From Dipo Olowookere
A new report from Agusto & Co. Limited showed that the banking industry in Nigeria saw a decline in e-banking revenues in fiscal 2020.
The report from the country’s leading research and rating institute said the decline was 27.3 percent despite an increase in digital transactions in the pandemic year.
The Flagship Banking Industry Report 2021 found that some banks saw digital banking transaction volume increase by as much as 50 percent last year, but the gains came from the Central Bank of Nigeria (CBN) lowering bank fees from January 2020.
Agusto said this move by the banking regulator had an impact on e-banking income, accounting for a lower 13.2 percent of non-interest income compared to the 21.1 percent seen in fiscal 2019.
The pandemic was found to have demonstrated how technology can be used to deepen financial services in the country, as it has been the means most banking institutions use to freeze their services to clients during the second quarter of the year and the quarter of the year offer during the # EndSARS saga.
The report found that despite the challenges of the year, the sector was resilient, capitalizing on the lessons of the 2016/2017 economic recession.
“Proactive measures in the form of a forbearance granted by the CBN enabled banks to provide temporary and temporary facility restructuring for households and businesses severely affected by COVID-19.
“In view of the difficult framework conditions, lending in the industry was generally cautious.
“Although gross loans and advances were up 12 percent, credit growth was negative when you factor in the 19.3 percent naira devaluation.
“Supported by the forbearance and proactive measures taken by the banks, the NPL ratio improved to 6.6 percent (FYE 2019: 7.6 percent),” says the summary of the report that was made available to us Business mail read.
Agusto also noted in the report that the CBN’s policy of lowering interest rates persists, particularly given the urgent need to stimulate the economy after the adversity caused by the pandemic.
It noted that given the need to moderate inflation amid efforts to maintain a stable exchange rate, the cash reserve requirement (CRR) has been increased and standardized to 27.5 percent for both commercial and commercial banks, adding that the standardized one CRR was introduced alongside discretionary deductions.
“As of FYE 2020, the industry’s restricted cash reserves exceeded N 9.5 trillion, which corresponds to an effective CRR of 37 percent.
“It is noteworthy that Nigeria has the highest reserve requirements in sub-Saharan Africa. South Africa, Kenya and Ghana all have CRR values below 10 percent.
“We believe that the increased CRR level dampened the performance and liquidity position of the industry in the reporting year.
“Assuming that 5 percent of the sterile CRR had been invested in government bonds, N482 billion would have been added to the pre-tax profit of the industry.
“This would have increased the industry’s average return on equity (ROE) in the fiscal year ended December 31, 2020 by 11 percent to 31.6 percent,” it said.
For the report, Agusto said it had analyzed the financial statements of 20 commercial banks and five commercial banks, taking into account the structure of the sector, financial condition, regulatory environment, as well as the macroeconomic environment and its impact on the Nigerian banking industry.
Business mail learned that the banks reviewed by Agusto: 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 . were 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.