3 banks earn N123.437bn from commissions

The combined total fee-based earnings and commissions made by the trio of Guaranty Trust Bank (GTBank) Plc., Zenith Bank Plc. and Access Bank Plc. in their 2012 annual report attained a whopping N123.437 billion.

Recent results presented to the Nigeria Stock Exchange (NSE) by the banks show that although GTB posted a profit before tax of N103 billion, N44.3 billion of the amount was generated through fees and commissions as against N43.5 billion recorded in 2011.

On the other hand, Zenith Bank was able to earn a profit before tax of N102 billion in 2012. However, out of this amount, N50.4 billion came in through fees and commissions as against N42.2 billion realized in 2011.

The third bank, Access Bank’s fees and commissions in 2012 was 89 per cent higher than the 2011 figures. The bank, in its 2012 results posted N28.734 billion as fee-based income which was an improvement over N22.331 billion recorded in 2011, after it posted a profit before tax of N44.8 billion as against N24.107 billion in the preceding year.

Analysts believe that the trend may not continue in 2013 if the Central Bank of Nigeria (CBN) makes good its plans to peg the Cost of Transaction (COT) at N3 for every N1,000 transacted.

Banks may be compelled to look for alternative sources of income. The apex bank had in a circular with reference number: (CFP/DIR/GDL/01/018) to deposit money banks in July last year stated that the review “is intended to align the tariff regime in the banking industry with present economic realities and offer a platform for standard application of charges on different types of banking products and services.”

Part of the new clause was that the impending COT regime will be flexible but may not exceed 3 per cent. Central Bank sources insist that customers can negotiate COT charges between zero and 3 per cent, such that what they will pay depends upon their negotiating power.

Before now, transaction cost was officially N5 for every N1,000 transacted. This means that, officially, the Central Bank will effectively reduce cost by 40 per cent for banks’ customers.

But the snag before now was that banks never adhered to the stipulated N5 for every N1,000 transacted. Other banks role out their year-end financial results, Managing Director, Enterprise Capital partners Ltd., Mr. Rotimi Fakayejo, wants stakeholders to watch out for the banks’ Earnings Per Share (EPS), Price Earnings Growth and not just dividend yield alone as a way of judging performance.

He was optimistic that since the stock market has remarkably improved, many of those banks are going to come out profitable and that investors would not be disappointed with the performance of the banks. Speaking at a Channels TV program ‘Business Morning’ monitored in Lagos, Fakayejo ruled out the possibility of the banks engaging in share buy-back; stressing that it is a capital intensive project which most of them would not like to venture into.

Source: TheSun