By Jeph Ajobaju, Chief Copy Editor
Access Bank made N29.9 billion from its Channels and e-Business Income in 2020, a 37 per cent rise above the then-record N21.8 billion in 2019, according to the latest financial figures of Nigeria’s largest bank by assets.
E-business Income amounted to N73.7 billion in half-year ending June 30 (HY 2021), which formed about 40.5 per cent of Fees and Commission Income compared to 42 per cent in HY 2020.
Nigerian banks garnered about N216 billion in e-Business Income in 2020, with Access Bank topping the chart with about N56.09 billion up from N36 billion in 2019.
The numbers are huge, even though the bank is growing slower than it did in 2020. Its channels and e-business income earnings total N13.9 billion in HY 2020, according to Nairametrics.
Growing reach
Access Bank became the largest bank in Nigeria after it merged with Diamond Bank whose tech focus was a major attraction for Access Bank.
Nairametrics adds that since the merger, deposits in Access Bank have risen to N7.7 trillion from about N3.5 trillion in 2018, when the merger was first revealed.
The revenue base is perhaps the major driver for the growth of its e-Business Income.
Access Bank is Nigeria’s fourth most valuable bank with a market value at N298.58 billion.
In June, it launched a South African subsidiary known as Access Bank South after it acquired Grobank, an agricultural bank, in Q1 2021 and launched its entry into Africa’s second largest economy.
The bank provided N100 billion loans to about four million beneficiaries in 2000 and plans to surpass the record as it pushes out more digital loans.
Mobile phone boosts e-banking
According to Nairametrics, Nigeria has been experiencing a boost in electronic-driven banking as increasing mobile phone adoption and viral social media stoke consumption of data and spending across several channels.
The banking sector also benefits from the wave of mobile phone easy-to-use banking apps that are secure and operate like social media apps.
Mobile banking is expected to become a significant source of revenue for Nigerian banks especially through data monetisation which they are yet to leverage.
E-banking fetches N216b for banks
Nairametrics reported in April that a total N216.52 billion was made by Nigerian banks from e-business in 2020, a sector cornered up by tier-1 banks called FUGAZ (First Bank, UBA, Access Bank, GT Bank, and Zenith Bank).
Income from digital channels is also classified as electronic business (e-business) or banking income by the majority of commercial banks, according to the audited financial statements of 12 leading banks analysed by Nairametrics.
The banks reported that N217 billion income from digital channels in 2019 dipped 0.24 per cent in 2020.
· Banks attributed the drop to the revision of fees and charges for electronic transfers by the Central Bank of Nigeria (CBN) last year.
· The CBN introduced new bank charges on January 1, 2020 that mostly affected things like card maintenance fees, charge for hardware tokens as well as the amount that can be paid for e-transfers.
· A graduated fee scale for e-transfers replaced the flat fee of N50 such that transfers below N10,000 now attract a maximum charge of N10; and N50 for transfers above N50,000.
· Dollar fees are also affected, with customers paying a flat fee of N6.98 per transaction from March 16, 2021.
· Covid-19 affected the expansion of digital rollout plans earlier on in the year, but the pandemic also swung in favour of banks as Nigerians increasingly relied on mobile banking and avoid banking halls for fear of contracting virus.
Digital channels
Nairametrics reports that banks in Nigeria are relying more on income from digital channels such as mobile apps, USSD channels, and online banking targeting customers from all works of life.
Digital channels are heavily supported by the CBN with initiatives such as BVN, POS, and other banking policies driving financial inclusion.
CBN policy aims at reducing the number of the unbanked but banks have seized on it to offer a wide range of services that provide alternative sources of income.
According to the Nigeria Inter-Bank Settlement System (NIBSS), e-transfers topped N158 trillion in 2020, a 50 per cent growth compared to 2019. Transaction volume rose to two billion, 77 per cent against 2019.
Challenger banks
Nairametrics adds that banks will face stiffer competition in 2021 as Challenger Banks such as Kuda Bank and V-Bank are more capitalised having attracted significant funding in recent months.
These banks offer zero fees as an attractive selling point they hope will sway customers from big commercial banks who have long monetised their platforms.
