Stories by Blaise Udunze
A wave of protests is brewing in Nigeria’s banking industry as the Consumer Advocacy Foundation of Nigeria (CAFON) is calling Nigerians for a “No Banking Day” protest on March 1, when no customer is expected to transact any banking business to drive home their displeasure over excessive bank charges.
The foundation in a petition signed by its President, Sola Salako, and made available to Daily Sun, also accused the Central Bank of Nigeria (CBN) of not doing enough to stop banks from exploiting customers.
The protest comes as a fallout of over 10 identifiable charges associated with banking activities currently raising concerns among customers.
The charges, in no particular order, include the maintenance fees, which some banks are now charging monthly on current accounts and Value Added Tax (VAT) on virtually every transaction by customers, including SMS.
There are also charges for transfers both online and over the counter, remote-on-us (charges incurred for using other banks’ ATM in withdrawing money more than three times in a month) as well as the recently introduced stamp duties charge.
In the petition, however, Salako bemoaned the high level of exploitation, saying that bank customers, for many years, have been subjected to series of poor and unsatisfactory transaction and relationship terms.
The CAFON boss called on Nigerians to participate in the “No Banking Day” holding on March 1, 2016 when bank customers will shun all banking services to protest excessive bank charges.
The petition stated: “Dear Nigerian bank consumer, for many years now, consumers of banking services have been subjected to series of poor and unsatisfactory transaction and relationship terms.
“We have endured excessive charges, illegal fees and unfair contracts that only protect the bank but do not protect the consumers. Banks debit our accounts at will for charges we never agreed to or were not aware of; they charge us for every little service; we pay for getting our statements; introduction letters; and now, some banks are charging N200 for the use of deposit and transfer forms! “Under the current CBN management, abolished fees are being reintroduced.
“ATM withdrawals that were free now cost N65 on 3rd withdrawals. We pay N1,000 for debit card issuance and renewals; we pay N105 for every online transfer; and they still charge N105 as Annual Debit Card Maintenance and now, a new Stamp Duty charge of N50 on every credit of over N1,000 has just been introduced.
“COT that was supposed to end finally in 2016 is now being reintroduced as 1 per cent of every withdrawal purportedly as Monthly Current Account Maintenance Fees!
“This is unacceptable! The fact is, consumers are being exploited by all the banks and CBN is turning a blind eye to these exploitations. We cannot continue to endure these exploitations!”
“That is why Consumer Advocacy Foundation of Nigeria (CAFON), a consumer rights NGO, is calling consumers to join us in protest of banking exploitation by declaring Tuesday, March 1, 2016 as ‘No Banking Day!’
“Our Demands are: We want bank charges reviewed downwards; banks must clear fees with consumers before debiting our accounts; bank forms and contracts must be reviewed to include more protection for consumers; consumer complaints must be resolved promptly and satisfactorily; CBN must review the new Stamp Duty Charge, Account Maintenance Charge and Debit Card Maintenance Fees.
“We urge all consumers to boycott all banking services in protest of these excessive charges and policies. That means on Tuesday, March 1, don’t visit any bank or branches to transact any business; don’t use your ATM from 12a.m-12 midnight on March 1; don’t log in to any of your accounts online and don’t do any transfers from 12am-12 midnight; don’t make any online payments from 12am-12 midnight; don’t issue any cheques or banking instruments dated March 1, 2016.
“Avoid doing any financial transactions on March 1 but if you must, avoid the banks! We can all commit to observe a ‘No Banking Day’ protest to press home our demands. After all, if we don’t patronise them, they can’t be in business.
“Please sign this petition if you agree to join the protest and share with your friends and family until we have mass awareness so everyone can observe the ‘No Banking Day’ protest. It is not right, so let’s use our rights!”
Tier-2 banks in trouble over tough operating environment
Financial experts have projected that with the overall impact of tough operating environment on impairment charges, cost to income ratio and profitability, Tier-2 banks’ performances are expected to be significantly impaired.
This is even as an analyst at Investment Research Department of Afrinvest (West Africa) Limited, Ayodeji Ebo, stated that despite tepid outlook, most Tier-1 banks are expected to remain resilient on the basis of their nine-month submissions and stronger risk management in contrast to Tier-2 banks.
In a note made available to Daily Sun, it was observed that in Q3:2015, “FY:2015 earnings expectation for stocks in the banking space remains modest due to the impact of softer loans and deposits growth on earnings, and the overall impact of tough operating environment on impairment charges, cost to income ratio and profitability.”
