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Which of these contender groups will produce Nigeria’s biggest bank?

It may not be too long before we see one of the potential contender groups produce the next biggest bank in Nigeria.



Nigerian banks, Banks with the Highest Social Media Followers

Since the release of the 2020 audited financial reports of various Nigerian banks, there have been numerous published works comparing the country’s biggest banks based on varying metrics—customer base, balance sheet size, capitalization, earnings, and chiefly, profitability.

Zenith Bank and GTBank, the behemoths of Nigeria’s banking industry, being consistently the most profitable of the bunch, have had their financials frequently dissected by one too many analysts revealing valuable insights into the dynamics of each bank’s management style and vision, track records, and, of course, a projection of what this year’s profitability race will look like for them, for FUGAZ, and others in the industry.

READ: USSD service disruption: MTN, banks meeting end in a deadlock, continues today

A cursory search on Google with “vs” between the names of both banks will show that various publications have pitched them against each other in the battle for supremacy as Nigeria’s biggest bank in different aspects within and outside of banking. So many articles that an observer could be tempted to think that the Nigerian banking industry was at its peak and the aforementioned banks were the only ones poised to profit from Nigeria’s economy. Such an observer would be wrong on both counts.

On the first count, Nigerian banks are outranked in Africa, with Zenith Bank leading the nation’s most lucrative industry at number 14 behind North and South African banks in terms of capital; and on the second count, there are challenger banks whose market share and profitability can no longer be ignored. These banks are the potential contenders for the coveted status of Nigeria’s biggest bank.

READ: CBN crypto ban and its ramifications for Nigerian banks

Access, Fidelity, et al

This ignored group of potential contenders have continually made progress over the past few years. Access bank, whose vision is to be number one in Africa, has been relentless in this pursuit that has seen it become the youngest member of the FUGAZ while acquiring competitors along the way. Its profitability has more than doubled since its record-breaking N60.1b in 2017, even as it continues to expand its presence in the continent.

Fidelity, Stanbic, and Sterling can hardly be classed with the self-proclaimed warriors of Access Bank in terms of balance sheet and customer base, but their resilience and grit in leading the Tier 2 banks’ charge have accorded them their deserved respect in the industry as they continue to increase their year on year profitability and become an investor’s delight.

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READ: Nigerian Banks to stop “instant completion” for forex transfers online

This group of potential contenders are inspired, more than anything, by their need for self-actualization in the industry, and while some don’t look likely to overtake the leading duo to become Nigeria’s biggest bank in the nearest future, their being in the race will always be important in determining who gets the title.

The elephant (and horse) in the room

Conspicuously missing from the previous list of challengers are First Bank, UBA and Union Bank. Although their profitability and capitalization sets them up as favourable challengers, one cannot but consider their pedigree in making the distinction of not grouping them with the rest of the potential contenders for the enviable Nigeria’s biggest bank title.

These banks, which used to be the immovable financial giants until a few decades ago, when the likes of Zenith and GTBank leveraged superior service delivery and aggressive marketing to unseat them, have been able to reinvent themselves and stay relevant in the industry, even producing two of the five FUGAZ. Notwithstanding, they will need something radically new if they are to catch up with, much less overtake, the industry’s leading duo.

The fintech MFBs

They are the smallest group of the chasing pack quite alright, who with each passing day and each round of funding, seem the most likely to unseat the so-called top dogs and other potential contenders. Nigerian fintechs have transcended the Payment Service Provider’s space and, in most cases, become pseudo digital banks through the acquisition of MFB and BDC licenses.

Stanbic 728 x 90

These fintech MFBs have demystified the banking industry with innovative customer offerings that have seen traditional banks consistently try to play catch up. They have leveraged social media expertise to reach a larger network of customers, mostly beyond the scope of their one-state MFB licenses.

They have been able to appeal to millennials and Gen Z by selling convenience and meeting them where they can be found, and where they are most comfortable doing business—online. Their products are also streamlined to their target market and are adopted by communities through online influence as a social standard.

