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Banking Sector

Failed Transactions Drag on E-Payment Performance as Transaction Value Drops to N37.7tn

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ATM at lagos

According to recent data from the Nigeria Interbank Settlement System (NIBSS), the value of E-payment transactions in Nigeria fell to N37.67 trillion in February 2023, a decline of 4.83 percent from N39.58 trillion recorded in the month of January.

The NBSS data also revealed that payments platforms, which include E-Bills Pay, NIBSS Interbank Platform, and Point of Sales (PoS), among others were used 901.46 million times last month, as against the 638 million times reported in January.

PoS transaction volume is reported to have risen from 96.3 million in January to 113.5 million in February. Cheque transactions also increased to 333.952 in February from 319.373 in January with values put at N238.4 billion in February as against N244 billion in January.

For the past two months, a large percentage of Nigerians have been faced with unpleasant situations such as lack of cash at ATMs, exorbitant charges from PoS agents, a rise in the failure of mobile transactions, as well as failure of the Unstructured Supplementary Service Data (USSD) which has severely affected businesses in the country most especially small-scale businesses.

With the Central Bank of Nigeria’s (CBN) Naira redesign policy bottleneck and cash withdrawal limits imposed on transactions to spur the adoption of electronic payments compelling millions of Nigerians to jump on the poorly designed electronic channels, slower servers, failed transactions and other technical limitations have crippled electronic payments and impede business activities.

Contrary to the CBN claims that this policy will deepen electronic means of transactions, it has been faced with a decline in the percentage of mobile transactions as a large percentage of the citizens continue to lament cases of failed transactions and the refusal of banks to reverse their funds. This had seen several individuals reluctant to use mobile banking means of payment resulting in a decline in e-payment transactions.

Investors King understands that other factors could be responsible for the decline in e-payments transaction value.

One, more low transaction value compared to January when people were reluctant to use e-payment.

Two, there seems to be an improvement in the circulation of the new naira notes last month than in January, which might have seen a lot of individuals resort to cash transactions. Lastly, a general drop in consumer spending due to the cashless economy caused by naira scarcity.

A lot of Nigerians have however expressed concerns, faulting the Central Bank of Nigeria (CBN) Naira redesign policy, noting that it has been plagued with several challenges.

The pressure of increased electronic payment has overwhelmed the banking sector, leaving many customers stranded. Many bankers have suggested that some of these failures have been because the NIBSS didn’t increase its capacity to accommodate the increase in transaction volume.

They also disclosed that the huge number of failed transactions when using mobile bank apps to send or receive money, just shows that the country is not yet ready for the cashless policy. Some experts have also stated that a lot of failed transactions are a result of poor network infrastructure.

Citizens continue to decry that the whole banking system is a mess, as they continue to witness failed transactions and unreversed debits, coupled with busy customer care lines, which have continued to heighten frustration in the country.

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Banking Sector

CBN Denies Banks Upgrade of Operations Till License Approval

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Central Bank headquarters

Following the increase in requests seeking operational upgrades for financial institutions, the Central Bank of Nigeria (CBN) has warned against taking such action until their licences are approved.

The CBN informed banks and other financial institutions who have requested for conversion of licenses to refrain from enlarging or reducing their present banking networks while their requests are still pending, Investors King reports.

This was contained in CBN’s circular ‘FPR/DIR/PUB/CIR/001/072’ to banks and other financial institutions in the country dated March 28, 2023.

The circular was titled– “Regulatory guidelines for change of operational licence for banks and other financial institutions in Nigeria” signed by the Director, Financial Policy and Regulation Department, Chibuzor Efobi.

The apex bank barred financial institutions from launching new services or banking activity until otherwise approved and included in the company’s terms.

According to CBN, the regulatory guideline became imperative as more banks and other financial institutions submitted requests for upgrade or conversion to other licence regimes. 

The laid down guidelines will properly guide and give explanations to eligible financial institutions on the system’s requirements.

The circular reads partly, “Under these guidelines, the following prohibitions/restrictions shall apply to eligible banks and OFIs applying for conversion or re-categorisation. The bank or OFI shall not, pending when the application is determined expand or reduce its current banking network;

“Roll-out new products and services; carry out any new strategic banking activity but the settlement of rights and obligations shall continue until extinguished in accordance with existing terms and conditions;

“Take any business decision after the conversion process has commenced, except in line with the bank’s conversion strategy submitted to the CBN; Engage in any banking activity specific to the proposed new licence; any other requirement that may be prescribed from time to time by the CBN.”

