Nigerian banks’ online banking revenues decline 27.3% despite high transactions

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By Dipo Olowookere

A new report from Agusto & Co. Limited has shown that in fiscal year 2020, the banking sector in Nigeria saw a decline in electronic banking revenues.

In the report from the country’s leading research house and rating institution, it was stated that the drop was 27.3% despite an increase in digital transactions during the pandemic year.

The 2021 flagship report on the banking industry found that last year some banks saw a 50% increase in digital banking transaction volumes, but the gains were reduced by the reduction in bank fees from January. 2020 by the Central Bank of Nigeria (CBN).

Agusto said this action by the banking sector regulator affected online banking income and represented a 13.2% drop in non-interest income from the 21.1% posted in the fiscal year. 2019.

It has been said that the pandemic has demonstrated how technology can be used to deepen financial services in the country, as it was the way most banking institutions were using to offer their services to customers during the second quarter lockdown of the year and quarter of the year during the #EndSARS saga.

In the report, it was stated that despite the challenges of the year, the sector has shown resilience, learning lessons from the economic recession of 2016/2017.

“Proactive measures in the form of forbearance granted by the CBN have enabled banks to undertake a temporary and time-limited restructuring of the facilities granted to households and businesses severely affected by COVID-19.

“There was generally a conservative approach to lending in the industry, given the difficult operating environment.

“Although gross loans and advances increased by 12%, loan growth was negative when you consider the 19.3% devaluation of the Naira.

“Supported by the abstention and the proactive measures adopted by the banks, the ratio of non-performing loans improved to 6.6% (fiscal year 2019: 7.6%)”, indicates part of the summary of the updated report. the disposition of Business post read.

Agusto also noted in the report that CBN policies to lower interest rates have persisted, especially given the urgent need to stimulate the economy in the wake of adversities created by the pandemic.

He said that given the need to moderate inflation as part of efforts to keep the exchange rate stable, the cash reserve requirement (CRR) was increased and normalized to 27.5% for investment and commercial banks, adding that the standardized CRR has been implemented alongside discretionary deductions. .

“In FY2020, the industry’s tight cash reserves exceeded N9.5 trillion and resulted in an effective CRR of 37%.

“It should be noted that Nigeria has the highest reserve requirements in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRRs below 10 percent.

“We believe that the high level of CRR moderated the performance and the liquidity position of the sector during the year under review.

“Assuming the sterile CRR had been invested in 5 percent Treasury securities, N482 billion would have been added to the industry’s pre-tax profits.

“This would have increased the industry’s return on average equity (ROE) from 11% to 31.6% in the fiscal year ended December 31, 2020,” he said.

Agusto said that for the report, he analyzed the financial statements of 20 commercial banks and five investment banks, taking into account the industry structure, financial situation, regulatory environment in addition to the macroeconomic environment and its impact on the Nigerian banking sector.

Business post learned that the banks reviewed by Agusto were Zenith Bank Plc, Access Bank Plc, First Bank of Nigeria Ltd, United Bank for Africa (UBA) Plc, Guaranty Trust Bank, Fidelity Bank Plc, Ecobank Nigeria, Standard Chartered Bank Nigeria, Union Bank of Nigeria Plc and Stanbic IBTC Bank.

Others were First City Monument Bank, Wema Bank Plc, Sterling Bank Plc, Citibank Nigeria, Polaris Bank, Unity Bank Plc, Providus Bank, Coronation Merchant Bank, FBN Merchant Bank, Nova Merchant Bank, FSDH Merchant Bank, Globus Bank, Rand Merchant Bank, Jaiz Bank and Titan Trust Bank.


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