Recession: Bank Customers’ Deposits Escalate in 2016

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At the face of economic recession and regulatory headwinds, deposit money banks (DMBs) showed a rise in customer deposits in 2016 full year financial results published by the lenders have shown.
The results of five tier I banks reviewed by New Telegraph, for instance, showed that their total customer deposits rose to N12.6 trillion in 2016 compared to N10.9 trillion in 2015.

 Zenith Bank, GTB, Access Bank, UBA and First Bank are the lenders. The reports by the lenders on the breakdown of the amounts revealed that Zenith Bank’s customers’ deposits increased to N2.983 trillion in 2016 up from N2.557 trillion in 2015, GTB’s customers’ deposits soared to N1.986 trillion last year from the N1.610 trillion it recorded in the previous year.

Also, UBA’s customers’ deposits boosted to N2.485 trillion in 2016 from N2.081 trillion in 2015, while First Bank’s increased to N3.104 trillion in 2016 from N2.970 trillion in 2015, while Access Bank’s rose to N2.089 trillion in 2016 from N1.683 trillion in 2015.

It was not only the tier-I banks that raked in more deposits from their customers in 2016. Some of the tier 2 counterparts also recorded a rise in the deposits regardless of the tough business environment.
Specifically, Union Bank’s 2016 full year results showed that the lender’s customer deposits increased to N633.8billion last year from N569.1billion in 2015.

In same vein, Stanbic Ibtc reported that its customer deposits went up to N560.97billion in 2016 from N493.51billion in the previous year.

Financial analysts evaluated that the rise in the banks’ customers’ deposits last year reveals the lenders’ adjustment in their business strategies following the withdrawal of public sector deposits to the Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN).

Indeed, an analysis of the banks’ results shows a significant shift towards savings deposit mobilisation by the financial institutions.

For instance, Zenith Bank’s savings deposits increased to N358.951 billion in 2016, higher than N246.113 billion it posted in the previous year, GTBank’s savings deposits also increased to N454.436 billion in 2016, higher than N332.781 billion recorded in 2015, Access Bank’s customers’ savings deposits went up to N179.070 billion in 2016, from N137.963 billion in 2015 while UBA’s customers’ savings deposits increased to N524.751 billion in 2016, higher than N407.036 billion it recorded in 2015.

Union Bank also reported a growth in savings deposits from N146.433 billion in 2015 to N169.597 billion last year, while Stanbic IBTC said its savings deposits rose to N38.630 billion in 2016, from N27.301 billion in 2015.

Captivatingly, lenders whose 2016 full year results show a marginal decrease in customers’ deposits compared with 2015 figures also reported an increase in savings deposits.

For illustration, FCMB’s savings deposits went up to N139.771 billion in 2016, from N112.728 billion in 2015, while Sterling Bank accounted N52.357 billion through savings deposit mobilisation in 2016, up from N41.728 billion in 2015.

Other banks that reported growth in savings deposits included Unity Bank – N46 billion in 2016, from N41.962 billion in 2015; Wema Bank – N45.339 billion in 2016, from N35.580 billion in 2015 and Fidelity Bank – N155.019 billion in 2016, from N119.140 billion recorded in the previous year.

The TSA policy, initiated by the administration of former President Goodluck Jonathan but implemented by his successor President Muhammadu Buhari’s administration, stipulates that all government taxes, levies and tariffs should be deposited in the Central Bank of Nigeria (CBN).

The funds would afterwards be disbursed to ministries, departments and agencies (MDAs) based on approved rules to ensure accountability in the management of government resources.
 Mr. Ahmed Idriss, the Accountant General of the Federation(AGF) released a Figure that reveals that the Federal Government recorded over N7 trillion in the Treasury Single Account (TSA) at the end of March this year.

According to analysts, in order to cope with the withdrawal of the public sector funds, banks embarked on aggressive campaigns and reward schemes aimed at attracting retail deposits.
Several banks also offered rewards to customers willing to deposit more cash with them through promotions where prizes such as cash, cars, generators, refrigerators and other electronic gadgets were won through electronic draws.

In a report, Afrinvest Securities Limited  pointed out that with the increased focus on the retail segment, “the future of banking is set to take a dramatic turn.

“We believe banks will begin to specialise in specific areas of business to ensure they compete effectively in the new banking landscape.

“While most banks are hinged on product differentiation strategies using innovation to remain afloat, we keep a keen watch on the industry’s competitiveness as events unfold,” Afrinvest added.

Source: Newtelegraph
Edited for Aprecon by Omolola Lipede.

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