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Banking Sector

Zenith Bank Caps The Year 2022 With Impressive 24% Growth in Gross Earnings

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Zenith Bank - Investors King

Zenith Bank Plc has announced its audited results for the year ending December 31, 2022, achieving an impressive double-digit growth of 24% in gross earnings from NGN765.6 billion reported in the previous year to NGN945.5 billion in 2022. This is despite the persistent challenging macroeconomic environment and headwinds.

According to the audited financial results for the 2022 financial year presented to the Nigerian Exchange (NGX), the double-digit growth in gross earnings was driven by a 26% year-on-year (YoY) growth in interest income from NGN427.6 billion to N540.2 billion and a 23% year-on-year (YoY) growth in non-interest income from NGN309 billion to NGN381 billion. Profit before tax also grew by 2% from NGN280.4 billion to NGN284.7 billion in the current year. The increase in profit before tax was due to the significant growth in all the income lines.

Impairments grew by 107% from NGN59.9 billion to NGN124.2 billion, while interest expense grew 63% YoY from N106.8 billion to N173.5 billion, respectively. The impairment growth, which also resulted in an increase in the cost of risk (from 1.9% in 2021 to 3.3% in the current year), was due to the impact of Ghana’s sovereign debt restructuring programme. The growth in interest expense increased the cost of funds from 1.5% in 2021 to 1.9% in 2022 due to hikes in interest rates globally.

Customer deposits increased by 39%, growing from NGN6.47 trillion in the previous year to NGN8.98 trillion in the current year. The growth in customer deposits came from all products and deposit segments (corporate and retail), thus consolidating the bank’s market leadership and indicating customers’ trust.

The continued elevated yield environment positively impacted the bank’s Net-Interest-Margin (NIM), which grew from 6.7% to 7.2% due to an effective repricing of interest-bearing assets. Operating expenses grew by 17% YoY, but growth remains below the inflation rate. Total assets increased by 30%, growing from NGN9.45 trillion in 2021 to NGN12.29 trillion, mainly driven by growth in customer deposits. With the steady and continued recovery in economic activities, the Group prudently grew its gross loans by 20%, from NGN3.5 trillion in 2021 to NGN4.1 trillion in 2022, which increased the Non-Performing Loan (NPL) ratio modestly from 4.2% to 4.3% YoY. The capital adequacy ratio decreased from 21% to 19%, while the liquidity ratio improved from 71.2% to 75%. Both prudential ratios are well above regulatory thresholds.

In 2023, the Group intends to expand its frontiers as it also reorganises into a holding company structure, adding new verticals to its businesses and growing in all its chosen markets, both locally and internationally.

As a testament to its commitment to shareholders, the bank has announced a proposed final dividend payout of N2.90 per share, bringing the total dividend to N3.20 per share.

In recognition of its track record of excellent performances, Zenith Bank was recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; Best in Corporate Governance’ Financial Services’ Africa, for three consecutive years from 2020 to 2022, by the Ethical Boardroom; Best Commercial Bank,

Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards. Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Retail Bank of the year, for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. Similarly, Zenith Bank was named as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Most Innovative Bank of the Year 2019 by Tribune Newspaper, Bank of the Year 2020 by Independent Newspaper, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

 

 

 

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Banking Sector

Demola Sogunle Increases Stake in Stanbic IBTC

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Demola Sogunle

Dr. Demola Sogunle, the Chief Executive Officer of Stanbic IBTC Holdings Plc has expanded his stake in the bank by 1,521,117 shares.

This was made known in a statement signed by Chidi Okezie, Company Secretary, Stanbic IBTC and made available to investing public.

The bank chief acquired the shares between 21 March and 24 March 2023 at N37.05 a unit. Meaning, he paid a total sum of N56.357 million for the acquisition.

Sogunle held 3.41 million indirect shares before acquiring more shares in Stanbic IBTC as of December 31, 2022. In 2021, he held 2.41 million indirect shares, which he increased to 3.41 million last year.

Sogunle remained the second-largest shareholder in Stanbic IBTC after Ifeoma Esiri, who holds 40.38 million direct shares and 3.11 million indirect shares valued at N1.63 billion as of December 2022.

During the financial period of 2022, Stanbic IBTC reported a gross turnover of N287.53 million, surpassing the N206.64 million generated in the previous year. The financial institution also recorded growth in its net interest income, which increased to N113.11 billion in 2022 from N75.37 billion in 2021.

In addition, Stanbic IBTC closed the year with N80.81 billion in net profit, an improvement on the N56.96 billion profit after tax earned in the corresponding period of 2021.

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