The fintech MFBs’ ability to offer free banking services and higher interest rates for investments is a huge selling point that tips consumer acceptance in their favour and is predicated on their relatively low costs as shown below:

Fintech MFBsTraditional Banks
Licensing costMinimum paid up capital for MFBs ranges from N20m for a unit, N100m for a state and N2billion for a National license.Commercial banks are required to maintain a minimum paid-up share capital of Twenty five billion naira (N25,000,000,000.00) or such other amount as may be prescribed by the CBN from time to time.
Operational costWhile not having access to their financials, as they are not publicly traded, one would be correct to assume that the cost of running a single physical address would be quite minimal compared to that of commercial banks with over 200 branches nationwide.Huge operational cost. For instance, Zenith Bank spent N1.8billion on Travels, N20b on IT, N30.9b on AMCON levies, and N148b on other expense lines in 2020 which include advertisements.

Fintech MFBs are nimble organizations that have shown their ability to adapt and align themselves to the yearnings of Nigeria’s young population. They have become the preferred investment destination on the African continent for venture capitalists.

Their framework for competing on their own terms is being adopted by newly established commercial banks, who no longer see the relevance of establishing so-called “wide branch networks,” but are rather using hubs in different geo-political zones to drive their commercial interests while going digital for retail; exploiting increased smartphone penetration, demographics and regulatory focus on inclusive banking.

The figures look unlikely presently, but it may not be too long before we see history repeat itself in the Nigerian banking industry, and one of the groups produces the next biggest bank in Nigeria. Whichever bank emerges, it is certain that reduced cost of service delivery, as well as a robust IT infrastructure and a strong retail market, will play a key part.

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We will keep watching with anticipation as it all unfolds.

Kelly Zolonye Ushedo is passionate about Banking, and simplifying complex issues around personal finance and start-ups. He has over 8years experience in various job functions in the Banking industry across top Banks. Follow @Zolonye on Twitter.

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    CBN moves against bad debtors to other financial institutions in new circular

    The CBN has said it will extend its Credit Risk Management System to other financial institutions in the country.



    CBN health intervention fund gets new interest rate by March 2012, Nigerian banks’ non-performing loans drop significantly by 41% in 2019, External reserves decline by over 8% in 3 months, Nigeria’s external reserves increase by $1.36 billion in 13 days

    The Central Bank of Nigeria (CBN) has further moved against bad debtors as it said it will extend its Credit Risk Management System (CRMS) to the other financial institutions (OFIs) in the country.

    This follows the successful implementation of the CRMS in deposit money banks across the country.

    This disclosure is contained in a circular titled, ‘Credit Risk Management System: Commencement of Enrolment of all Development Finance Institutions, Microfinance Banks, Primary Mortgage Banks and Finance Companies, issued by the apex bank and signed by its Director, Financial Policy and Regulation Department, Kelvin Amugo, on April 8, 2021.

    CBN in the circular noted that this policy is to help promote a safe and sound financial system in the country as well as prevent the bad debtors from undermining the banking system.

    READ: CBN warns banks against rising level of Non Performing Loans

    What the CBN is saying in the circular

    The statement from the CBN’s circular reads, “As part of efforts to promote a safe and sound financial system in Nigeria, the CBN introduced the CRMS to improve credit risk management in commercial, merchant and non-interest banks as well as to prevent predatory borrowers from undermining the banking system.

    “With the successful implementation of the CRMS in deposit money banks, it has become expedient to commence the enrolment of Other Financial Institutions on the CRMS platform.

    Accordingly, all DFIs, MfBs, PMBs and FCs are required to report all credit facilities (principal and interest) to the CRMs and to update same on monthly basis. OFIs shall note the Bank Verification Numbers and Tax Identification Numbers are the only basis for regulatory renditions.

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    READ: CBN reviews minimum interest rates on savings deposit to 1.25%

    To ensure full compliance, OFIs are reminded to conclude the tagging of ALL life credits files for ALL individual and non-individual borrowers with BVN and TIN respectively by May 14, 2021.’’

    The apex bank in the circular also advised concerned OFIs to acquaint themselves with the regulatory guidelines for the operations of the redesigned CRMS for commercial, merchant and non-interest banks in the country.

    While noting that it would monitor compliance with the requirements of this circular, the CBN said that appropriate sanctions would be applied for non-compliance.