Challenger Banks typically earn money from other sources such as providing bespoke services wrapped around savings and investments.
Rather than rely on digital revenues from fees and charges, they earn by engaging in the business of banking, lending depositors’ funds, and investing their free float.
Top earners in 2020
Apart from Access Bank, UBA, and FBNH, all the other banks posted year-on-year declines. Zenith Bank recorded a 36 per cent drop and GTB 25 per cent.
But Access Bank recorded an increase of 56 per cent to N56 billion, and UBA 14 per cent to N44.2 billion.
Access Bank is now Nigeria’s largest bank making money from e-business, displacing FBNH which posted N48 billion from e-business income in 2019, the highest that year.
Access Bank (N56.09 billion) – first
Access Bank, the largest Nigerian bank by assets, toppled First Bank, Zenith, and UBA to occupy the first position with e-business revenue of N56.09 billion in 2020.
· Access Bank was fourth in 2019 but catapulted to first in 2020 as it grew e-business income 55.64 per cent from N36.04 billion in 2019.
· This increase translated to a 12.71 per cent growth in profit after tax to stand at N106.01 billion from N94.06 billion in 2019.
· Its e-business income includes earnings from its channels business.
The increase in e-business revenue is no surprise as the tier-1 bank spent N18.7 billion on IT and e-business related initiatives in 2020, against N9.7 billion in 2019 and N11.39 billion in 2018.
Access Bank created four million digital loans in 2020 and disbursed N105 billion loans through its digital lending platform, a 48 per cent year-on-year growth.
FBN Holdings (N48.68 billion) – second
First Bank lost its first position to Access Bank, having increased e-business revenue 1.35 per cent to stand at N48.68 billion in 2020. Its e-business revenue accounted for 22.5 per cent of the total recorded by the 12 banks.
· First Bank is at the forefront of the mobile banking revolution.
· It is one of the pioneers of the USSD platform for transfer money via mobile phone text messaging app and continues to create products in the electronic space.
· In November 2020, First Bank launched a Next Generation ATM, called FastTrack ATM, which eliminates physical interaction with ATM.
· This was borne out of the need to reduce physical contact with people and substances to curtail the spread of coronavirus.
UBA (N44.25 billion) – third
UBA retained its position in third place with a total e-business revenue of N44.25 billion, or 20.4 per cent of the total e-business income generated by the 12 banks.
· UBA recorded a 14.14 per cent increase in e-business revenue in 2020 compared to N38.8 billion in 2019.
· UBA has also intensified its revenue effort with a new mobile banking app which aims to improve customer transaction.
· It posted after tax profit of N113.77 billion in 2020, a 27.7 per cent increase compared to N89.09 billion in 2019.
Zenith Bank (N27.08 billion) – fourth
Zenith Bank earned N27.08 billion from e-business in 2020 to stand fourth on the list behind UBA.
· Its income from e-business accounted for 12.5 per cent of the total income of the 12 banks. Its e-business income plunged 36.3 per cent in 2020 compared to N42.5 billion in 2019.
· However, Zenith Bank posted the highest profit of N230.6 billion in 2020, growing profit after tax 10.4 per cent from N208.8 billion in 2019.
GT Bank (N11.77 billion) – fifth
Guaranty Trust Bank, the most capitalised financial institution listed on the Nigerian Stock Exchange (NSE), generated N11.8 billion from e-business, accounting for about 5.4 per cent of its total e-business revenue in 2020.
· Its e-business revenue declined 24.85 per cent compared to N15.66 billion in 2019.
· But it posted after tax profit of N201.44 billion in 2020 (second to Zenith Bank), a 2.33 per cent increase compared to N196.85 billion in 2019.
Bubbling under
· FCMB (N8.61 billion)
· Union Bank (N7.04 billion)
· Sterling Bank (N4.97 billion)
· Stanbic IBTC (N2.74 billion)
· Wema Bank (N2.61 billion)
· Fidelity Bank (N2.46 billion)
· Jaiz Bank (N214 million)
Commercial Banks E-Business (Digital Banking) Income.
Source: Nairalytics Research.