10 Banks Earn N22bn On Account Maintenance Charges (Names)

A computation of Banks’ earnings from account maintenance charges, for 10 out of the 14 listed banks on the Nigerian Stock Exchange (NSE) amounts to N22 billion compared to N19.1 billion in Q1: 2019 The current year has seen a surge of N2.9 billion amounting to an increase of 13.2 percent year on year despite the coronavirus pandemic.

Account maintenance fee may be low when compared to other revenue streams, still make up a significant portion of their non-interest income.

According to the latest directive by the Central Bank of Nigeria on bank charges, Nigerian banks are allowed to charge their customers a “negotiable” N1 per mile.

What this means is that banks can charge N1 per N1000 debit transactions on current accounts. Banks’ account maintenance charges come in the form of COT (i.e., Commission on Turnover), which is a charge levied on customer withdrawals by their banks and are mainly applicable to current accounts.

A further breakdown of the earning revealed that Nigeria’s tier-1 banks, which comprises of First Bank, UBA, GTBank, Access Bank, and Zenith Bank generated a total of N18.4 billion from bank maintenance charges in Q1 2020.

The sum is 17.12percent more than N15.6 billion that was generated by the five banks during the comparable period in 2019.
The other five banks namely FCMB, Stanbic IBTC, Wema, Sterling and Union bank merely earned N3.6bn from account maintenance fee.

A further breakdown of the fees revealed that Zenith Bank generated the most income from account maintenance fees, which amounts to N5.7bn, followed by Access Bank N3.9bn and then, GTBank N3.3bn.

Other are: First Bank Plc: N3.1 billion, United Bank for Africa Plc: N2.3 billion, Stanbic IBTC N1bn, FCMB N911 million, Fidelity bank N735 million, Union Bank N406 million, Sterling bank N394 million and Wema bank N270 million.

The earning for Ecobank and Unity could not be ascertained as Unity Bank has not released it Q1; 2020 report, while that of Ecobank was not clear to our report from the financial statement According to Joseph Enenche, a banker who shed more light on the charge: “Account maintenance fee is calculated on the total amount of debit transaction or withdrawals on your account at a given interval.

“What this implies is that your account should not be charged AMC if there are no withdrawal either electronically via instant transfer, online or physical withdrawal with your cheque in the banking hall.

“If you continue to build your account balance without making withdrawals, your account will not be charged AMC.”

Polaris Bank optimistic on post-COVID-19 performance

Polaris Bank plans to leverage its investment in cutting-edge information technology to harness emerging opportunities and mitigate the disruptive effect of the COVID-19 pandemic on its business.

Against the backdrop of the impressive financials of the bank in 2019, the management of the bank said investment in technology infrastructure, comprehensive corporate transformation and a keen focus on customer experience would continue to give the bank comparative advantage in the Nigerian financial services sector.

Managing Director, Polaris Bank Limited, Mr Tokunbo Abiru, w2ho reviewed the performance and outlook of the bank in a special media interview, said the 2019 performance of the bank was the result of a corporate transformation that started in September 2018.

He said the corporate transformation has helped the bank build a robust foundation for capital preservation and sustainable profitability.

According to him, while the Coronavirus pandemic would undoubtedly impact all economies and sectors, including Nigeria, Polaris Bank’s strong business focus, organisational efficiency, innovation and digitisation will provide the winning edge against the emerging disruptions.

He also noted that Polaris Bank’s retail customer segments and commercial businesses will remain thriving and competitive, ensuring that the bank continues to harness the value of its investments.

“The key drivers of the outcome as shown in the 2019 results were strong earnings from interest and non- interest income as well as through operational efficiency via cost containment, all resulting in a decent cost to income ratio. These measures are key initiatives of our on-going transformation programme,” Abiru said.

Speaking on the impact of COVID-19 on the economy, he noted that the COVID1-19 would adversely impact businesses both locally and globally, with credit quality being challenged, business market size already shrinking, and inflationary pressures mounting.

He further explained that while no business can hardly outperform the environment where it operates, Polaris Bank will seek ways to maximise all available income sources; while also seeking ingenious means of containing the negative impact of the Coronavirus pandemic.

On the impact of technology on banking, Abiru outlined that the future of banking, like other sectors of the economy, will continue to be shaped by technology.

“Just look around you, is there any area of our lives that technology is not reshaping? Why should banking be an exception? More so, if you look at the nature of our business, it lends itself to digital adaptations more than other areas of our lives. The world is a global village; just look at what is happening elsewhere, and you know it is only a matter of when will it catch up with you and not if. So, it is not so much of what I believe, it’s where the world is evidently heading,” Abiru said.

He reiterated that the vision of Polaris Bank remains to be a top, innovative and digital-led retail bank, a preferred partner that provides superior financial solutions to its customers and one that is not afraid to be different from the pack.

“The bank is currently on a corporate transformation journey, which focuses on five key pillars: process, technology, business strategy, brand, and culture alignment. With regards to technology, we have concluded the first phase of our I.T platform refresh to world-class servers and data centres, we are strengthening our cyber-security and network capacity, we have upgraded all our digital channels with robust offerings across mobile banking, internet banking, USSD, POS, ATMs, including agency banking etc. As we reposition our I.T infrastructure to world-class standards, we are implementing a robust digital transformation to actualise our vision of making Polaris a truly digital bank that makes banking more convenient with customised , value-adding product offerings,”Abiru said.

He noted that with all the bank’s fundamentals competing well with its industry peers and above the regulatory minimum, Polaris Bank now stands on firmer ground with better margins, lower cost of operations for good returns to stakeholders.

