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Banking Sector

Bureau de Change Operators at Odds with Central Bank of Nigeria



Bureau De Change Operator

Market intelligence suggests that Bureau de Change (BDC) operators in Nigeria could be heading for a showdown with the Central Bank of Nigeria (CBN) due to alleged market infractions.

Reliable sources have revealed ongoing discussions between the regulator and the Association of Bureau de Change of Nigeria (ABCON) regarding unmet expectations.

The CBN has openly and privately criticized BDC operators for what it perceives as market sabotage and manipulation, allegations that operators have vehemently denied.

While the CBN has focused on the registered operators, numbering 5,689 as of December 2021, ABCON has consistently argued that the central bank needs to differentiate between market speculators and legitimate ABCON members.

Dr. Aminu Gwadabe, the President of ABCON, reiterated this point recently, emphasizing that the inability to distinguish between these groups remains a significant source of conflict in the sector.

Tensions are expected to rise following the CBN’s deadline for ABCON to enforce its newly-refreshed guideline. The CBN had introduced these changes to enhance the efficiency of the Nigerian Foreign Exchange Market, including capping the trading margin for BDC operators at -2.5% to +2.5% of the Nigerian Foreign Exchange Market’s previous day weighted average.

Also, the new rules mandate BDC operators to submit daily, weekly, monthly, quarterly, and yearly returns using the upgraded Financial Institution Forex Rendition System (FIFX). Failure to comply may result in license withdrawal, as part of broader efforts to bring order and accountability to the sector.

However, just days before the August 31 deadline, market reports indicate a significant gap between these regulations and the actual market situation. The intended stability from the margin cap has yet to materialize, with foreign exchange end-users still paying over a 19% premium at the black market.

Parallel market rates remain considerably higher than the CBN’s margin, further highlighting the challenge of aligning market dynamics with regulatory expectations. ABCON insists it is training its members to meet regulatory goals, but there are concerns about the thousands of individuals posing as BDC operators who lack understanding and compliance with the rules.

Regarding funding, there is uncertainty about the CBN’s plans. Gwadabe suggests that access to official windows, diaspora remittances, and international oil companies could provide funding streams to bolster market liquidity. However, the CBN’s capacity for direct funding remains uncertain due to liquidity constraints.

The divergence between informal and formal channels for remittances, exacerbated by high transfer costs, threatens the gains made through convergence measures. While regulation and intervention discussions continue, it remains clear that stabilizing the foreign exchange market is crucial for Nigeria’s macroeconomic stability.

Ultimately, the ongoing debate over BDC regulation and funding underscores the complex dynamics facing Nigeria’s foreign exchange market and its potential impact on the nation’s economy.

The CBN and ABCON must find common ground to address these challenges and foster a more stable and transparent foreign exchange market.

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Banking Sector

Access Bank, Others Collect N154 Billion in Electronic Banking Fees in H1’23, a 16.7% YoY Surge



Global Banking - Investors King

In the first half of 2023, customers of Nigeria’s top nine commercial banks paid a whopping N154 billion in fees for utilizing electronic banking services, reflecting a robust 16.7% year-on-year increase compared to H1’22’s N131.97 billion.

The data, extracted from the financial statements of these banks, underscores the escalating trend of Nigerians embracing electronic payment channels.

Leading the pack in revenue generation from these fees is Access Bank, amassing N43.9 billion, followed by United Bank for Africa Plc (N51.07 billion), Zenith Bank (N22.27 billion), Guaranty Trust Bank (N21.2 billion), and others like Stanbic IBTC (N2.14 billion), First City Monument Bank (N7.4 billion), Unity Bank (N1.96 billion), Fidelity Bank (N1.85 billion), and Wema Bank (N3.13 billion).

Electronic banking services encompass a gamut of options, including internet banking, mobile banking, ATMs, and Point of Sale (PoS) systems.

Recent data from the Nigerian Interbank Settlement System (NIBSS) for Q1’23 indicates a substantial surge in electronic transactions.

Transaction volume increased by 209% YoY to 4.7 billion, and transaction value grew by 48% YoY to N137.52 trillion.

The nine banks collectively raked in N66.7 billion in account maintenance fees and commissions during H1’23, reflecting a 14.7% YoY rise.

Zenith Bank led this category with N21.02 billion, trailed by Access Bank (N13.36 billion), Guaranty Trust Bank (N10.5 billion), and United Bank of Africa (N9.6 billion).

Overall, the banks’ cumulative net fees and commission income registered a substantial 20.7% YoY growth, reaching N448.47 billion in H1’23 from N371.43 billion in H1’22.

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Banking Sector

Access Holdings Posts 52.6% Profit for the First Half of the Year

Parent Company of Access Bank Celebrates Remarkable Financial Performance in H1’23



Access bank

Access Holdings Plc, the parent company of Access Bank, has reported a 58.9 percent surge in gross revenue to N940.3 billion for the first half of 2023.

The financial services giant also recorded remarkable growth in Profit Before Tax (PBT) and Profit After Tax (PAT) at 71.4 percent and 52.6 percent, respectively, culminating in N167.6 billion for PBT and N135.4 billion for PAT during the same period.

These financial milestones were unveiled as part of Access Holdings’ Audited Consolidated and Separate Financial Statements for the period concluding on June 30, 2023.

The driving force behind this unprecedented growth can be attributed to a potent combination of factors. A 63.0 percent growth in interest income and a 51.9 percent increase in non-interest income fueled the surge in gross revenue.

Access Holdings also witnessed a 35 percent year-to-date growth in customer deposits, capping the first half of 2023 at an impressive N12.5 trillion. This remarkable achievement encompassed all business segments, reinforcing the Group’s status as Nigeria’s largest financial institution by total assets.

The company’s total assets grew by 39.0 percent year-on-year to N20.9 trillion while shareholders’ funds surged by 40.6 percent to N1.7 trillion.

These astounding figures underline the Group’s ability to generate value from a diversified business portfolio, spanning banking, asset management, and payment services.

Herbert Wigwe, the Group Chief Executive Officer of Access Holdings Plc, commented on the company’s positive performance, saying, “Our growth plans for the African continent remain firm and clear, driven by the strong long-term growth prospects and trade opportunities seen across many of the countries.”

He went on to emphasize the company’s commitment to its 5-year cyclical strategy, stating, “Our primary objective remains to transform Access Holdings Plc into a leading financial and ecosystem player, fostering opportunities for shared prosperity among all stakeholders.”

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Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting



Central Bank of Nigeria - Investors King

The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.

Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.

In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.

President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.

The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.

The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.

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