Banks listed on the floor of the Nigerian Exchange scooped a sum of N88.9 billion from account maintenance charges in the 9-month period of 2021 (January – September). This is according to data extracted from the quarterly financial statements of the twelve listed banks.
Zenith Bank, Access Bank and GTB led the list of banks in Nigeria with highest income from account maintenance in the period under review. The amount generated from account maintenance charges in 2021, represented a 39.5% increase compared to N63.7 billion recorded in the corresponding period of 2020.
Also, it represents a 41.4% increase compared to N62.9 billion generated in the 9-month period of 2019. It is worth noting that the banks were only able to manage a marginal increase in account maintenance income in the previous year, while the world was dealing with the Covid-19 pandemic and lockdown measures.
However, with businesses around the world and in Nigeria reopening and the economy returning to normalcy, the banking sector is beginning to record massive growth in top and bottom line. Notably, according to data from the National Bureau of Statistics (NBS), the financial sector grew by 25.5% in Q3 2021, from a contraction of 4.54% recorded in the previous quarter.
Nairametrics presents a list of Nigerian banks based on their revenue in the 9-month period ended September 2021 from account maintenance charges. This is the second series of Nairametrics 9-months bank analyses, you can read the first series on e-business revenue here.
UBA – N7.11 billion
United Bank for Africa came fifth on the list with N7.11 billion revenue from account maintenance, which is 21.6% higher than N5.85 billion recorded in the corresponding period of 2020. Also, compared to N6.04 billion recorded in the same period of 2019, it increased by 7.8%.
It is worth noting that, the pan African bank’s account maintenance income accounts for 8% of the total N88.9 billion recorded by the 12 banks under consideration. In terms of the bottom line, UBA grew its profit after tax by 35.6% year-on-year to N104.6 billion, fourth on the list of highest earners.
FBN Holdings – N11.74 billion
FBN Holdings, the holding company of First Bank of Nigeria saw its account maintenance income surge by 33.3% from N8.81 billion generated in the nine-month period of 2020 to N11.7 billion in 2021. On the other hand, it increased by 19.8% compared to N9.81 billion generated in the same period of 2019.
Despite the growth in account maintenance revenue, gross earnings during the period reduced marginally by 2.8% to N427 billion. This is due to a 12.6% decline in its interest income during the period, which resulted to a year-on-year decline in its bottom line.
Specifically, profit after tax dropped by 24.8% to N40.85 billion in the 9-month period of 2021 compared to N54.4 billion recorded in the previous year.
GT Bank – N13.02 billion
GT Bank generated a sum of N13.02 billion from account maintenance income between January and September 2021. This represents a 36.5% increase compared to N9.54 billion recorded in the corresponding period of 2020. Compared to N8.54 billion recorded in 9-month 2019, account maintenance income increased by 52.5%.
However, its net profit dropped by 9.1% compared to N142.3 billion recorded as of the same period in the previous year to stand at N129.4 billion. This was largely affected by the 14.5% decline in its interest income during the period under review.
Access Bank – N16.21 billion
Access Bank, the largest financial institution in the country by customer base and total assets value, boasted of a N16.2 billion income from account maintenance charges, representing 50.9% increase compared to N10.7 billion recorded in similar period of 2020.
In similar fashion, the bank which is set to restructure into a non-operating financial holding company grew its profit after tax to N121.9 billion from last year’s figure of N102.3 billion, representing a 19.1% year-on-year increase.
Zenith Bank – N24.18 billion
Zenith Bank seats comfortably in top position having generated a sum of N24.2 billion from account maintenance, representing 27.2% of the total income by the 12 banks. Zenith Bank increased its account maintenance income by 41.9% and 52.9% compared to N17.15 billion and N15.82 billion recorded in the corresponding periods of 2020 and 2019 respectively.
Similarly, the tier-1 giant printed a year-on-year marginal increase in its profit after tax to N16.6 billion compared to N159.3 billion recorded in the corresponding period of 2020. In comparison to other listed banks, Zenith Bank recorded the highest net profit, representing 24% of the total N668.7 billion recorded by the industry in the period under review.
- Stanbic IBTC – N3.8 billion (+32.5%)
- FCMB – N3.4 billion (+33.3%)
- Fidelity Bank – N2.9 billion (+48.7%)
- Sterling Bank – N2.1 billion (+51.3%)
- Union Bank – N1.7 billion (+42%)
What you should know about account maintenance charges
Banks’ earnings from account maintenance charges, though low when compared to other revenue streams, still make up a significant portion of their non-interest income.
According to the directive by the Central Bank of Nigeria on bank charges, Nigerian banks are allowed to charge their customers a “negotiable” N1 per mille.
What this means is that banks can charge N1 per N1000 debit transactions on current accounts. Banks’ account maintenance charges come in the form of COT (i.e., Commission on Turnover) which is a charge levied on customer withdrawals by their banks. In Nigeria, these charges are mainly applicable to current accounts.