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Market Views

The new income stream that could define success in banking.

Now that more Nigerians are increasingly resorting to digital banking, there is an even greater chance that banks will start earning more income from e-banking fees. Experts agree to this



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During a recent interview, Zenith Bank’s CEO, Ebenezer Onyeagwu, hinted at something exciting for most banks – the fact that a growing number of customers are now switching to e-banking. At a time when the COVID-19 pandemic has ravaged the economy and left banks exposed to financial risks, e-banking is probably the ultimate silver lining.

According to checks by Nairametrics Research, electronic banking has always been profitable for banks. In the first quarter of 2020 alone, Nigeria’s tier-1 banks (i.e., First Bank, UBA, GTB, Access Bank, and Zenith Bank, otherwise known as FUGAZ) collectively earned N38.7 billion from e-banking. During the comparable quarter in 2019, the FUGAZ earned N33.4 billion from e-banking fees.

The chart below shows the revenue NSE-listed banks earned from e-banking over the past five years.

Now that more Nigerians are increasingly resorting to digital banking, there is an even greater chance that banks will start earning more income from e-banking fees. Experts agree to this. 

READ MORE: Why shareholders of Nigerian banks should expect lesser dividend payouts in 2020

Exploiting e-banking 

In the meantime, banks are going to be pushing their online banking products in the faces of their customers. Speaking to Nairametrics earlier this week, the Director of Marketing at Chapel Hill Denham, Lanre Buluro, discussed the areas banks are going to be focusing on going forward. Doubling down on their e-banking strategy is top on the list. He said:

“The banks are definitely going to be focusing on pushing a lot of their transactions to the electronic channels. There will really be a big drive to push customers to the electronic channels. If you recollect, on the first day of easing the lockdown, we were seeing videos of customers rushing to the branches. In this day and age, that shouldn’t be what we should be seeing. A lot of people should be using their electronic channels. There is an urgent need to leverage technology to do more. Some branches will still remain closed.”

Table showing the revenue NSE-listed banks earned from e-banking over the past five years

Focusing on the essentials

Also speaking to Nairametrics, the Managing Partner of GBC Professional Services, Gbenga Badejo, said banks will only focus on giving credit facilities to businesses whose models are essential, profitable, efficient, and smart. He said:

“The banks are going to focus on businesses that are highly profitable, despite the semi lockdown situation. This is an example of what I mean – I recently got a brief from a client to prepare a document because this particular bank suddenly wants to give him an LPO financial facility. This is somebody that the banks have been saying no to for a long time. Now, they’ve seen that this man’s business is among what can be classified as essential. And what are the essentials – food, pharmaceuticals, education, medicals. The banks will gravitate towards the essentials because patronage will always be there.

“Now, because you are part of the essentials does not necessarily mean that you are efficient. If a bank gives you a credit facility and you blow it up in expenses that are unnecessary, you it’s going to affect your bottomline. And when it affects your bottomline, it affects your cashflow. Your ability to return the loan given to you is therefore in jeopardy.

“So, in addition to being in the essential sector of the economy, you are also efficient, profitable, smart, and watching your cost. You should be able to even better than you were doing (profit-wise) before this COVID-19 era.”

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READ ALSO: Ratings firm explains why bank non-performing loans could be worse than expected


Meanwhile, banks will be managing their loan books

While banks may no longer be able to give out as much loans as they used to, Lanre Buluro said they are definitely going to be making sure that the loans already in their books are performing. He also noted that there may be some loan restructuring, especially for SMEs. The CBN has provided some guidelines on how banks should manage SME loans, he said.

Taking advantage of naira’s devaluation 

Another thing banks may depend on to earn revenue/profit during this difficult time is by taking advantage of the devaluation of the naira. According to Buluro, banks like GTBank and Access Bank that have a lot of dollars in their possession, are really going to benefit from this. He said:

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“There are some banks that are quite long on dollars. Examples would be GTBank, Access Bank, and to a great extent Zenith Bank. Just this devaluation alone will see banks booking devaluation gains when they revalue the dollars in their books. As of last year, the official exchange rate to the dollar was N360 and now it’s about N380. So, with just that alone, some banks have booked profits.

I think the CBN may further devalue to an official number of N420 because we are seeing transactions in the parallel market at an average exchange rate of say N450 to the dollar. So, it’s very likely the CBN may further adjust (because I know they don’t like using the word ‘devalue’) to N420 to a dollar. With that adjustment alone, banks who are long on dollars could book some devaluation gains.” 

READ ALSO: Naira drops to N446 to $1 at black market as calls for currency adjustments increases.

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It should be noted that the option of managing costs by laying off staff may no longer be applicable for banks. This is because the Central Bank of Nigeria recently ordering them not to do that, as Nairametrics reported. However, the banks will most likely figure out other ways of reducing operating costs. For example, while many bank branches remain closed for now, the costs of running those facilities will considerably reduce.

In conclusion, Buluro noted that this is a challenging time for everyone, even though it appears as if banks are the main people at the receiving end of the economic fallouts. He also implied that this might as well be the case for banks, considering the fact that they have not really created new products in a long time. So, while the prospects remain quite low, they will just manage what they currently have.

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Market Views

Nigerian stocks plunge, as WEMA, CHAMPION, MANSARD slump

The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session.



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Nigerian stocks wrapped up the week on a bearish note after the benchmark index registered its third negative close in the last five sessions.

  • Sentiments notably picked up where they left off yesterday, as selloffs persisted in bellwether ticker – ZENITHBANK (-1.55%) as well as in Telco giant – MTN Nigeria (-3.28%).
  • The 74 basis points pullback recorded today kept the All Share Index return firmly rooted in the red and also lowering the Year date returns to -1.88%.
  • Save for the Oil and Gas (+0.25%) index lifted by sustained interest in OANDO (+2.99%), all other sectors closed in the negative territory.
  • The Insurance (-2.32%), Banking (-0.48%), Consumer Goods (-0.40%), and Industrial Goods (-0.19) indices declined following price dips in MANSARD (-5.36%), ZENITHBANK (-1.55%), INTBREW (-3.65%), and WAPCO (-2.94%) respectively.
  • The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session

Top gainers

  1. LASACO down 9.82% to close at N1.23
  2. MBENEFIT down 8.11% to close at N0.37
  3. COURTVILLE down 5.00% to close at N0.21
  4. OANDO down 2.99% to close at N3.45
  5. NAHCO down 2.70% to close at N2.28

Top losers

  1. WEMABANK down 10.00% to close at N0.63
  2. CHAMPION down 10.00% to close at N2.52
  3. SUNUASSUR down 9.59% to close at N0.66
  4. AFRIPRUD down 5.74% to close at N5.75
  5. MANSARD down 5.36% to close at N1.06


Nigerian stocks ended the last trading session of the week on a bearish note amid profit-taking across the market spectrum.

  • Downtrend was driven by price depreciation medium capitalized stocks amongst which are; WEMA, CHAMPION, MANSARD.
  • That being said, Nairametrics envisages cautious buying on the account that certain market indicators reveal investors are taking some of their gains across the market spectrum.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.



Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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