As
regulatory pressures continue to undermine Banks’ earnings potential, Nigerian
lenders have renewed focus on cost efficiency, to grow profitability and
overall return to shareholders. Notably, there is a consensus on the use of
alternative low cost channels in serving the growing customer base;
particularly as such cost efficiency initiative aligns with the cashless policy
of the Central Bank of Nigeria (CBN), which is also aimed at reducing the cost
associated to cash management in the banking sector.
regulatory pressures continue to undermine Banks’ earnings potential, Nigerian
lenders have renewed focus on cost efficiency, to grow profitability and
overall return to shareholders. Notably, there is a consensus on the use of
alternative low cost channels in serving the growing customer base;
particularly as such cost efficiency initiative aligns with the cashless policy
of the Central Bank of Nigeria (CBN), which is also aimed at reducing the cost
associated to cash management in the banking sector.
Of
the tier-1 Nigerian banks covered in this report, only Access Bank had a double
digit growth in operating expenses in the first quarter of the year, as its
peers had a good hold on operating cost, which grew in single digit below
inflation rate. Notably, United Bank for Africa (UBA) Plc had the best hold on
its cost in the first three months of the year, with barely 4% YoY growth in
operating expenses; Zenith Bank Plc (Zenith) and First Bank of Nigeria Plc
(FirstBank) also managed their operating cost well, with moderate 5% and 7% YoY
growth respectively. Even so, GTBank had historically been the most cost
efficient Bank, its operating cost rose by 10% YoY, due partly to the low base
of its cost structure, changing mix of its staff force with more middle and
senior staff, increasing customer base and branch footprint and relatively
lower headroom for cost saving.
the tier-1 Nigerian banks covered in this report, only Access Bank had a double
digit growth in operating expenses in the first quarter of the year, as its
peers had a good hold on operating cost, which grew in single digit below
inflation rate. Notably, United Bank for Africa (UBA) Plc had the best hold on
its cost in the first three months of the year, with barely 4% YoY growth in
operating expenses; Zenith Bank Plc (Zenith) and First Bank of Nigeria Plc
(FirstBank) also managed their operating cost well, with moderate 5% and 7% YoY
growth respectively. Even so, GTBank had historically been the most cost
efficient Bank, its operating cost rose by 10% YoY, due partly to the low base
of its cost structure, changing mix of its staff force with more middle and
senior staff, increasing customer base and branch footprint and relatively
lower headroom for cost saving.
Interestingly,
whilst UBA has the second highest number of branch footprints (605 branches)
and customer base (over 8.6 million), its operating cost was lower than that of
Zenith and Access in the first three months of the year; whilst UBA
incurred N32.5 billion
in running its business across 22 countries (19 African countries, the United
States, the United Kingdom, and Paris), Access and Zenith reported N33.6 billion and N39.4 billion in operating expenses
in the period, despite having lower customer base, fewer branches and less
number of country presence.
whilst UBA has the second highest number of branch footprints (605 branches)
and customer base (over 8.6 million), its operating cost was lower than that of
Zenith and Access in the first three months of the year; whilst UBA
incurred N32.5 billion
in running its business across 22 countries (19 African countries, the United
States, the United Kingdom, and Paris), Access and Zenith reported N33.6 billion and N39.4 billion in operating expenses
in the period, despite having lower customer base, fewer branches and less
number of country presence.
|
Headline
|
Operating Expenses
(N’Million) |
YoY Growth
|
|
|
2015Q1
|
2014Q1
|
||
|
FirstBank
|
53,123
|
49,508
|
7.3%
|
|
Zenith
Bank |
39,350
|
37,563
|
4.8%
|
|
Access
|
33,574
|
27,148
|
23.7%
|
|
UBA
|
32,530
|
31,427
|
3.5%
|
|
GTBank
|
26,183
|
23,867
|
9.7%
|
Looking
behind the figures, it is noteworthy that UBA has the lowest cost per staff; an
average of N10 million.
Within the universe of peers, Access has the highest cost per staff of N49 million. FirstBank, GTBank and
Zenith have almost same cost per staff structure, at N21 million, N21 million and N22 million respectively. This
analysis reveals certain salient facts on the current and future profitability
of the Banks. UBA may gain the most from improved staff productivity in the
banking industry, especially as human capital becomes increasing mobile in the
financial services sector, with most people being relatively indifferent in
working for any of these tier-one lenders.
behind the figures, it is noteworthy that UBA has the lowest cost per staff; an
average of N10 million.