According to him, Polaris Bank is a future-determining bank that is committed to the delivery of industry-defining products, and services, across all the sectors of the Nigerian economy.

He pointed out that the successful turnaround of Polaris Bank has made it a classic testimony of the turnaround of a troubled bank through a regulator-induced intervention adding that from all indications, the future of the bank is now very bright as evidenced by the improved prudential ratios.

Naira exchanges at N450 to dollar

The naira on Thursday exchanged at N450 to  dollar at the parallel market as build up on dollar demand continued to rise.

The naira is seen weakening on the black market as dollar demand rises from foreign investors and importers with payment obligations accumulated amid hard currency shortages triggered by an oil price crash, traders said.

Aside devaluing the naira in March,  the Central Bank of Nigeria (CBN) also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378.

The CBN also moved the official rate to N360 to the dollar from N307 per dollar previously and now selling dollar to foreign portfolio investors (FPI) at N380 at the Investors’ & Exporters FOREX window from N366 per dollar previously.

But the move has failed to strengthen the local currency which many experts fear could face second round of devaluation.

Meanwhile, the naira is seen steady on the official and over-the-counter spot markets, traders say, as bidders resist weakening the currency since the majority of dollar supply is from the  CBN.

The bank resumed forex sales last week to help importers and individuals with dollar expenses abroad ramp up economic activity following a phased easing of the coronavirus lockdown.

Diamond Bank’s merger: Access Bank increases capital raising to $457m

Access Bank Plc could raise up to $457 million or about N165.6 billion in new debt and equities capital to support ongoing business combination with Diamond Bank Plc. Access Bank will be the post-merger entity and its Group Managing Director, Mr Herbet Wigwe, will remain the chief executive of the enlarged bank.

At a joint media briefing in Lagos yesterday to outline key details of the business combination, Access Bank and Diamond Bank said the business combination was driven by value accretion and synergies, citing the potential to become Africa’s foremost financial institution.

Access Bank said it has received regulatory approvals to raise up to $457 million, equivalent to about N165.58 billion, in tier 11 capital and equity funds to ensure that the post-merger entity has robust capital buffer in line with national and international requirements.

The capital raising includes a $250 million tier 11 capital and a $207 million rights issue. Both capital raisings are expected to be concluded in the first half of 2019, in time for the completion of the business combination, which is also scheduled for the end of first half 2019.

In order to meet international standards of best practice and ensure a robust capital buffer, Access Bank and Diamond Bank have also jointly agreed a strategic capital management plan and expect to achieve a post-completion Capital Adequacy Ratio (CAR) of 20 per cent at the bank level and 22 per cent at the group level.

Nigerian banks lose N12.30 billion to fraud

The Nigerian Inter-Bank Settlement System (NIBSS), on Thursday said the banking industry lost the sum of N12.30 billion to various frauds between 2014 and 2017.
Mr Adebisi Shonubi, Managing Director, NIBBS, disclosed this at the third Annual Banking Security Summit organised by MAXUT Consulting in partnership with OneSpan, a global data security company in Lagos.
Shonubi said the figure was lost in 41,461 fraud cases between 2014 and 2017.
Specifically, he noted that 2014 fraud volume stood at 1,461, 10,743 (2015), 19,531 in 2016 and 25,043 in 2017.
Speaking on “Industry fraud overview with focus on mobile & payments related frauds,” Shonubi said the industry lost N6.22 billion in 2014 on attempted fraud value of N7.76 billion
Shonubi who was represented by Mr Olufemi Fadairo, Head, Industry Security Services, said the sum of N2.26 billion was lost in 2015 on attempted fraud value of N4.37 billion in 2015.
According to him, the industry lost the sum of N2.19 billion in 2016 on attempted fraud value of N4.37 billion.
Shonubi said gender fraud analysis during the period showed males accounted for 73 per cent, while females accounted for 23 per cent.
He said more fraud cases were reported in 2017, with an increase of 28 per cent compared with 2016 but with less financial loss.
On fraud channel, Shonubi said the Automated Teller Machine (ATM) accounted for the highest fraud in 2017 with an actual loss of N497.64 million with a fraud volume of 9,823.
According to him, mobile trailed with N347.65 million loss on 5,055 fraud volume, while across the counter transactions accounted for N259. 02 million loss in 314 fraud volume.
He said that “while fraud trend is generally on the decline, mobile fraud trend alone is on the increase.”
Shonubi said mobile fraud would overtake ATM fraud by 2020 with the rate of increasing fraud in the channel.
He listed the top three mobile threats in Nigeria to include phone theft, sim swaps and kidnaps.
Shonubi, however, called on Nigerians to shield themselves by ensuring phone lock, sim lock, swap/recycle checks.
Also speaking, Mr Mike Odusami, CEO/President MAXUT Consulting, said the summit was geared toward making the financial system safer for people to have trust in the system.
“Our solution as a technology company is really about fraud prevention and making sure that this is the person the bank authorises because most of the transactions are not physical, they are done through electronic channels.
“And also in the background, we are monitoring everything that is going on in the system, that is fraud monitoring and we have helped a lot of banks and financial institutions to do that,” he said.
Odusami said the company was committed to make the banking system safer for people to have confidence in the system by preventing.
He said the Nigerian banking system was advanced and not lacking behind in terms of digital banking.
“We are very advanced; we are not lacking behind, but because a lot of transactions are still done through USSD channel, this is the normal feature channel and anybody can use it.
“Lot frauds are done in that channel either through SIM swap, stolen phones and kidnapping. So we are working with the banks to develop a solution to curb that,” Odusami said.
He said the country was still behind in open banking security, and that it was relatively new with more players connecting to the banking system.
The summit was themed: “Digital Channels & Open Banking Security.”