Leading banks in Nigeria recorded a 17.5 percent Year-on-Year (YoY) increase in fees and commission income, amounting to N365 billion, in the first quarter ended March 31, 2023.
Available data shows that the banks raked in N364.72 billion during the period as against N310.48 billion recorded in the corresponding period in 2022.
The banks are Zenith Bank Plc, Access Holdings Plc, FBN Holdings Plc, Stanbic IBTC Holdings Plc, United Bank for Africa (UBA) Plc, Guaranty Trust Holding Company Plc (GTCo), Fidelity Bank Plc, Unity Bank Plc, Wema Bank Plc, FCMB Group Plc, Ecobank Transnational Incorporated (ETI) and Union Bank of Nigeria (UBN) Plc.
Vanguard’s findings from the banks’ fees and commission income showed that tier-2 banks recorded the highest growth rate in the three month period.
Fidelity Bank recorded the highest percentage growth as its net fees and commission income for the period rose by 50.3 percent to N11.9 billion from N7.92 billion in the corresponding period in 2022.
This was followed by FCMB Group, posting a 40.9 percent increase amounting to N14.41 billion from N10.23 billion. Wema Bank ranked third with 39.4 percent increase to N14.45 billion from N10.08 billion, while Unity Bank, GTCo and FBN Holdings followed with 34 percent to N2.02 billion from N1.5 billion; 33.2 percent increase to N32.43 billion from N24.35 billion and 27.2 percent increase to N42.87 billion from N33.71 billion, respectively.
United Bank for Africa recorded a 24 percent increase to N52.19 billion from N42.1 billion in the corresponding period in 2022.
On the other hand, UBN and Zenith Bank recorded decline. UBN posted a 5.4 percent decline to N4.05 billion from N4.28 billion, while Zenith Bank recorded a 4.0 percent decline to N39.76 billion from N41.4 billion in Q1’22.
Meanwhile, Ecobank, Access Holdings and UBA led the banks in size of income, recording N63.36 billion, N61.26 billion and N52.19 billion, respectively.
Commenting on the outlook for the banking industry in a report titled, “Nigerian Banks: A Year of Resilience and Grit”, analysts at Coronation Asset Management, said: “In 2023 we expect the Nigerian banking industry to face pressures stemming from stringent regulations, high inflation, continuous dollar shortages and even asset quality issues.
“Nonetheless, we expect modest earnings growth, driven by rising interest rates, a strong contribution from non-interest revenue derived from FX revaluation gains, and growth in non-bank
businesses and digital banking.”
Continuing, they said: “We believe the impact of rising yields will vary across the banks, depending on each bank’s ability to re-price its loan book and the composition and contribution of interest-earning assets. Given the sticky nature of loan yields, we favour banks with large exposure to investment securities in this regard. Lastly, we think banks with low-cost deposits are likely to benefit on a net basis.”
Vangaurd