Within the universe of peers, Access has the highest cost per staff of N49 million. FirstBank, GTBank and
Zenith have almost same cost per staff structure, at N21 million, N21 million and N22 million respectively. This
analysis reveals certain salient facts on the current and future profitability
of the Banks. UBA may gain the most from improved staff productivity in the
banking industry, especially as human capital becomes increasing mobile in the
financial services sector, with most people being relatively indifferent in
working for any of these tier-one lenders.
Interestingly,
the basic remuneration of the tier-1 banks are relatively aligned, thus
suggesting that UBA’s edge in terms of having the lowest cost per staff may be
largely due to the hierarchical demographics of its work force; a “tight
pyramid structure”, with most staff being in the middle and lower management
cadre, as against being top-heavy. Whilst there is a question of whether UBA’s
cost per staff will tend towards FirstBank, GTBank and Zenith, which seems as
the industry equilibrium, the competitive edge of UBA in this regard seems to
be the benefit of scale economies, given its geographic spread and staff
headcount. More so, UBA may incur lower cost in some countries, which has a
relatively business friendly environment, with lower human capital cost and
lower infrastructure-related expense. Thus, UBA may sustain its lower than
industry cost per staff over the medium term, if it remains focus on its
resourcing strategy and scale efficiency. Access Bank has the headroom to
moderate its relatively higher cost per staff as it continually gains
scale.
the basic remuneration of the tier-1 banks are relatively aligned, thus
suggesting that UBA’s edge in terms of having the lowest cost per staff may be
largely due to the hierarchical demographics of its work force; a “tight
pyramid structure”, with most staff being in the middle and lower management
cadre, as against being top-heavy. Whilst there is a question of whether UBA’s
cost per staff will tend towards FirstBank, GTBank and Zenith, which seems as
the industry equilibrium, the competitive edge of UBA in this regard seems to
be the benefit of scale economies, given its geographic spread and staff
headcount. More so, UBA may incur lower cost in some countries, which has a
relatively business friendly environment, with lower human capital cost and
lower infrastructure-related expense. Thus, UBA may sustain its lower than
industry cost per staff over the medium term, if it remains focus on its
resourcing strategy and scale efficiency. Access Bank has the headroom to
moderate its relatively higher cost per staff as it continually gains
scale.
|
Headline
|
Staff Count
|
Cost Per Staff
|
Branches
|
Cost Per Branch
|
|
(N’Million)
|
(N’Million)
|
|||
|
FirstBank
|
10,000
|
21
|
892
|
238
|
|
Zenith
Bank |
7,278
|
22
|
500
|
315
|
|
Access
|
2,721
|
49
|
300
|
448
|
|
UBA
|
12,699
|
10
|
605
|
215
|
|
GTBank
|
4,929
|
21
|
231
|
453
|
It
is pertinent to take another look at operating cost structure, with a focus on
cost per branch, especially as banks spend a notable percentage of operating
expense on branch maintenance. Notably, the relatively high cost of running
branches has been a major reason why international banks like Standard
Chartered and Citi have been somewhat shy of “commercial and retail” banking in
the country, with a focus on treasury play and corporate banking model. UBA
also came up to be the most efficient, with the least cost per branch of N215
million, as against the average of N364 million for its peers. Whilst it may be
somewhat right to conclude that GTBank has the highest cost per branch of N453
million because of its relatively fewer branches (does not enjoy economies of
scale like UBA), FirstBank which has the highest number of branches, has a
higher cost per branch of N238 million, trailing UBA from an efficiency
perspective. No doubt, the high cost of doing business in Nigeria, in the form
of high security cost and poor infrastructure like power is a major burden,
weighing down the profitability of Nigerian banks.
is pertinent to take another look at operating cost structure, with a focus on
cost per branch, especially as banks spend a notable percentage of operating
expense on branch maintenance. Notably, the relatively high cost of running
branches has been a major reason why international banks like Standard
Chartered and Citi have been somewhat shy of “commercial and retail” banking in
the country, with a focus on treasury play and corporate banking model. UBA
also came up to be the most efficient, with the least cost per branch of N215
million, as against the average of N364 million for its peers. Whilst it may be
somewhat right to conclude that GTBank has the highest cost per branch of N453
million because of its relatively fewer branches (does not enjoy economies of
scale like UBA), FirstBank which has the highest number of branches, has a
higher cost per branch of N238 million, trailing UBA from an efficiency
perspective. No doubt, the high cost of doing business in Nigeria, in the form
of high security cost and poor infrastructure like power is a major burden,
weighing down the profitability of Nigerian banks.
