Electronic transfers

Nine banks made N554 billion fee, commission in 2021 -Reports

NINE major depository banks in Nigeria raked in the sum of N554.23 billion from fees and commissions in 2021.

This amount is 29.4% higher than the 428.32 billion naira they earned in 2020.

The banks are Access Bank Plc, Zenith Bank Plc, Guaranty Trust Bank Limited, United Bank for Africa Plc, First City Monument Bank, Stanbic IBTC, Wema Bank, Sterling Bank and Fidelity Bank Plc.

The sum of 554.23 billion naira was obtained after aggregating the income net of fees and commissions contained in the banks’ annual financial statements ending on December 31, 2021.

Fees and commissions represent a significant percentage of banks’ non-interest income and represent income from account maintenance fees, electronic banking fees and other credit-related fees.

Net fee and commission income is the actual income generated by these fees after deducting the expenses incurred for the provision of the services.

Access Bank raised a total of N118.56 billion against N93.57 billion generated during the same period in 2020.

The bank’s financial report also showed that it earned N7.23 billion from electronic banking fees and N33.35 billion from online banking fees.

During the reporting period, Zenith Bank earned N103.95 billion in fees and commissions resulting in total income of N132.88 billion and expenses of N28.96 billion.

The amount generated by the bank in 2021 is 31.03% higher than the 79.33 billion naira recorded the previous year.

The bank said: “Total fee and commission income recognized at any given time is N91,291 million and N71,092 million for the group and the bank (31 December 2020: N70,556 million). Naira and 52,446 million Naira) respectively, while an amount of 41,593 million Naira and 41.068 million Naira (December 31, 2020: 32,669 million Naira and 31,932 million Naira) were recognized during the ‘year ”

Through electronics fees, the bank fetched N37.47 billion while N31.39 billion was generated from account maintenance fees.

UBA generated 110.9 billion naira, which is 25.9 billion naira more than the 85 billion naira made in the nine-month period of 2020. It generated 7.1 billion naira from fees from account maintenance and N41.9 billion from e-commerce fees.

According to GTB’s financial statements, N65.65 billion was generated from fees and commissions in 2021, a jump of N18.72 billion from revenue generated in 2020.

The bank also disclosed that the sum of N16.68 billion came from account maintenance fees, while e-commerce fees produced N21.08 billion.

For FCMB, revenue from fees and commissions increased to N28.75 billion in 2021 from N19.55 billion recorded in 2020, according to the bank’s financial statements.

The report also revealed that the bank earned N12.82 billion on electronic banking fees and N4.8 billion on account maintenance fees.

Meanwhile, Wema Bank generated the sum of N13.42 billion from fees and commissions in 2021, while Sterling Bank generated N13.08 billion in the same period.

For the account maintenance and electronic banking services provided, Stanbic IBTC generated N5.08 billion and N3.69 billion respectively, garnering a total of N82.87 billion from fees and commissions.

The results show that Stanbic’s revenue from fees and commissions in 2021 was higher than the amount recorded in 2020 of N11.68 billion.

Another bank that recorded an increase in fee and commission income in 2021 is Fidelity Bank Plc. As of December 31, 2020, the bank said it generated N13.76 billion from fees and commissions.

This increased to 20.78 billion naira in 2021, comprising 4.14 billion naira of account maintenance and 2.99 billion naira of fees on online banking activities.

On January 1, 2020, the apex bank inaugurated a new banking fee regime. Changes to its guidelines mainly affected things like card maintenance fees, fees for hardware tokens, and the amount that can be paid for electronic transfers.

In a circular dated December 20, 2019, the CBN placed N2,500 as the maximum cost for a hardware token.

He also said bill payments, including bill payments through other electronic channels, should cost a maximum of N500, and gave a cost range for electronic funds transfer.

“Card maintenance fees on current account have been removed as accounts already incur account maintenance fees. Savings accounts will now incur card maintenance fees of N50 per quarter instead of N50 per months,” the central bank said.

Speaking on the development, the President of the Banking Customers Association of Nigeria, Uju Ogubunka, lamented the problem of excess fees paid by bank customers, describing it as a major concern.

He said: “The issue of excess fees has been a major source of concern for us as an association. We’ve been fighting it ever since and we won’t stop.

“However, I have to say that in most cases the additional charges imposed on bank customers are not deliberate but the result of a capacity building issue. This is when new recruits or inexperienced hands handle trades and overcharges.

“Furthermore, most of the time when banks overcharge, they are forced to reimburse customers with prime interest plus two percent.”

He advised banks to prioritize professionalism and ethical standards in their operations to reduce the amount of excessive or irregular charges recorded.

Similarly, a financial analyst and professor of economics at Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Sheriffdeen Tella complained that many bank charges levied on customers were irregular and full of inconsistencies.

Additionally, Managing Director of Cowry Asset Management, Johnson Chukwu, attributed the huge fee and commission revenue to the high volume of digital banking transactions in the country.

Chukwu said, “I don’t think the problem is the fee they charge, as private organizations and other legal entities usually negotiate down the fee they pay.

“So I think it’s all about trading volume. You will notice that many banks derive revenue from commissions and fees primarily because with advances in technology, people are transacting online.

“For every digital transaction a customer executes, it gives the bank the opportunity to generate revenue.

“So I don’t think bank customers are complaining that the fees are high and therefore there’s no need for a review.”

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