    READ: U.S Government to unveil Crypto nemesis before end of July

    Stanbic 728 x 90

    What you should know

    • The CRMS was introduced due to rising cases of non-performing loans in banks and this contributed significantly to the financial distress in the banking sector.
    • This was also compounded by the existence of predatory debtors in the banking system who are fond of abandoning their debt obligations in some banks only to move to contract new debts in other banks. This led to the need for a central database from which consolidated credit information on borrowers could be obtained.
    • The CRMS is web-enabled thereby allowing banks and other stakeholders to dial directly into the CRMS database for the purpose of rendering statutory returns or conducting status enquiry on borrowers.

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    Business News

    Banks earn N216 billion in E-banking income amidst threat from challenger banks

    Nigerian banks raked in a sum of N216.52 billion from their e-business earnings in the year 2020.



    the best mobile banking apps, On Google Play Store, some Nigerians are dissatisfied with their mobile banking apps  

    Nigerian banks raked in a sum of N216.52 billion from their e-business earnings in the year 2020 as tier-1 banks popularly known as FUGAZ (First Bank, UBA, Access Bank, GT Bank, and Zenith Bank) topped the list of highest earners. 

    Income from digital channels is also classified as electronic business or banking income by the majority of commercial banks. Nairametrics gathered this research from the audited financial statements of 12 of the leading banks in the country. The same banks reported N217 billion in income from digital channels in 2019 dipping marginally by 0.24%.

    • Banks attribute the reason for the drop in 2020 compared to 2019 to the revision of fees and charges for electronic transfers by the central bank in early 2020.
    • On January 1st, 2020, the CBN ushered in a new regime for bank charges. While these mostly affected things like card maintenance fees, charge for hardware tokens it also affected the amount that can be paid for electronic transfers.
    • For example, a graduated fee scale for electronic transfers replaced the current flat fee of N50 such that transfers below N10,000 now attract a maximum charge of N10; and transfers above N50,000, N50.
    • USSD fees also got a cut a few months later announcing that customers will pay a flat fee of N6.98 per transaction every time they use USSD services with effect from Tuesday, March 16, 2021.
    • The Covid-19 pandemic also played a major role in bank performance as it affected the expansion of the digital rollout plans earlier on in the year. However, the pandemic will swing in their favour as Nigerians increasingly relied on mobile banking for transactions while avoiding banking halls for fear of contracting Covid-19.

    READ: EXCLUSIVE: Best performing banks in Nigeria judging by the numbers

    Banks and Digital Channels

    Banks in Nigeria have increasingly resorted to generating income from digital channels such as their mobile applications, USSD channels, and online banking targeting Nigerians from all works of life. Efforts at increasing revenue from digital channels have been supported heavily by the Central Bank through initiatives such as BVN, POS, and other banking policies driving financial inclusion.

    While the apex bank’s policy was aimed at reducing the number of unbanked in the country, banks have seized on the opportunity to offer a wide range of services that have increasingly provided an alternative source of income. According to NIBSS, the total value of electronic transfers for 2020 topped N158 trillion in 2020 a 50% growth when compared to 2019. Transaction volume also rose to 2 billion up 77% when compared to 2019.

    READ: Zenith Bank spends N20 billion on IT in 2020, up 122%

    Rise of Challenger Banks

    Banks will face stiffer competition in 2021 as Challenger Banks such as Kuda Bank and V-Bank are more capitalized having attracted significant funding in recent months. These banks offer zero fees as an attractive selling point which they hope will sway customers from the big commercial banks who have long started monetizing their platforms.

    Challenger Banks typically earn money from other sources such as providing bespoke services wrapped around savings and investments with their customers. Thus, rather than rely on digital revenues earned from fees and charges per transaction, they earn by actually engaging in the business of banking, lending depositors funds, and investing their free float.

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    READ: Highest paid Nigerian bank MD/CEOs of 2020

    Here are the top earners in 2020: 

    Apart from Access Bank, UBA, and FBNH, all the other banks posted year-on-year declines. For example, Zenith Bank and GTB recorded a 36% and 25% drop respectively.

    However, Access Bank and UBA both recorded an increase of 56% and 14% respectively topping N56 billion and N44.2 billion respectively. Access Bank is now the largest bank making money from e-business income having topped FBNH which posted N48 billion from E-business income, the highest in 2019.

