5 million transactions worth ₦4.7 trillion in March.

Volume and value of NEFT transaction also dropped by 40 per cent and 22 per cent respectively to 1.5 million transactions worth ₦918 billion in April from 2.5 million transactions worth ₦1.17 trillion in March.

But when compared with the transactions recorded in April 2016, the volume and value of transactions through the four channels rose by 172 per cent and 37 per cent from 16.9 million transactions worth ₦3.9 trillion recorded April 2016 to 36.7 transactions worth ₦5.34 trillion recorded April this year.

Also the total volume and value of transactions through the four channels from January to April 2016 rose by 134 per cent and 51 per cent respectively from 59.7 million transactions worth ₦14.4 trillion in January to April 2016 to 140 million transactions worth ₦21.8 trillion recorded from January to April 2017.

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