In
the peak of the Niger Delta insurgence, many banks had to use aircrafts for
cash management in the volatile locations, just as banks now incur notable cost
in reinforcing security around their operations in the North East part of the
country. Whilst banks in some other African countries like South Africa, Kenya,
Ghana etc rely largely on cheaper energy source from the National Grid,
Nigerian banks rely largely on self generated power for their operations, with
each branch having at least two self power generator sets, which run on diesel,
the price of which has been fully deregulated.
the peak of the Niger Delta insurgence, many banks had to use aircrafts for
cash management in the volatile locations, just as banks now incur notable cost
in reinforcing security around their operations in the North East part of the
country. Whilst banks in some other African countries like South Africa, Kenya,
Ghana etc rely largely on cheaper energy source from the National Grid,
Nigerian banks rely largely on self generated power for their operations, with
each branch having at least two self power generator sets, which run on diesel,
the price of which has been fully deregulated.
Apparently,
Nigerian banks have the potential to improve on their profitability if the
structural challenges of doing business in Nigeria ease. In addition, Nigerian
banks have been hit with a host of regulatory induced cost in the last five
years, ranging from an extremely high cash reserve ratio, which now stands at
31%, as against less than 10% in most frontier and emerging countries,
including African peers. The banking sector resolution levy of 0.5% of
preceding year’s total asset, which is paid to the Asset Management Corporation
(AMCON) is another peculiar but notable cost for Nigerian banks. Undoubtedly,
when all these cost pressures normalize; Nigerian lenders will apparently be
ahead of African peers from a profitability perspective. Interestingly, despite
the pressure, Nigerian banks are still more profitable than South African
banks, with an average Return on Equity of c.20%.
Nigerian banks have the potential to improve on their profitability if the
structural challenges of doing business in Nigeria ease. In addition, Nigerian
banks have been hit with a host of regulatory induced cost in the last five
years, ranging from an extremely high cash reserve ratio, which now stands at
31%, as against less than 10% in most frontier and emerging countries,
including African peers. The banking sector resolution levy of 0.5% of
preceding year’s total asset, which is paid to the Asset Management Corporation
(AMCON) is another peculiar but notable cost for Nigerian banks. Undoubtedly,
when all these cost pressures normalize; Nigerian lenders will apparently be
ahead of African peers from a profitability perspective. Interestingly, despite
the pressure, Nigerian banks are still more profitable than South African
banks, with an average Return on Equity of c.20%.
admirable post! I really like and appreciate your work, thank you for sharing such a useful information about strategic resourcing management strategies, keep updating the information, hear i prefer some more information about jobs for your career hr jobs in hyderabad .
Sometimes they are successful and well sometimes not. Often a team of professionals from a large auditing or accounting firm are brought in. Receivership practices can frequently mean that a percentage of your funds will be unavailable for withdrawal for sometime. guarantor loans
It's really important for people to understand that world peace is one of the most important things today. You can also read https://writemyessay4me.org/blog/world-peace-essay to express your opinion on paper.
