Access Bank Plc said it will no longer be going forward with its earlier decision to collect accrued stamp duty charges (for February through to April) from its customers. This followed a serious social media backlash against the tier-1 bank this weekend, as customers expressed their utter dissatisfaction over the debits.
In a statement issued on Twitter, Access Bank explained the decision to cancel the stamp duty collection was because it cared about its customers. The bank, however, maintained that the earlier decision to withdraw the accrued charges was legal.
In the meantime, Access Bank said it will go ahead and bear the cost of the stamp duty (for February through to April 2020 alone) on behalf of its customers. Note that stamp duty charges on bank customers’ transactions are usually collected by the banks on behalf of the Federal Government of Nigeria.
Part of the statement by Access Bank said:
“Stamp duty charge collection is in compliance with the mandate of the ‘Finance Act, 2019 (Stamp Duty Act, Cap S8). We are required by law to apply this charge as applicable and remit all funds to the Federal Government.
“However, we have heard our customers’ feedback that this charge is unwelcome, especially at this time against a challenging economic backdrop. We have considered your feedback and have decided to pay the stamp duty on our customers’ behalf for the affected period only. This means all individual and SMEs who were debited for the accumulated stamp duty charge for February to April 2020, will be refunded.”
— Access Bank Plc (@myaccessbank) June 28, 2020
To this end, Access Bank said it hopes the decision to refund all those who were debited would go a long way towards making them feel better.
Recall that Nairametrics reported last week about Access Bank informing its customers ahead of the stamp duty debits this weekend. An email sent by the tier-1 bank to its customers, as seen by Nairametrics, had explained that the accrued charges were not debited between February and April when they were supposed to, due to an omission on the part of Access Bank. The bank had, therefore, apologised to the customers for the inconvenience. But apparently, many customers claim they did not receive this notification, hence the backlash.
Investigation by Nairametrics reveal some of the banks customers have started receiving credit alerts on the phones. In a reversal seen by Nairametrics, the account holder was credited N100 at 20.31pm with a description “REFUND OF STAMP DUTY” included in the alert.
Zenith Bank and GTBank are considering paying interim dividends despite COVID-19
Analysts earlier predicted that banks may hold off on dividend payments as a way of cutting down on costs in view of COVID-19.
Zenith Bank’s board of directors is set to meet on July 23rd, 2020 to consider the tier-1 bank’s audited financial statements for half-year 2020. The directors will also consider “the proposal for recommendation of interim dividend for shareholders,” said a notice that was sent by the company to the Nigerian Stock Exchange.
In a similar development, Guaranty Trust Bank Plc said in a statement to the NSE that “issues relating to half-year dividend may also be discussed” when its board of directors meet later this month.
Zenith Bank and GTBank, which are two of the most profitable banks in Nigeria, have always paid interim dividends to their shareholders. However, analysts earlier predicted that many banks may hold off on dividend payments as a way of cutting down on costs, in view of COVID-19 and its attendant economic implications. It is, therefore, fascinating to see that Zenith Bank and GTBank are considering interim dividends nonetheless.
Elsewhere, banks around the world have either been warned not to pay dividends at all or to be careful with dividend payouts. In April, The Economic Times reported that the Reserve Bank of India advised Indian banks to suspend dividend payments in order to conserve their capital amid the pandemic. In a similar development, regulators in Europe also banned European banks from paying any dividend in 2020. In Australia, banks were advised to slash their dividend payouts. Meanwhile, over in North America, the US Federal Reserve announced in late June that it will temporarily restrict dividend payouts by some of the country’s biggest banks, the New York Times reported.
As Nairametrics had repeatedly reported, the COVID-19 pandemic is expected to adversely impact different sectors of the Nigerian economy, including the financial institutions. An earlier report by Nairametrics quoted Augusto & Co to have predicted how the pandemic would weaken Nigerian banks’ assets. An April report by PwC also highlighted some of the ways COVID-19 could impact Nigerian banks.
In the meantime, the Banking Industry Risk Indicator (BIRI) in Nigeria stands at a score of 12.14 out of 100, according to a recent analysis by Fitch Solutions, as Nairametrics reported.
Do note that Zenith Bank Plc has declared a closed period for the trading in its stock starting from July 6th, 2020. The closed period will last until 24 hours after the company’s half-year 2020 financial report is released to the public. In the meantime, all persons with inside knowledge of Zenith Bank’s affairs shall be prohibited from buying and selling the company’s stock during the closed period.
