The on-going salary cuts ravaging across several sectors of the Nigerian economy have spread to the doors of the banking industry. While some were surprised, others already expected that some Nigerian banks would either ‘right-size’ their staff strength or slash salaries.
A few days ago, the Group Managing Director of Access Bank, Herbert Wigwe, held a meeting, tagged Employee Town Hall Meeting, with some staff of the bank via Microsoft’s Teams (video) and informed them of some strategic moves that the financial institution would take this month to ensure it weathered the ravaging effects of the present crisis shaking the world.
According to him, the decision would affect the bank’s 5,870 permanent staff starting with him, as his salary would be cut by 40%. Sources within the bank informed Nairametrics that he had initially held a session with the staff, engaging them on what decisions needed to be made regarding salaries, especially considering the effects of Covid-19 on the economy. He gave staff the options of either downsizing or accepting cut salaries. Majority of the staff present at the online video meeting on Microsoft Teams chose the lesser evil of cutting salaries.
After this, he had another meeting with staff via the same Teams where he finally announced that there will be salary cuts.
“One thing that has come out from the lockdown is that digital is the way forward. We do not need the complement of staff to take us to where we are going. It has also shown that non-essential staff, particularly from the outsourced staff, may not be at the level that we require to be in the future.
“We do not need all the security personnel, cleaners, tellers among others that we have now, considering the fact that not all our branches would be open between now and December. We will talk to the employers of that number of staff, which represent about 75% of our staff strength, to rationalize to the level we think would make us a customer-oriented financial institution that we are.
“We are also looking at a professional cut. I understand that that is very tricky because it comes with pains. I will be the first to take the heat and I will take the largest pay cut as much as 40%. Everybody may have to make some adjustments of the sort. We understand the difficulties people are going through but also understand the higher calling of creating an institution that can continue to provide for us. When things improve tomorrow, we shall revert to normal. We understand the difficulties facing the people but we have to protect our franchise.” Herbert Wigwe.
Access Bank acquired rival Diamond Bank Plc last year and that partly contributed to a 31% increase in operating expenses. Personnel, recruitment, and training costs account for more than a third of overheads after the deal boosted employee numbers and resulted in “wage harmonization” across the businesses. As at December 2019, Access Bank’s personnel cost was about N76.9 billion, up from N57.1 billion same period in 2018. The spike was mostly due to the merger with Diamond Bank where it also absorbed legacy Diamond Bank staff.
Meanwhile, Nigerian banks are also facing the threat of rising bad-debt levels, as a crash in oil prices and the risk of a naira devaluation coincide with the Covid-19 pandemic that has shuttered businesses. UBA, another mega Nigerian bank, had announced a rightsizing earlier in the year.
Access Bank is yet to issue a press release on this issue at the time this article was published.
COVID-19, VAT, FX scarcity adversely impacted our operations in 2020 – Nigerian Breweries boss says
NB Plc’s operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase and FX devaluation.
The management of Nigeria’s leading brewer, Nigerian Breweries Plc has revealed that its operations in 2020 were adversely impacted by the COVID-19 pandemic, VAT increase, FX devaluation and scarcity of foreign exchange.
This statement was made by the Managing Director of Nigerian Breweries, Mr Jordi Borrut Bel, at the company’s pre-AGM media briefing for the financial year-end 2020, which held in Lagos this week.
He noted that the increase in the brewer’s cost in 2020 was due to the COVID-19 pandemic which disrupted the company’s operations, as well as the increase in VAT, devaluation and FX scarcity which has put pressure on input cost.
The Nigerian Breweries boss explained further that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity.
He explained that the increase in costs of goods sold, as reported in its audited financial results, could also be linked to the increase in the volume of goods sold, as the company’s sales volume in 2020 increased by almost the same percentage as the cost of goods sold.
To deal with this challenge going forward, he revealed that the company is focused on the supply chain, and will continue to seek out ways to mitigate any of the price increases coming from FX scarcity.
The company’s profitability in question?
An analysis of the company’s result revealed that despite the 4.3% increase in net revenue from N323.00 billion recorded in 2019, to a total of N337.01 billion in 2020, the company’s profit declined significantly by 53.3% to N7.53 billion.
Speaking on this, Jordi Borrut in his statement at the press briefing noted that the brewer’s business performance in 2020 was quite impressive especially in the face of the COVID-19 pandemic and economic recession. Despite these challenges, the company maintained a strong and healthy balance sheet.
“There was a slight reduction in profitability but compared to the previous year, the business witnessed an improved growth in revenue. The significance of this is that the business became more stable and healthier,” he said.
What you should know
- Nigerian breweries, being the largest brewer in the country, maintained its stance in terms of generating profits year-on-year. The company emerged as the only brewer to record a profit of N7.37 billion from its operations in 2020, 54.3% lower than 2019 figures (N16.1 billion).
- From this, the leading brewer was able to pay shareholders a total dividend of N7.5 billion, translating to a dividend of 94 kobos per share – a dividend payout in which exceeds 100%.
- While Guinness and International Breweries made a loss of N12.6 billion and N24.9 billion respectively, this reality impacted their ability to pay their shareholders dividends in 2020.
Highest paid Nigerian bank MD/CEOs of 2020
Bank MD/CEOs in Nigeria earned a combined N1.5 billion in salaries in 2020.
The banking sector, especially commercial banks, is one of the most profitable sectors of the Nigerian Economy churning out profits of close to a trillion in 2020 alone. They are also one of the highest employers of labours in the country employing over 93,000 Nigerians.
Sitting at the helm of affairs is the Chief Executive/Managing Director, the highest-ranking executive in the organization saddled with the responsibility of making the best corporate decisions, oversight of the execution of the organisation’s corporate strategies and most importantly increasing the shareholders’ return. The buck basically stops on their table.
Thus, these enormous responsibilities also come with a considerable executive compensation for their service making them ostensibly the highest-ranking staff of the bank.
In typical Nairametrics fashion, we bring to you a list of the highest-ranking bank CEOs for 2020 based on their executive compensation (exec comps). The bank MD/CEOs under our review earned over N1.5 billion in salaries in 2020.
The data was sourced from the published audited accounts of the bank and verified by Nairametrics Research.
Nairametrics | Company Earnings
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- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.