Banks Earn N216bn From E-Banking In 2020 

Central Bank of Nigeria

Nigerian banks raked in a sum of N216.52 billion from their e-business earnings in the year 2020.

Nigerian banks raked in a sum of N216.52 billion from their e-business earnings in the year 2020 as tier-1 banks popularly known as FUGAZ (First Bank, UBA, Access Bank, GT Bank, and Zenith Bank) topped the list of highest earners.

The same banks reported N217 billion in income from digital channels in 2019 dipping marginally by 0.24 per cent.

Banks attribute the reason for the drop in 2020 compared to 2019 to the revision of fees and charges for electronic transfers by the central bank in early 2020.

On January 1st, 2020, the CBN ushered in a new regime for bank charges. While these mostly affected things like card maintenance fees, charge for hardware tokens it also affected the amount that can be paid for electronic transfers.

For example, a graduated fee scale for electronic transfers replaced the current flat fee of N50 such that transfers below N10,000 now attract a maximum charge of N10; and transfers above N50,000, N50.

USSD fees also got a cut a few months later announcing that customers would pay a flat fee of N6.98 per transaction every time they use USSD services with effect from Tuesday, March 16, 2021.

The COVID-19 pandemic also played a major role in bank performance as it affected the expansion of the digital rollout plans earlier on in the year. However, the pandemic will swing in their favour as Nigerians increasingly relied on mobile banking for transactions while avoiding banking halls for fear of contracting COVID-19.

According to NIBSS, the total value of electronic transfers for 2020 topped N158 trillion in 2020 ; a 50 per cent growth when compared to 2019. Transaction volume also rose to 2 billion up 77 per cent when compared to 2019.

Apart from Access Bank, UBA, and FBNH, all the other banks posted year-on-year declines. For example, Zenith Bank and GTB recorded a 36 per cent and 25 per cent drop respectively.

However, Access Bank and UBA both recorded an increase of 56 per cent and 14 per cent respectively topping N56 billion and N44.2 billion respectively. Access Bank is now the largest bank making money from e-business income having topped FBNH which posted N48 billion from E-business income, the highest in 2019.

Guaranty Trust Bank, the most capitalised financial institution listed on the Nigerian Stock Exchange (NSE) generated a sum of N11.8 billion from its e-business unit, accounting for about 5.4 per cent of the total e-business revenue in 2020.

Its e-business revenue declined massively by 24.85 per cent compared to N15.66 billion recorded in the previous year.

The bank, however, posted a profit- after- tax of N201.44 billion in 2020 (second only to Zenith Bank), representing a 2.33 per cent increase compared to N196.85 billion recorded in 2019.

Zenith Bank earned a sum of N27.08 billion from its e-business in 2020 to stand fourth on the list behind UBA.

Its income from e-business accounted for 12.5 per cent of the total income generated by the twelve banks. Zenith Bank’s e-business income witnessed a huge plunge of 36.3 per cent in 2020 compared to N42.5 billion it recorded in 2019.

However, Zenith Bank posted the highest profit of N230.6 billion in the review period, growing its profit- after- tax by 10.4 per cent from N208.8 billion recorded in 2019.

UBA retained its position in third place with a total e-business revenue of N44.25 billion, accounting for 20.4 per cent of the total e-business income generated by the banks on our list.

UBA recorded a 14.14 per cent increase in its e-business revenue in 2020 compared to N38.8 billion recorded in the prior year.

UBA has also intensified its effort to build on its 2020 success by releasing a new mobile banking app, which aims to improve the ease of transacting by their customers.

The tier-1 bank posted a profit- after- tax of N113.77 billion in 2020, representing a 27.7 per cent increase compared to N89.09 billion recorded in the previous year.

First Bank lost its first position to Access Bank, having increased its e-business revenue marginally by 1.35 per cent to stand at N48.68 billion in 2020. Its e-business revenue accounted for 22.5 per cent of the e-business income recorded by the twelve banks under consideration.

Despite being one of the oldest banks in the country, First Bank has been at the forefront of the mobile banking revolution.

The bank was one of the pioneers of the USSD platform which is used to transfer money via a text messaging application of a mobile phone and has continued to create products within the electronic space.

For example, in November 2020, First Bank launched a Next Generation ATM, referred to as FastTrack ATM, designed to eliminate the need for physical interaction with the automated machine.

This was as a result of the need to reduce physical contact with people and substances, due to the COVID-19 spread in the country.

The largest bank in Nigeria by total assets toppled First Bank, Zenith, and UBA to occupy the first position with e-business revenue of N56.09 billion in 2020.

Access Bank was in the fourth position in 2019 but catapulted to first as it grew its e-business income by a whopping 55.64 per cent from N36.04 billion recorded in the previous year.

This increase also translated to a 12.71 per cent growth in profit- after- tax to stand at N106.01 billion in the review period from N94.06 billion recorded in 2019.

Access Bank does mention that its E-business income includes earnings from its Channels business.

The increase in its e-business revenue is no surprise as the tier-1 bank spent a sum of N18.7 billion on IT and E-business related initiatives in the same year, as against N9.7 billion incurred in the previous year and N11.39 billion in 2018, a move that clearly translated to a boost in E-business income.

Others include FCMB – N8.61 billion; Union Bank – N7.04 billion, Sterling Bank – N4.97 billion; Stanbic IBTC – N2.74 billion; Wema Bank – N2.61 billion; Fidelity Bank – N2.46 billion; Jaiz Bank – N214 million.

 

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