Lenders flourish amid fintech challenge

In the first nine months of 2022, nine Nigerian banks collectively earned N203.71 billion through electronic transactions, with Access Holdings Plc and United Bank for Africa Plc (UBA) topping the list of greatest earners.

A 9.3% growth in digital channel revenue was also reported by the banks in the first nine months of 2021, despite challenges from Financial Technology (Fintech) firms.

Mobile banking, Automated Teller Machines (ATMs), Unstructured Supplementary Service Data (USSD), and Point of Sales (PoS), among other digital channels, are important revenue generators for banks’ non-core banking operations. On the other hand, among the Tier-1 banks, FBN Holdings, and Guaranty Trust Holding Company Plc (GTCO), recorded a drop.

According to an analysis of the banks’ performance, Access Holdings increased its e-business income by 7.4% to N49.4 billion in the first nine months of 2022 from N45.98 billion reported in the same period the previous year, while UBA announced a 14% increase to N47.96 billion from N41.9 billion reported in the same period the previous year.

Furthermore, Zenith Bank doubled its earnings from non-core banking operations, which ultimately had an influence on profit before tax, with an increase in E-business income of almost 50% to N36.07 billion in the first nine months of 2022 from N23.99 billion in the same period in 2021.

As FBN Holdings reported a 4.9 per cent decline in E-business income to N39.98 billion in the first nine months of 2022 from N42.02 billion in the same period the previous year, GTCO reported a 3.1 per cent decline in E-business income to N15.18 billion in the first nine months of 2022 from N 15.67 billion in the same period the previous year.

Most Tier-2 banks’ revenue from non-core banking operations was also negatively impacted by the Central Bank of Nigeria’s (CBN) Payment Service Bank (PSB) licences to MTN Nigeria and Airtel Africa, although they were nevertheless able to report outstanding results in profit.

It is important to note that Fidelity, Union Bank of Nigeria, and Stanbic IBTC Holdings all saw a decline in e-business revenue during the time period under consideration.

While Union Bank of Nigeria reported a 16 per cent decline in its E-business income activities to N5.68 billion in nine months as compared to N6.7 billion reported in nine months of 2021, Stanbic IBTC Holdings reported N1.63 billion in E-business income in the first nine months of 2022, a decline of 36% from N2.53 billion in the first nine months of 2021.

Additionally, Fidelity Bank reported a 7.4% decrease in commission on electronic banking activities, from N2.42 billion in the first nine months of 2021 to N2.24 billion in the first nine months of 2022.

Sterling Bank is the only bank among the Tier-2 banks under examination to have increased E-business commission and fees by around 11%. In comparison to the N5.02 billion reported in the first nine months of 2021, the bank recorded N5.57 billion in E-business income in the first nine months of 2022.