    Fifth position – GT Bank (N11.77 billion)

    Guaranty Trust Bank, the most capitalized financial institution listed on the Nigerian Stock Exchange generated a sum of N11.8 billion from its e-business unit, accounting for about 5.4% of the total e-business revenue in 2020.

    • Its e-business revenue declined massively by 24.85% compared to N15.66 billion recorded in the previous year.
    • The bank, however, posted a profit after tax of N201.44 billion in 2020 (second only to Zenith Bank), representing a 2.33% increase compared to N196.85 billion recorded in 2019. 

    READ: Ecobank Transnational Inc. records 24% increase in Profit After Tax for Q4 2020.

    Stanbic 728 x 90

    Fourth position – Zenith Bank (N27.08 billion)

    Zenith Bank earned a sum of N27.08 billion from its e-business in 2020 to stand fourth on the list behind UBA.

    • Its income from e-business accounted for 12.5% of the total income generated by the twelve banks. Zenith Bank’s e-business income witnessed a huge plunge of 36.3% in 2020 compared to N42.5 billion it recorded in 2019.
    • However, Zenith Bank posted the highest profit of N230.6 billion in the review period, growing its profit after tax by 10.4% from N208.8 billion recorded in 2019. 

    Third position – UBA (N44.25 billion)

    UBA retained its position in third place with a total e-business revenue of N44.25 billion, accounting for 20.4% of the total e-business income generated by the banks on our list.

    • UBA recorded a 14.14% increase in its e-business revenue in 2020 compared to N38.8 billion recorded in the prior year. 
    • UBA has also intensified its effort to build on its 2020 success by releasing a new mobile banking app, which aims to improve the ease of transacting by their customers.
    • The tier-1 bank posted a profit after tax of N113.77 billion in 2020, representing a 27.7% increase compared to N89.09 billion recorded in the previous year. 

    Second position – FBN Holdings (N48.68 billion)

    First Bank lost its first position to Access Bank, having increased its e-business revenue marginally by 1.35% to stand at N48.68 billion in 2020. Its e-business revenue accounted for 22.5% of the e-business income recorded by the twelve banks under consideration. 

    • Despite being one of the oldest banks in the country, First Bank has been at the forefront 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 and has continued to create products within the electronic space.
    • For example, in November 2020, First Bank launched a Next Generation ATM, referred to as FastTrack ATM, designed to eliminate the need for physical interaction with the automated machine.
    • This was as a result of the need to reduce physical contact with people and substances, due to the covid-19 spread in the country. 

    First position Access Bank (N56.09 billion )

    The largest bank in Nigeria by total assets toppled First Bank, Zenith, and UBA to occupy the first position with e-business revenue of N56.09 billion in 2020.

    • Access Bank was in the fourth position in 2019 but catapulted to first as it grew its e-business income by a whopping 55.64% from N36.04 billion recorded in the previous year.
    • This increase also translated to a 12.71% growth in profit after tax to stand at N106.01 billion in the review period from N94.06 billion recorded in 2019. 
    • Access Bank does mention that its E-business income includes earnings from its Channels business.

    The increase in its e-business revenue is no surprise as the tier-1 bank spent a sum of N18.7 billion on IT and E-business related initiatives in the same year, as against N9.7 billion incurred in the previous year and N11.39 billion in 2018, a move that clearly translated to a boost in E-business income. 

    According to a recent article published by Nairametrics, Access Bank stated that it created 4 million digital loans in the year under review and disbursed N105 billion loans through its digital lending platform, indicating a 48% year-on-year growth. 

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    Bubbling under

    • FCMB – N8.61 billion
    • Union Bank – N7.04 billion
    • Sterling Bank – N4.97 billion
    • Stanbic IBTC – N2.74 billion
    • Wema Bank – N2.61 billion
    • Fidelity Bank – N2.46 billion
    • Jaiz Bank – N214 million


    Commercial Banks E-Business (Digital Banking) Income.
    Source: Nairalytics Research.


    Bottom line

    The disruption caused by the covid-19 pandemic plunged into the revenue generated by Nigerian banks from their e-businesses, however, they were able to make up for it from their multiple streams of income which translated to a general stellar performance from the sector. It is worth noting that only Access Bank, UBA, and First Bank recorded growth in e-business income in the period under review. 


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