Twelve banks have raked in a total of N126.90 billion in net fees and commission in the first quarter, which represents a 13.45 percent increase from N111.98 billion recorded last year, according to data gathered by BusinessDay.
The banks are Zenith Bank Plc, Access Bank Plc, Fidelity Bank Plc, First City Monument Bank (FCMB) Plc, Guaranty Trust Bank (GTBank) Plc, Stanbic IBTC Holdings Plc, First Bank Nigeria Holdings Plc, Sterling Bank plc, Wema Bank Plc, and United Bank for Africa (UBA) Plc, Diamond Bank Plc, and Union Bank Plc.
Lenders in Africa’s largest economy have been seeking alternative ways of bolstering earnings as a drop in short term government securities signals end of free money.
The fees and commission income by the banks were derived from account maintenance fees, fees from electronic banking channels, ATM charges, letters of credit commission, remittances fees, card-based fees, fees from brokerage commission, financial advisory fees, among others.
A glimpse at the books of lenders shows Zenith Bank’s fees and commission income dipped by 1.37 percent to N20.83 billion in March 2018 from N21.12 billion the previous year.
Expectedly, noninterest revenue was down 10 percent to N26.57 billion in the period under review from N29.64 percent the previous year.
Access Bank’s fees and commission income increased by 34.54 percent to N15.71 billion in March 2018 from N11.67 billion the as at March 2017.
Stanbic IBTC Holdings Plc made N17.84 billion in fees and commission income in March 2018, which represents 35.26 percent increase from N13.19 billion made last year.
FirstBank Holdings fees and commission income rose by 6.31 percent to N19.17 billion in March 2018 from N18.03 billion the previous year.
UBA’s fees and commission income was up 15.39 percent to N15.13 billion in March 2018 as against N13 .15 billion the previous year.
GTBank made N14.48 billion in fees and commission income in the period under review, from N13 billion the previous year as the lender continues to bolster noninterest revenue.
Diamond Bank’s fees and commission income was down 1.69 percent to N6.87 billion in March 2018 from N8.27 billion the previous year.
FCMB’s fees and commission increased by 38.64 percent to N4.78 billion in March 2018 from N3.45 billion as at March 2017.
Fidelity Bank’s fees and commission income increase by 4.60 percent to N3.63 billion in March 2018 from N3.47 billion as at March 2017.
Analyst say lenders will have to intensify their revenue generation strategy as a sharp drop in yields on short term government securities are expected to damp future margins.
Fitch Ratings had stated that Nigerian banks might find it difficult to sustain their profitability this year, given the decline in net treasury bill issuance by the federal government.
It pointed out that Nigerian banks were highly reliant on net interest income to remain profitable, saying treasury bills was an important source of the banks’ profitability in 2017.
In addition, Fitch stated that its 2018 rating outlook for the Nigerian banking sector was negative, forecasting that some tier two banks would struggle to remain profitable this year.
“We expect falling treasury bill yields and lower issuance to put pressure on Nigerian banks’ profitability in 2018,” it said.
