Companies

Banks’ operating expenses soars to N244.43 billion in six months

by BALA AUGIE

September 22, 2017 | 10:50 am
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Aggregate spending on staff by Nigeria’s largest banks in the first six months of 2017 hit N244.43 billion, 3 percent  rise from the same period of last year.

The 13 banks had total staff strength of 46,250 as at December 2016, resulting in an average cost per staff of N5.28 million.

This is based on summation of operating expenses of Nigeria’s 13 largest listed banks that released their results on the Nigerian Stock Exchange (NSE) for the second quarter ended June 2017. 

Other operating expenses grew 22 percent to N496.01 billion in June 2017 as against N405.90 billion as at June 2016, driven by regulatory-induced costs, higher energy costs, and inflation pressures.

Banks also spent money on continuous investment in their channels, distribution network, service quality, and brand quality.

For some banks, costs imposed by regulation such as the mandatory Asset Management Corporation of Nigeria (AMCON) charge contributed to the rise in other operating expenses.

Drilling down the figures shows that GTBank, the largest lender by market capitalization, saw ‘other operating expenses’ increase by 28 percent to N51.45 billion as at June 2017. AMCON charge, which makes up 25 percent of costs, was up 14.76 percent to N13.06 billion.

Zenith Bank’s ‘other operating expenses’ were up 50.8 percent to N86.35 billion in the period under review while AMCON charge was up 14.16 percent to N21.41 billion.

Access Bank’s AMCON charge rose to N15.50 billion in June 2017, as the bank attributed the rise in regulatory-induced cost to a large balance sheet in the period under review.

United Bank for Africa (UBA)’s ‘other operating expenses’ grew by 34 percent to N60.78 billion in the period under review. AMCON charge, which makes up 20.84 percent of costs, rose by 14.48 percent to N12.70 billion.

For First Bank Holdings, ‘other operating expenses’ were up 21 percent to N73.03 billion as at June 2017.

AMCON was set to buy loans from lenders and use the proceeds to buy debts arising from rising non-performing loans.

Each bank is required to contribute 0.5 percent of total assets and 0.5 percent of 33 percent of their off balance sheet items to the sinking fund.

The cumulative total assets of the 13 lender stood at  N29.16 trillion as at June 2017, 8 percent increase from last year’s figure of N26.91 trillion.

Banks in Africa’s largest oil producer have been operating in a volatile and tough operating environment as they spend huge sums on diesel oil to power generator plants at head office and branches since electricity from the grid is erratic.

The devaluation of the currency as a result of the adoption of a flexible exchange rate by the central bank in June 2016, which saw the Naira lose 40 percent of its value against the U.S currency,  teamed up with inflation  rate above the apex bank’s range to compound the woes of lenders.

The National Bureau of Statistics reported last week that Nigeria’s inflation rate rose 16.01 percent for the month of August 2017, higher than the central bank’s 6 percent and 9 percent target range.

BALA AUGIE


by BALA AUGIE

September 22, 2017 | 10:50 am
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