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Nigerian Banks Earn N307bn from e-Business in 2022
Eleven Nigerian banks listed on the Nigerian Exchange (NGX) collectively earned N307.472 billion from electronic-business transactions in 2022.
Eleven Nigerian banks listed on the Nigerian Exchange (NGX) collectively earned N307.472 billion from electronic-business transactions in 2022. This represents a 7% increase from the previous year’s figure of N287.429 billion.
United Bank for Africa Plc (UBA) and Access Holdings Plc were the top earners from electronic business in 2022, with N102.9 billion and N84.3 billion in revenue, respectively. Other banks that recorded significant growth in e-business income include First Bank of Nigeria Plc (FBN), which saw its revenue increase by 15% to N57.2 billion, and Zenith Bank Plc increased by 12% to N53.1 billion.
The growth in e-business income for Nigerian banks is likely due to a number of factors, including the increasing use of mobile banking and online banking, as well as the growing popularity of digital payments. The Central Bank of Nigeria (CBN) has also been encouraging banks to invest in digital infrastructure and offer more innovative digital banking products and services.
Revenue Soars Has Nigerian Banks Shift Focus to Electronic Payments
The financial services sector in Nigeria is undergoing a rapid transformation, driven by the rise of fintech and the entry of telecom companies into the market. This has led to a surge in the use of electronic payments, which has benefited banks by increasing their revenue from commissions and fees.
In the past, banks relied heavily on traditional over-the-counter transactions for revenue. However, the rise of fintech has made it easier for customers to conduct financial transactions online or through mobile apps. This has led to a decline in the number of customers visiting bank branches, which has reduced the need for extensive human resources.
As a result, banks have shifted their focus to electronic payment systems. This has led to an increase in revenue from commissions and fees, as banks charge a small fee for each electronic transaction. In addition, banks have also been able to save money on operating costs by reducing the number of staff needed to operate branches.
The rise of e-payments is a positive development for the financial services sector in Nigeria. It has made it easier and more convenient for customers to conduct financial transactions, and it has also benefited banks by increasing their revenue.
Impact of fintech on the Nigerian financial services sector:
- Fintech has made it easier for people to access financial services, especially in rural areas.
- It has helped to reduce the cost of financial services.
- Fintech has increased competition in the financial services sector, which has led to better services and lower prices for consumers.
The rise of these E-payment companies is a major trend that is transforming the financial services sector around the world. Nigeria is no exception, and the country’s financial services sector is poised to experience even more growth in the years to come.
Breakdown of the banks’ e-income earnings
An analysis of financial statements of the listed banks, compiled by Nairametrics, revealed that tier-1 banks such as UBA, Access Bank, and Zenith Bank led topped the list with their e-income earnings last year.
These banks collectively recorded a pre-tax profit of N1.035 trillion, representing a 3% increase from the N998 billion posted in the previous year, FY 2021.
Below is a breakdown of the banks’ e-income earnings in 2022.
GTCO Holdings – N23.201 billion
The e-business income reported by GTCO Holdings was N23.201 billion, up 10.04% from the N21.083 billion made during the same period the year before.
The holding company was responsible for 7.5% of the total revenue from electronic banking that the twelve banks generated.
In its fiscal year 2022, GTCO reported a profit before tax of N214.2 billion, a 3.3% decrease from the N221.5 billion reported in the comparable year ending in December 2021.
A financial institution reports that the Group reported a net interest income of 30 billion for the year 2022 as opposed to N220.61 billion posted in 2021, showing an increase of 17.54%.
The Group’s loan book climbed by 4.6% from N1.80 trillion in December 2021 to N1.89 trillion in December 2022, while deposit liabilities increased by 11.6% over the same time period, from N4.13 trillion to N4.61 trillion.
With total assets and shareholders’ funds closing at N6.45 trillion and N931.1 billion, respectively, the Group’s balance sheet is still solid. The Capital Adequacy Ratio (CAR), which closed at 24.1%, was still quite high.
Zenith Bank – N45.739 billion
Zenith Bank Plc recorded a 30.07% increase in e-business income from N37.470 billion in 2021 to N45.739 billion in 2022. This represents 14.88% of the total e-business income of the eleven banks.
The bank’s gross earnings grew by 24% from N765.6 billion in 2021 to N945.5 billion in 2022. This was driven by a 26% year-on-year growth in interest income from N427.6 billion to N540.2 billion and a 23% year-on-year growth in non-interest income from N309 billion to N381 billion.
