12 Banks Earn N1.86 Trillion Naira from Account Maintenance, Online Banking Fees and Others in 3 Years

Kayode Kotede

A total of 12 banks generated 1.86 trillion naira in commission and fee income from customers’ current and savings accounts between 2018 and 2020, data collected by THIDAY showed.

Analysis of bank figures revealed that these 12 of them generated N684.03 billion in fee and commission income in 2020 compared to N630.4 billion and N550.33 billion between 2019 and 2018.

Banks generate fees through account maintenance fees, wire transfers, turnover commission, credit-related fees, among others.

Further analysis showed that United Bank for Africa Plc, followed by Zenith bank Plc, led the others in terms of fees and commissions generated over the past three years, while Unity Bank Plc recorded fees and commissions the lowest during the period considered.

Over the past three years, UBA Plc generated N331.5 billion in fees and commissions, while Zenith Bank Plcc generated N310.04 billion in fees and commissions between 2018 and 2020.

Others are; Access Bank Plc N270.64 billion, Stanbic IBTC Holdings Plc N221.4 billion, Guaranty Trust Holdings Plc N167.97 billion, Fidelity Bank Plc N65.5 billion, Sterling Bank Plc N65.53 billion, FCMB Group Plc N58.18 billion, Union Bank Plc N42.6 billion, Wema Bank Plc N22.93 billion and Unity Bank Plc N12.5 billion.
Meanwhile, analysts say banks may not be able to continue to make much of a profit from the fees following licenses granted by the Central Bank of Nigeria (CBN) to MTN Nigeria and Airtel Africa to operate a banking service. payment services (PSP).

The development, they said, has renewed competition in mobile money transactions among financial instructions operating in Nigeria.

Commenting, the Vetiva Research analyst said the new PSB licenses issued by CBN to MTN Nigeria and Airtel posed a threat to certain banking businesses in 2022.

In its 2022 outlook titled “Running scared”, Vetiva Research predicted that the headwinds seen in the banking sector in 2021 would begin to ease.

The analyst in a statement said it was possible that new PSBs would reap a significant portion of transaction fees and potentially lower revaluation gains.

Dispute between banks and telecom operators over N42 billion debts arising from Unstructured Supplementary Service Data (USSD) transactions had forced the CBN and Nigerian Communications Commission (NCC) to step in with new charges of 6.98 naira on any successful USSD transaction.

In April 2021, banks disconnected MTN subscribers from their banking channels, including USSD and banking apps, as the mobile network operator switched its customers to other e-payment platforms.

The telecom company has cut banks’ commission from an average of 3.5% to 2.5% per transaction, prompting banks to disconnect MTN subscribers from its service.
Senior Director of External Relations, MTN, Mr. Funso Aina had said that their customers can top up airtime and make other transactions online through payment solution platforms.

“It will interest you to note that for the benefit of our customers who have been greatly inconvenienced by the suspension of service, we now have alternative channels to access MTN services electronically,” reads a section of the release.

The banks had told the telecom company to disconnect subscribers if they did not revert to the old commission, but when their call did not go through they blocked MTN subscribers from their channels, preventing customers from recharging virtually.

Data from NCC revealed that MTN has 73.6 million subscribers which accounts for 38.61% of the total telecom market share in Nigeria, while Airtel with 51 million subscribers and a market share of 26 .79% in September 2021 are arguably the first and third major telecommunications operators in the country.

Analysts said the entry of MTN Nigeria and Airtel Africa into the financial services space will intensify competition, especially with banks and fintech companies currently operating in the country.

They further stated that competition is necessary to foster financial inclusion through the provision of diversified and convenient financial services to the unbanked population.

The managing director of Financial Derivatives Company Limited, Bismarck Rewane, in a recent conversation with THISDAY noted that the main endorsement by CBN is meant to create competition and stimulate the economy of the country.

According to him: “In mobile money countries like Kenya, Ghana among others, banks are making money and mobile money operators are also making money – it is better for everyone. because it brings greater financial inclusion. It is a complete misinterpretation of the facts that will affect the banks’ fees and commissions. Banks in Ghana are making profits and this has not reduced their profits.

“The mobile payment system in Ghana has become more efficient and is actually driving the growth of the economy. It is a good thing that CBN has granted the main license to MTN Nigeria and Airtel Africa. The approval will help the mobile money platform and have a positive impact on the national economy.

“The approval means customers will be looking for the most convenient and efficient way to make transfers. The license is in everyone’s interest and I’m surprised it’s taken so long. Three telecom operators have been granted and they had no impact. Now there will be more competition, more efficiency and it will reduce the cost of settling payments in the future.

The Chairman of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Ikechukwu Nnamani, said the CBN endorsement was long overdue, noting that the financial inclusion effort in Nigeria has been slow as for many years, CBN has insisted on doing financial inclusion activities. be banks instead of conducting telecommunications.

He further explained that, “Given the subscriber base in the country, it is expected that if financial inclusion activities are led by telecom operators, we will see much more adoption of financial services across the country than is currently the case.

“We have seen examples in other countries that support this hypothesis. So I’m very happy that we finally got to this point. I believe this will improve the delivery of financial services across the country. In all parts of the world where telecom operators have enabled financial inclusion services to flourish, it has had no negative impact on the traditional banking system, but rather helped to improve it.

“Remember the underlying word here is financial inclusion. The main beneficiaries of these services will be people who are not yet using traditional banking services. So I don’t see how this will have a negative impact on traditional banks. I see this as a win-win for all parties, including the banks.”

For his part, the Chairman of the Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said that the main approval granted to MTN Nigeria and Airtel Africa is expected to have an impact on financial inclusion which stakeholders have talked about over the years.

According to him, “So many people have been left out of financial inclusion and with mobile companies involved in payment services, it will expand the reach and increase the number of people in the country’s financial affairs.”

He said the mobile money payment industry was going to compete with banks given the reach of telecom companies across the country.

“I think the telecom companies will compete with the banks and this could reduce costs and improve the efficiency of the sector. Once we have serious competition, we may have reduced the reduction and customers will seek better settlement prices.

Also speaking to THISDAY, Professor Hassan Oaikhenan from the Department of Economics at the University of Benin said that the license approval to MTN Nigeria and Airtel on mobile payment services banking business in Nigeria has a lot of sense.

He noted that the approval is expected to extend financial inclusion to unbanked people in rural areas, saying bank charges and commission on e-revenues are not expected to decrease.

Airtel Africa Managing Director Segun Ogunsanya said in a statement, “I am very pleased that Smartcash has obtained approval in principle to operate a service banking business in Nigeria. We will now work closely with the Central Bank to fulfill all its conditions in order to receive the operating license and begin operations.

The final operating license will allow us to expand our digital financial products and reach the millions of Nigerians who do not have access to traditional financial services. I look forward to working closely with government, the Central Bank and traditional financial institutions to expand financial inclusion and meet the ever-changing needs of our customers and the economy.