Ten Deposit Money Banks (DMBs) in the country earned a total of N124.47 billion in fees and commission income in the first three months of this year, the lenders’ unaudited Q1 2020 results have shown.
The amount generated by the DMBs represents a marginal increase of 1.4 per cent, over the N122.76 billion they realised in the first quarter of last year.
Fees and commission income are proceeds earned by lenders on services rendered to the banking public other than interest earned on loans. They are derived from sources such as account maintenance fees, fees from electronic banking channels, Automated Teller Machine (ATM) charges, letters of credit commission, remittances fees, card-based fees, fees from brokerage commis sion, management fees and financial advisory fees, among others.
In fact, analysts attributed the generally flat earnings in fees and commission income reported by DMBs in the first quarter of this year to the downward review of some bank charges and fees announced by the Central Bank of Nigeria’s (CBN) late last year.
Specifically, the apex bank had, on December 22 released a new Guide to Bank Charges, which it said replaced the Guide to Charges by Banks and Other Financial Institutions issued in 2017.
The CBN’s downward review of fees and charges seems to have negatively impacted DMBs’ earnings in Q1 2020 as New Telegraph’s analysis of the unaudited Q1 2020 results for the 10 lenders, shows that only five of them posted improved net fees and commission income in the first three months of this year compared with what they reported for the corresponding period of last year.
The 10 banks’ Q1 2020 results reviewed by New Telegraph were those of Access Bank, United Bank for Africa (UBA), Zenith Bank, Guaranty Trust Bank (GTB) and FBN Holdings (unaudited).
Others were mid-sized DMBs – Fidelity Bank, Stanbic IBTC, First City Monument Bank (FCMB), Union Bank and Sterling Bank (unaudited).
A breakdown of the results shows that Access Bank led others, as its net fees and commission income increased by 78.79 per cent to N23 billion in Q1 2020, from N13.07 billion in the same period of last year.
It was followed by FBN Holdings with net fees and commission income of N20.77 billion in the first quarter of this year which was an improvement on the N19.45 billion posted by the Tier 1 lender in the corresponding period of 2019.
Next was UBA with net fees and commission income of N18.7 billion in Q1 2020, which was higher than the N16.76 billion posted by the first tier lender in the same period of last year.
Zenith Bank reported net fees and commission income of N15.44 billion in the first quarter of this year compared with N21.32 billion the first tier lender generated in Q1 2019.
GTB’s net fees and commission income in the first three months of this year stood at N13.55 billion compared with N18.01 billion in the corresponding period of 2019.
Stanbic IBTC led the pack of Tier 2 lenders as it posted net fees and commission income of N17.91 billion in Q1 2020 compared with N16.79 billion it reported for the same period of last year.
It was followed by FCMB, which reported net fees and commission income of N5.05 billion in the first three months of this year, an improvement on the N4.96 billion it generated in Q1 2019.
Leading Tier 2 lender, Fidelity Bank reported net fees and commission income of N4.02billion in the first quarter of this year as against the N5.36 billon it posted for the corresponding period of 2019.
Union Bank generated net fees and commission income of N3.11 billion in Q1 2020 compared with N3.58 billion it reported for the same quarter last year.
Sterling Bank reported net fees and commission income of N2.92 billion in the first three months of this year as against N3.48 billion it generated in Q1 2019.
Explaining the need for the review, the CBN Director, Corporate Communications Department, Mr. Isaac Okorafor, said the apex bank carried out the review in order to align with market developments.
However, analysts said that the CBN undertook the review to placate bank customers who had been complaining about the series of charges that banks usually imposed on their accounts.
Highlights of the new Guide to Bank Charges, which took effect from January 1, 2020, included the CBN’s directive slashing the withdrawal fee charge that DMBs charge their customers for the use of other banks’ ATM by 46.15 per cent from N65 to N35.
The banking watchdog also directed lenders to charge a maximum of N1 per mille for customer-induced debit transactions to third parties and transfers or lodgements to the customers’ account in other bank on current accounts only.
Other pro-bank customer moves announced by the CBN, included the reduction of maintenance fee, for cards linked to savings account, to a maximum of N50 per quarter from N50 per month, scrapping of charges for reactivation or closure of accounts such as savings, current and domiciliary accounts and the pegging at N500 per request, for status enquiry by customers requiring confirmation letter, letter of non-indebtedness reference letter and other such demands. (New Telegraph)