GTBank declares closed period as directors meet July 22nd to consider H1 result
GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019.
Guaranty Trust Bank Plc (GTBank) has declared a closed period ahead of the release of its audited half-year 2020 financial statements.
A corporate disclosure that was signed by the Company Secretary (Erhi Obebeduo) and sent to the Nigerian Stock Exchange said the closed period commenced on July 3rd, 2020. In line with the listing rules of the NSE, the closed period is expected to last until twenty-four hours after the bank’s financial statements have been released to the public.
Note that the implication of the closed period is that all persons with insider knowledge of the company’s affairs are hereby prohibited from trading the company’s stock.
Meanwhile, members of GTBank’s board of directors are scheduled to meet on July 22nd to consider the audited HI 2020 financial statements. A separate notice that was sent to the NSE said:
“Pursuant to the post-listing requirements of the Nigerian Stock Exchange for quoted companies, Guaranty Trust Bank Plc hereby informs you that the board of directors of our bank is scheduled to meet on Wednesday, July 22, 2020, to consider the audited financial statement for the half-year ended June 30, 2020. Issues relating to half-year dividend may also be discussed at the meeting.”
The audited financial statements for half-year 2020 shall be sent to the Central Bank of Nigeria for approval prior to being made public through the Nigerian Stock Exchange.
Recall that GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019. In the same vein, the tier-1 bank’s profit before tax grew by 2.1% to N58.2 billion, up from N57 billion in Q1 2019. Profit after tax also grew from N49.3 billion in Q1 2019 to N50 billion in Q1 2020.
GTBank closed last week’s trading on the Nigerian Stock Exchange with a share price of N20.80, according to trading reports seen by Nairametrics. Year to date, the stock has lost by more than -19%.
CBN imposes fresh CRR debits on banks to the tune of N118 billion
These debits have inevitably tightened liquidity in the banking system and bankers are complaining.
On July 3rd, 2020, the Central Bank of Nigeria (CBN) once again debited many banks in Nigeria in line with its Cash Reserve Ratio (CRR) compliance requirement. This time around, about 14 banks were debited to the tune of N118 billion.
These banks are:
- Access Bank Plc: N3 billion
- Guaranty Trust Bank Plc: N15 billion
- First Bank of Nigeria Ltd: N12.4 billion
- Ecobank Nigeria: N7 billion
- Sterling Bank Plc: N5 billion
- Fidelity Bank Plc: N11 billion
- Union Bank of Nigeria Plc: N12.5 billion
- First City Monument Bank Ltd: N10 billion
- CitiBank Nigeria Ltd: N10.2 billion
- Stanbic IBTC Bank: N15 billion
- Zenith Bank Plc: N7 billion
- Wema Bank Plc: N3 billion
- Titan Trust Bank: N2.5 billion
- Rand Merchant Bank Nigeria Ltd: N4 billion
More details on these debits
These constant CRR debits, which typically herald the apex bank’s FX auctions as Nairametrics was made to understand, have served to significantly reduce liquidity in the system. An insider who informed Nairametrics about the latest debit said “the liquidity within the system is now very tight”. As a matter of fact, liquidity is now reportedly below N100 billion.
Apparently, the CBN is using these weekly CRR debits to mop up liquidity in the system. In other words, these debits help to prevent banks from coming to the FX auctions with lots of cash. Too much FX demands tend to put the apex bank under pressure.
Note that inasmuch as the CBN is trying hard to stabilise the FX markets, these constant debits have inevitably affected banks negatively by leaving them cash-strapped. Our source, who was quoted above, earlier complained about these ‘indiscriminate debits’ when he said:
“These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%. So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”
Banks’ stakeholders have also collectively complained
Meanwhile, bank stakeholders have also collectively complained about these incessant CRR debits by the Central Bank of Nigeria. As Nairametrics reported yesterday, the negative impacts of CBN’s constant CRR debits were among some of the issues raised by banks’ stakeholders during Standard Chartered Bank’s 2020 Africa Investor’s Conference.
It is important to point out that many banks in the country, including the likes of First Bank, now have billions of their customers’ debits sterilised for the sake of CRR compliance.
The cash reserve requirement is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.