Profits before tax also grew by 2% from N280.4 billion in 2021 to N284.7 billion in 2022. The increase in profit before tax was due to the significant growth in all the income lines.
As part of its commitment to shareholders, the bank announced a proposed final dividend payout of N2.90 per share, bringing the total dividend to N3.20 per share.
These results show that Zenith Bank Plc is a strong and profitable institution. The bank’s focus on digital transformation and its commitment to customer service is paying off. This is good news for the bank’s shareholders and customers, and it is a sign of things to come.
FBNH– N55.099 billion
First Bank’s e-business revenue declined by 2.26% in the full year of 2022 to stand at N55.099 billion from N56.375 billion recorded in 2021. However, the bank’s e-business income accounted for 17.92% of the e-business revenue captured.
The Group’s Gross Earnings were up 6.32% to N805.128 billion from N757.296 billion posted in 2021, driven by strong growth in interest income. Profit before Tax dropped by 5.26% to N157.902 billion as against N166.662 billion posted in 2021.
According to the bank in a statement, Net Interest Income rose by 59.15% to N363.249 billion from N228.242 billion in 2021. FBN Holdings’ Operating Expenses grew by 23.35% to N218.481 billion from N177.130 billion in 2021.
Access Holdings – N59.653 billion
The largest commercial bank in the nation, Access Holdings Plc, generated N59.653 billion from its online operations, or 19.40% of the total revenue generated by the eleven banks under review.
Its e-business revenue decreased by 9.99% year over year from the N66.280 billion realized the year prior.
The bank recorded N15 trillion in total assets, up 28% from the N11.73 trillion reported in a similar period of 2021, according to the figures displayed on the floor of the Nigerian Exchange Limited (NGX).
In comparison to the N971.9 billion it earned the previous year, the Group’s total earnings increased by 43% to N1.388 trillion, while interest income increased by 19% to N359.4 billion from N301.5 billion.
UBA – N78.946 billion
The Pan African bank recorded a sum of N78.946 billion as e-business income during the full year of 2022, an increase of 22.21% compared to N64.595 billion recorded in FY 2021.
The bank accounted for 25.68 % of the total e-business income realized by the eleven banks.
The 2022 financials, filed by the bank on the floor of the Nigerian Exchange Limited (NGX), showed that despite the highly challenging global economic and business environment, UBA recorded a laudable profit before tax, with a 31.2% growth, to close the year under review at N200.8 billion, rising from the N153.01 billion recorded at the end of the 2021 financial year.
Its profit after tax (PAT) grew by 43.5% to N170.2 billion in 2022, compared to N118.7 billion recorded the year before. Consequently, UBA Group Shareholders’ Funds rose to N922.1 billion, as of December 2022, achieving an impressive growth of 14.6% compared to the prior year.
The results showed that the bank’s gross earnings rose significantly to N853.2 billion, from N660.2 billion recorded at the end of the 2021 financial year, representing a strong 29.2% growth.
Total assets rose remarkably by 27.2%, crossing the N10 trillion mark, to close at N10.9 trillion in December 2022, up from N8.5 trillion in 2021.
According to the statement, this was a significant achievement and milestone in the history of the powerhouse financial institution.
In the year under consideration, UBA Group’s cost-to-income ratio dropped to 59.2%, from over 60% in the prior year, pointing to the Group’s improving efficiency.
Others include
- FCMB – N13.997 billion
- Union Bank – N7.971 billion
- Sterling Bank – N7.157 billion
- Wema Bank – N6.135 billion
- Unity Bank- N3.963
- Stanbic IBTC – N2.513 billion
Conclusion
The rise of technology is changing the way people bank. Fintech firms and telecommunication companies with payment licenses are offering new and innovative products and services that are challenging traditional banks. To remain competitive, banks will need to adapt to these changes by:
- Improving their technology infrastructure. This includes investing in new hardware and software, as well as training staff on how to use the new technology.
- Developing new digital products and services. This includes mobile banking, online banking, and other digital channels that allow customers to bank without visiting a branch.
- Enhancing their online and mobile banking capabilities. This includes making it easier for customers to do things like deposit checks, transfer money, and pay bills online or through mobile apps.
- Investing in cybersecurity. This includes protecting customer data from cyberattacks.
By taking these steps, banks can remain competitive in the face of the challenges posed by fintech firms and telecommunication companies.
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