According to the financial investment firm, most of the Tier-1 banks will retain their consistent dividend payment history but their is some doubt on the ability of Tier-2 banks to sustain the tempo of earning.
Meanwhile, Afrinvest disclosed that full year corporate earnings are expected to remain pressured across sectors as observed in Q3:2015 where performance scorecards were broadly unimpressive.
However, the investment firm said that aside bargain hunting, current valuation also looks attractive for “dividend investors” who may want to take position in stocks with consistent dividend payment history ahead of full year corporate releases.
On the back of depressing share prices, the firm affirmed that dividend yield was expected to improve significantly assuming quoted companies maintain last dividend paid.
Afrinvest explained: “On the basis of the above, we observed that ‘dividend investors’ can position in key counters with sound dividend payment history. In addition, overall market dividend yield is estimated at 4.3 per cent.
Meanwhile, in line with recent trend observed in the Nigerian foreign exchange market, forex illiquidity has continued to see exchange rate depreciate at the less-regulated segments (BDC and parallel markets) as demand remains atop supply, while interbank liquidity declined by as much as N580 billion after banks made provisions for a Central Bank Nigeria’s currency auction.
The official (CBN) and interbank rates have remained stable at N197/$1 and N199.10/$1 respectively due to the subsisting fixed exchange rate policy of the CBN, while the spread between the official and the less regulated segments continue to widen.
Interbank rates dropped further on Friday after refunds were made for unfulfilled bids at the currency intervention auction with the Open Buy Back (OBB) and average Nigeria interbank offer rates (NIBOR) closing at 0.5 per cent and 7.3 per cent respectively while the O/N rate was flat at 1 per cent.
Exchange rate at the BDC segment opened the week at N307/$1 on Monday and depreciated N2 by mid-week. On Thursday, rates spiked to N317/$1 and N325/$1 at the BDC and parallel markets respectively.
Afrinvest expects the wide swing in interbank rates to continue next week, dictated by FX intervention provision and refund as well as a treasury bills maturity N142.4 billion and auction of the same amount.
The firm explained that this spike might not be unconnected to the report from the Bankers’ Committee meeting on Thursday from which a consensus was reached between the CBN and deposit money banks (DMBs) that demand for foreign exchange would only be met for development of the real sector.
CBN Director of Banking Supervision, Tokunbo Martins, had hinted that 15 per cent of forex demand stems from school fees and medical bills payment purposes and urged Nigerians to begin to look inwards.
On the decision by the apex bank, the firm said it suspected this might have fuelled speculative hoarding of FX in anticipation of further restrictions, hence the spike in the BDC and parallel market rates.
BoI’s profit after tax hits N12bn
By Adewale Sanyaolu
the Bank of Industry (BoI) has announced a profit after tax of N12 billion and an exceptional income of N37 billion from the disposal of WAMCO shares for the financial year ended December 31, 2015.
The bank, which attributed its improved profitability to operational efficiency during the financial year, disbursed loans worth N83.5 billion to 776 enterprises (47 Large Enterprises and 729 (SMEs) in the year.
A breakdown of the bank’s earnings for the year showed it recorded an unaudited Profit Before Tax of N50.4 billion for the year ended December 31, 2015, representing an operating profit of N12 billion up by 100 per cent from N6 billion achieved in 2014 and an exceptional income of N37 billion.
It explained that the loans to large enterprises went to companies in Nigeria’s real sectors such as agro-processing, food processing, solid minerals, gas value-chain, engineering and technology, and light manufacturing.
Loans for small and medium enterprises were disbursed to companies in the various SME clusters such as fruit juice, cassava processing, fish farming, bakery, furniture, among others, adding that the loans resulted in the creation of over 90,000 jobs in 2015.
“The bank’s operating results are underpinned by strong growth in balance sheet, improvement in its Non-Performing Loan ratio from 18 per cent in May 2014 to four per cent in December 2015, and efficient cost management which saw growth in operating expenses limited to only 12 per cent in 2015,” a statement from the bank read.
Speaking on the result, BoI’s Managing Director, Rasheed Olaoluwa said, “I feel very proud of what we achieved in 2015. We made significant developmental impact through the disbursement of over N83 billion to nearly 1000 enterprises. We commissioned two of the six rural solar micro grid projects we financed. We introduced many products and programmes to support the SME Ecosystem.
“We obtained our ISO 9001:2008 Quality Management System Certification. We also secured our first ever international rating from Fitch Ratings (BB-) and Moody’s (Ba3), moving the bank closer to global best practices.
“We are grateful to all our development stakeholders for their continuing support especially the Central Bank of Nigeria and our 200 Business Development Service Providers (BDSPs).”