PLEASE READ!!Hello Guys! I am Ruth I live in Ohio USA I’m 37 Years old, am so happy I got my blank ATM card from Adriano. My blank ATM card can withdraw $4,500 daily. I got it from Him last week and now I have withdrawn about $15,000 for free. The blank ATM withdraws money from any ATM machines and there is no name on it because it is blank just your PIN will be on it, it is not traceable and now I have money for business, shopping and enough money for me and my family to live on.I am really glad and happy i met Adriano because I met Five persons before him and they could not help me. But am happy now Adriano sent the card through DHL and I got it in two days. Get your own card from him right now, he is giving it out for small fee to help people even if it is illegal but it helps a lot and no one ever gets caught or traced. I’m happy and grateful to Adriano because he changed my story all of a sudden. The card works in all countries that is the good news Adriano’s email address is adrianohackers01@gmail.com
PLEASE READ!!Hello Guys!!! I am Caro I live in Ohio USA I’m 32 Years old, am so happy I got my blank ATM card from Adriano. My blank ATM card can withdraw $4,000 daily. I got it from Him last week and now I have withdrawn about $10,000 for free. The blank ATM withdraws money from any ATM machines and there is no name on it because it is blank just your PIN will be on it, it is not traceable and now I have money for business, shopping and enough money for me and my family to live on.I am really glad and happy i met Adriano because I met Five persons before him and they could not help me. But am happy now Adriano sent the card through DHL and I got it in two days. Get your own card from him right now, he is giving it out for small fee to help people even if it is illegal but it helps a lot and no one ever gets caught or traced. I’m happy and grateful to Adriano because he changed my story all of a sudden. The card works in all countries that is the good news Adriano's email address is adrianohackers01@gmail.com
PLEASE READ!!Hello Guys!!! I am Caro I live in Ohio USA I’m 32 Years old, am so happy I got my blank ATM card from Adriano. My blank ATM card can withdraw $4,000 daily. I got it from Him last week and now I have withdrawn about $10,000 for free. The blank ATM withdraws money from any ATM machines and there is no name on it because it is blank just your PIN will be on it, it is not traceable and now I have money for business, shopping and enough money for me and my family to live on.I am really glad and happy i met Adriano because I met Five persons before him and they could not help me. But am happy now Adriano sent the card through DHL and I got it in two days. Get your own card from him right now, he is giving it out for small fee to help people even if it is illegal but it helps a lot and no one ever gets caught or traced. I’m happy and grateful to Adriano because he changed my story all of a sudden. The card works in all countries that is the good news Adriano's email address is adrianohackers01@gmail.com
PLEASE READ!!Hello Guys!!! I am Caro I live in Ohio USA I’m 32 Years old, am so happy I got my blank ATM card from Adriano. My blank ATM card can withdraw $4,000 daily. I got it from Him last week and now I have withdrawn about $10,000 for free. The blank ATM withdraws money from any ATM machines and there is no name on it because it is blank just your PIN will be on it, it is not traceable and now I have money for business, shopping and enough money for me and my family to live on.I am really glad and happy i met Adriano because I met Five persons before him and they could not help me. But am happy now Adriano sent the card through DHL and I got it in two days. Get your own card from him right now, he is giving it out for small fee to help people even if it is illegal but it helps a lot and no one ever gets caught or traced. I’m happy and grateful to Adriano because he changed my story all of a sudden. The card works in all countries that is the good news Adriano's email address is adrianohackers01@gmail.com
PLEASE READ!!Hello Guys!!! I am Caro I live in Ohio USA I’m 32 Years old, am so happy I got my blank ATM card from Adriano. My blank ATM card can withdraw $4,000 daily. I got it from Him last week and now I have withdrawn about $10,000 for free. The blank ATM withdraws money from any ATM machines and there is no name on it because it is blank just your PIN will be on it, it is not traceable and now I have money for business, shopping and enough money for me and my family to live on.I am really glad and happy i met Adriano because I met Five persons before him and they could not help me. But am happy now Adriano sent the card through DHL and I got it in two days. Get your own card from him right now, he is giving it out for small fee to help people even if it is illegal but it helps a lot and no one ever gets caught or traced. I’m happy and grateful to Adriano because he changed my story all of a sudden. The card works in all countries that is the good news Adriano's email address is adrianohackers01@gmail.com
"DO YOU KNOW THAT YOU CAN HACK AN ATM MACHINE WITH PROGRAMMED BLANK ATM CARD?? This card is an ATM cards that can be used to hack into any ATM machine. Withdraw as much cash as you want!! We sell this cards to buyers worldwide. We also make credit cards too! Here is our list for ATM cards:
$10————-$10,000
$10 ————$20,000
$10 ————$30,000
$10 ————$40,000
Those cards are programed to withdraw for 3 months before you can renew it, if you want to get your own card Contact us on Email: adrianohackers01@gmail.com"