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Companies

Nigerian banks rake in N132.4 billion from E-business Income in 2016

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Data from annual report of some top commercial banks in Nigeria reveal they made a combined sum of N132.4 billion in E-business income for the year ended December 2016. This was about 41% higher than the N94.1 billion made in the same period in 2015.

E-business income

E-business income for most Nigerian banks include fees and charges earned from card usage, mobile banking and internet related transactions. Nigerian banks have stepped up their respective E-business products as Nigerians increasingly lean towards digital products. Adoption of card and online products to help facilitate transactions have soared despite the capital controls introduced by the CBN over the last two years. Data from the CBN also shows a steady rise in the volume and value of transactions of E-business related products as was reviewed in a Nairametrics post some weeks back.

See chart

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We review the top 3

UBA tops the chart

From the chart above, United Bank for Africa came tops for the second year running with N30.4 billion as E-business income. In what might seem like a surprise to a lot of young Nigerians, UBA has one of the most efficient E-business platforms in the country and is considered very strong in facilitating online electronic transfers. UBA’s Africash is also said to be widely popular among traders helping hem facilitate transfers across African countries where UBA has branches. UBA earns up to 1% as fees for the transfers. Other E-business products owned by UBA are Cash Fast, UBA Remit, Western Union and MoneyGram. UBA also recently updated its mobile banking app.

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First Bank maintains close lead

First Bank toppled GTB as number two in E-business income earning a whopping N21.8 billion which was a whopping 42% higher than the N15.3 billion earned in 2015. Despite being often considered an older generation bank, First Bank has also been in the fore front of the mobile banking revolution. The bank was one of the pioneers of the USSD platform which is used to transfer money via a text messaging application of a mobile phone. The bank also has two mobile banking app, the First Mobile which is like other banking apps, allows its users to transfer money (as much as in your account), pay bills, buy airtime, etc. First Bank also owns an app called First Monie which does not require its customers to have bank accounts to transfer money or make transactions. First Bank also uses Western Union, MoneyGram, Ria Money and TransFast for money transfers.

Access Bank

Access Bank recently launched an updated mobile banking app that includes a classic and premium offering. Information from Access Bank’s annual report also suggest most of its income came from card related transactions. Access Bank recorded the highest year on year growth in E-business income as its N21.2 billion income was about 221% higher than then N3.9 billion earned in 2015. Access Bank explains the increase was because of increase in volume of e-channel and card transactions.

See details for other banks.

Nigerian Banks E-Business Income.
Financial Year ended 2016. Nairametrics Research

Bank E- Business Products

Jaiz bank

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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Companies

First Bank’s board replacement won’t affect profitability – Fitch

CBN’s remedial actions will not have a material effect on the group’s asset quality, profitability and capitalisation.

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Fitch Ratings has affirmed that the recent First Bank board replacement will not affect the bank’s profitability and asset quality, as it rates the bank at B- with a negative outlook.

This was disclosed by the rating firm via a statement seen by Nairametrics.

According to the rating firm, the development reflects its view that the impact of the Central Bank of Nigeria’s replacement of FBNH and FBN Ltd boards, the identification of corporate governance failings and the imposition of corrective measures are tolerable at the rating level.

What Fitch is saying

It stated, “We have assessed the near-term financial impact of these actions on FBNH and FBN and believe this is tolerable at the rating level, even though the final outcome is uncertain. In our view, any remedial actions imposed by the CBN, including a potential reclassification of related-party exposures as impaired, will not have a material effect on the group’s asset quality, profitability and capitalisation.

However, this does not consider any possible additional actions by the CBN, especially if FBN fails to implement the regulator’s corrective measures or if there were any further uncovering of corporate governance irregularities.

The Outlook remains Negative, reflecting FBNH’s pre-existing asset quality and capitalisation weaknesses as well as the group’s corporate governance weaknesses highlighted by the CBN. These could put pressure on the ratings.”

What drives First Bank’s rating

FBNH is the non-operating holding company that owns FBN. FBNH’s ratings are aligned with those of FBN (which represents around 90% of consolidated group assets) due to high capital and liquidity fungibility within the group, and low double leverage (at 95% at end-1H20) at the holding company level.

