Ten Deposit Money Banks (DMBs) in the country garnered a total of N338.65 billion in fee and commission income in the first half of this year, the lenders’ H1 2020 results show.
The amount is, however, 6.4 per cent (N21.62 billion) less than the N360.27 billion the DMBs got from the same revenue source in the corresponding period of last year.
New Telegraph’s analysis of the 10 lenders’ half year 2020 results, in fact, shows a mixed performance in terms of net fee and commission income figures they posted for the review period.
The lenders are: FBN Holdings, Zenith Bank, Access Bank, United Bank for Africa (UBA), Guaranty Trust Bank (GTB) and Ecobank Transnational Incorporated (ETI). Others include Stanbic IBTC Bank, Fidelity Bank, First City Monument Bank (FCMB) and Union Bank. Fee 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 commission, management fees and financial advisory fees, among others.
A breakdown of the results shows that FBN Holdings’ net fee and commission income increased by 16.41 per cent to N46.75 billion in the first half of this year, from the N40.16 billion it earned in the corresponding period of 2019.
Access Bank’s net fee and commission income rose to N40.59 billion in H1’20 from N37.53 billion in the same period of last year. Similarly, UBA posted net fee and commission income of N38.59 billion in the first half of this year, as against the N36.06 billion the first tier lender earned in H1’19. Fidelity Bank’s net fee and commission income, equally improved during the period under review, rising to N18.33 billion in the first half of 2020 from N15.55 billion in the corresponding period of last year.
Also, Union Bank’s noninterest income increased by 22 per cent to N22.7 billion in H1’20, from N18.3 billion in the first half of last year. With net fee and commission income of N35.05 billion in H1’20, Stanbic IBTC’s performance was flat compared with the N35.9 billion it earned in the same period of last year.
The other four lenders – Zenith Bank, ETI, FCMB and GTB – however reported reduced net fee and commission income for the period under review. Specifically, Zenith Bank’s net fee and commission income for H1’20 fell to N33.5 billion from N55.82 billion in the same period of last year.
ETI also recorded a drop in the net fee and commission income it garnered in the first half of the year to N71.16 billion from N76.94 billion in H1’19.
Likewise, FCMB’s net fee and commission income for the review period fell to N9.69 billion from N10.1 billion in the first half of last year. GTB also reported a reduced net fee and commission income for H1’20 of N22.29 billion compared with the N33.84 billion it posted for the corresponding period of 2019.
Prior to December last year, when the Central Bank of Nigeria (CBN) reviewed downwards some bank charges and fees, DMBs had focused on boosting their fee and commission income in order to make up for lost revenue due to the slump in Treasury Bills yields.
According to analysts, apart from the impact of the coronavirus (COVID-19) crisis, the CBN’s downward review of bank charges and fees is taking a heavy toll on lenders’ fee and commission income.
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. Highlights of the new Guide to Bank Charges, which took effect from January 1, 2020, included the CBN’s slashing of the withdrawal fee that DMBs charge their customers for the use of other banks’ ATMs 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 actions taken 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 nonindebtedness reference letter and other such demands.