Total income from the electronic businesses of the country’s five largest banks rose to over $282 million (₦115.8 billion) in H1 2021, up 51% from $194 million (₦76.9 billion) recorded in the same period last year.

Earnings from electronic banking include fees charged to customers for the use of digital channels, such as debit cards, mobile applications, USSD channels, POS, and other related online banking services.

TechCabal gathered the figures from the audited financial statements of the country’s tier 1 banks comprising First Bank Holdings, United Bank for Africa, Guaranty Trust Holding Company, Access Bank, and Zenith Bank (“FUGAZ”).

The FUGAZ earnings from e-business is more than half of what Nigeria’s 12 largest banks made in the whole of 2020 $527 million (₦216 billion) and puts the banking industry well on course to beat last year’s figure by some margin.

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Busola Jeje, a Lagos-based equity research analyst covering the Nigerian banking sector at Tellimer explains to TechCabal that banks have been “very intentional about driving e-banking volumes to generate more fee income” as an additional source of revenue. 

“A number of banks have invested heavily in payment infrastructure, and continue to upgrade and expand their product offerings,” Jeje said. “Net interest margins have been weak … while trading gains have slowed. It’s logical that the banks are desperate to grow that line item, and also explains why some are transitioning to holdcos to build payment fintechs.”

Access Bank is currently the lender making the most money from e-business income after it posted $73 million (₦29.9 billion), the highest in the period under review. 

UBA and First Bank followed closely, raking in $72 million (₦29.6 billion) and $70 million (₦28.8 billion) from digital channels respectively while Zenith Bank recorded $42 million (₦17.1 billion) and GTCO $26 million (₦10.5 billion).

By year-on-year growth, Zenith saw the highest jump in e-business income with a 91% increase from $22 million (₦8.9 billion) realised in the first half of last year. 

UBA and GTCO’s earnings more than doubled with both companies posting 65% and 60% jumps, from $44 million (₦17.9 billion) and $16 million (₦6.5 billion) respectively in H1 2020. 

Access Bank’s 37% growth, from $53 million (₦21.8 billion), topped First Bank’s 33% jump, from $52.9 (₦21.7 billion) in the first half of 2020.

With Covid-19 and lockdown restrictions associated with the pandemic causing a significant shift in consumer behaviour to digital means of transactions, Jeje sees more room for banks to grow their incomes.

According to a report on Instant Payments in Nigeria Iby the Nigeria Interbank Settlement System Plc (NIBSS), over 2.03 billion electronic transactions were performed in 2020, a whopping 77% increase from 1.14 billion transacted in 2019.

“A bank like Stanbic reported that 98% of its transactions were done digitally in H1 2021, while 2% was done via branch operations,” Jeje said. “The switch to digital channels by consumers might now be permanent.”

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Michael Ajifowoke | Author

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