It added that FBNH’s IDR is driven by its intrinsic creditworthiness, as defined by its ‘b-‘ Viability Rating (VR). The rating, according to Fitch, considers the group’s exposure to Nigeria’s volatile operating environment and also factors in vulnerability in its capital position in the context of moderate earnings generation and asset-quality pressures, where headroom above the minimum regulatory capital requirements is also moderate. Capitalisation is a factor of high importance to VR.

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“The new boards appointed to FBNH and FBN comprise individuals with sufficient experience and expertise. However, we view such major change as hugely disruptive. There are no changes in FBNH and FBN’s executive management team.

“We believe the governance shortcomings cited by the CBN reflect poorly on FBNH’s reputation and on the group’s governance and control practices. As a result, we have revised down our assessment of FBNH’s Management and Strategy score to ‘b-‘ from ‘b’.

“We also assigned a negative outlook to this factor, which reflects the uncertainty surrounding additional remedial actions that the CBN may impose due to these related party exposures as well as the potential for further uncovering of governance irregularities. It also captures the lack of track record of the new board and its ability to restore confidence in FBNH and FBN,” it added.

Asset quality remains a rating weakness. FBNH reported an improved impaired loan ratio of 7.9% at end-1Q21 (end-2020: 7.7%). However, FBNH’s reported reserve coverage of 54.5% at end-1Q21 (end-2020: 48%) remains significantly weaker than domestic peers’.

“Our assessment indicates that if the related-party loan highlighted by the CBN were classified as impaired, the ratio would be unlikely to be above 10% (excluding any new impaired loan generation from ordinary business),” Fitch added.

What you should know

On 29 April 2021, the CBN removed the non-executive directors on the boards of FBNH and FBN and replaced them with new individuals appointed by the apex bank, according to Nairametrics.

The CBN gave a series of reasons for its action including the unjustified and unapproved change of the bank’s MD/CEO by the former board, corporate governance failings pertaining to long-standing insider loans that were affecting the bank’s capitalisation and failure to comply with regulatory directives.

Jaiz bank

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Appointments

Airtel Nigeria announces appointment of Surendran as new Chief Executive Officer

Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new MD/CEO with effect from August 1, 2021.

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Like MTN, is Airtel Nigeria considering listing?

Telecommunications giant, Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new Managing Director and Chief Executive Officer with effect from August 1, 2021.

Surendran would be replacing the outgoing Managing Director and Chief Executive of Airtel Nigeria, Olusegun Ogunsanya, who has been elevated to the position of Chief Executive Officer of Airtel Africa Plc with effect from October 1, 2021.

According to a report from the News Agency of Nigeria, this disclosure is contained in a statement issued by Airtel on Wednesday, May 5, 2021, in Lagos.

READ: Airtel Africa signs new $500 million loan with Bank of America, HSBC, others

The statement says that Surendran would also be appointed to the Executive Committee (ExCo) as Regional Operating Director, reporting to the CEO of Airtel Africa plc, and onto the Board of Airtel Networks (Nigeria) Limited.

Airtel in its statement said, “Surendran has been with Bharti Airtel since 2003 and has contributed immensely in various roles across customer experience, sales and business operations.

He was the Chief Executive Officer of Karnataka, which is the largest circle in Airtel India, with over one billion dollars in revenue.

Surendran delivered an exceptional performance with significant movement in Revenue Market Share (RMS) over the last few years, currently at 54 percent. He has over 30 years of business experience, including 15 years at Xerox.’’

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Airtel said that Surendran would transition into his new role from June 1, 2021, and spend the time onboarding into the business until July 31, 2021.

READ: Meet the latest billionaires on the Nigerian Stock Exchange

In case you missed it

It can be recalled that a few days ago, Airtel Africa Plc, a leading provider of telecommunications and mobile money services in Nigeria and 13 other countries, announced the appointment of Mr Olusegun Ogunsanya as the new Chief Executive Officer, following the notice of retirement given by the current Managing Director/Chief Executive Officer, Raghunath Mandava, to the Board.

In the notification sent by Airtel Africa to the Nigerian Exchange, Ogunsanya is expected to join the board of Airtel Africa with effect from October 1, 2021.

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