BY KENNETH EZE
Several deposit money banks in Nigeria rode the tide of the Covid-19 pandemic to grow profits, while several other sectors of the economy struggled to stay afloat.
A cursory look at the 2020 financial results of five banks, including Zenith Bank Plc, United Bank for Africa Plc, Unity Bank Plc, Guaranty Trust Bank Plc, and Fidelity Bank Plc show that the five banks raked in the sum of N574.5bn as Profit After Tax, as against N526.6bn recorded in the corresponding period of 2019.
In concrete terms, the five banks looked at made N48bn in PAT above the figures they posted for the previous year. The figure represents an average growth of 8.3 per cent in net profits for the five banks, year on year.
Figures in the 2020 Annual Report of Zenith Bank show that the bank grew PAT from N208.8bn in 2019 to N230.5bn in the 2020 financial year. This is a growth of 10 per cent, year on year.
Similarly, GTBank, grew PAT from N196.8bn in 2019 to N201.4bn in the financial year ended December 31, 2020. The bank recorded an increase of 2.3 per cent in this regard, year on year.
In the same vein, UBA recorded N113.8bn in net profit for the year, in the accounting period ended December 31, 2020, up from N89bn in the corresponding period of 2019. The bank grew in this regard by 21.7 per cent, year on year.
However, two other banks that The Point looked at their financial statements for the accounting period ended December 31, 2020, witnessed a little dip in their net profits, though they still retuned positive figures.
Fidelity Bank’s profit for the year stood at N28.4bn for the accounting period ended December 31, 2019 as against N26.7bn, recorded in the corresponding period of 2020. This is a decline of a little over 6.67 per cent, year on year.
Similarly, Unity Bank also moved south in PAT in the 2020 accounting year, ended December 31. The bank posted figures of almost N3.4bn for the year ended December 31, 2019 as against about N2bn in the corresponding period of 2020. This is a decrease of about 62.2 per cent, year on year.
Generally, the profit figures returned by the lenders for the year of the pandemic, left the impression that when the Covid-19 sneezed in Q4, 2019 and the entire world caught cold, the deposit money banks in Nigeria already had an antidote.
The pandemic made mankind go through tough times, readjust and readapt to new ways of living, working and doing business, thereby impacting both operations and bottom-line of businesses, in most segments of the economy, particularly the productive sector.
Watchers posit that while the world of business took to its knees, as COVID-19 reigned supreme, three sectors of the economy appeared immune to the vagaries of the pandemic and thus enjoyed relative boom.
Analysts point at the food, telecommunications/ICT and financial sectors as having enjoyed some sort of boom, during a period that would ordinarily have been an ill wind for all.
An Abuja based financial analyst and media practitioner, Kirk Leigh observed that, “while other aspects of the economy especially the productive sector succumbed to the pandemic, banks flourished because they were innovative.”
Tending to agree with Leigh, during a telephone interview with The Point, Matthew Obiazikwor, Unit Head, Internal and External Communications Department, Unity Bank, opined that the banks activated their business continuity plans, which helped them navigate a difficult period.
He said, “most of the banks had business continuity plans, so the moment Covid-19 set in, they were activated to help the banks survive the strong headwinds.”
He pointed out that the use of technology backed alternative banking channels, like electronic and USSD banking platforms played in major role in helping the banks serve their customers during a difficult period.
The social distancing prescribed by health authorities to help stem the tide of Covid-19 encouraged a wider acceptance of technology in financial service circles in Nigeria.
This also helped the banks, as that aspect of banking became more relied on by the banking public. Obiazikwor put it this way, “Electronic banking has become much more strong”.
In agreeing with Obiazikwor, Leigh said, “More than any time in the history of banking, more and more customers adopted the mobile banking technology made available by banks,” to meet their banking needs.
To elucidate his point, Obiazikwor cited instances at Unity Bank. He explained that what the management did was to “refocus the bank to leverage resources that will bring about top line performance by optimizing our technology, digital platforms and focusing our people on targeted opportnities across regions to deliver operational efficiency and improved customer service.”
And at industry level, he observed that, “People can do banking transactions outside the banking halls, with or without data. Those who have data can use the digital channels, while those who don’t can use the USSD channels.”
He explained that what the banks did was to make sure that the alternative touchpoints were available to fill the gaps created by the physical absence of the traditional touchpoint – the banking halls.
The banks, he opined, also restrategised and embarked on streamlined corporate actions to pursue certain lines of the business that gave them more leverage.
“Several banks, strengthened in certain areas, like retail, or other forms of specialisation, to improve efficiencies,” he said.
For the purpose of vivid delivery of his point, he drew attention to what is happening at his brand.
He said, “The Bank has been pushing transformation initiatives, with a strategic approach targeted at the youth market. It is also consolidating on the gains from its core business areas and niche in the agribusiness sector.”
Insiders adduce technology, niche play and operational efficiencies as some of the strong pillars on which the banks grew profits during the pandemic.
But Leigh is wondering, “How is it possible to make such fantastic profits from doing business in a depressed economy?”
And watchers assert that the banks have been indulging in unwholesome practices on labour related matters, as well as imposing strange charges on customers in their desperate bid to boost profit margins.
Some bank customers decried what they described as the untoward and antagonistic attitude of Nigerian banks to their customers, with some claiming that the profits the banks are declaring were gleaned from unfriendly and unexplainable charges, debited against customers’ accounts.
In addition, some people who gave their youthful days to working for banks, who spoke to The Point, decried they referred to as “sharp labour practices in the banking sector”.
Jide Jande and Okun Iweka worked with several first generation banks before retirement and disengagement respectively.
Jande expressed worry that “people who are neither qualified nor experienced are being put in sensitive positions because the banks want to save on personnel costs.”
He described the move as “ill advised”, because it portends danger for both employer and employee.
He would want to see the banks return to the core values of trust and stability, as against the race to win the profitability war at all costs.
“Young, inexperienced, ill prepared and poorly motivated people are exposed to sensitive positions and huge sums of money, in today’s banking environment. Their moral strengths are stretched to the limits, and often broken, that is why banking fraud is on the increase in Nigeria,” he observed.
Iweka, while corroborating Jande’s position that the banks fill sensitive positions with inexperienced hands and immature minds, disclosed that this is why they are contenting with a plethora of litigation on personnel matters.
In the face of all these, Leigh reasons that there must be something fishy with the banks. “If the economy is in an economic trough, it should reflect on the banks who rely on economic agents to make a profit,” he said.
