Despite the tough economy, Deposit Money Banks (DMBs) in the country continue to record success in their bid to attract customer deposits, Q1’ 2021 results so far released by the lenders show.
An analysis of 10 DMBs’ Q1’ 2021 unaudited financial statements, for instance, shows that they grew their total customer deposits by 25.1 per cent to N31.28 trillion in the first three months of this year from the N25 trillion that they reported in the corresponding period of 2020.
The banks are Access Bank, Zenith Bank, United Bank for Africa (UBA), FBN Holdings, Guaranty Trust Bank (GTB), Fidelity Bank, FCMB, Union Bank, Stanbic IBTC and Unity Bank.
A breakdown of the results indicates that UBA’s customer deposits increased to N5.8 trillion in Q1’ 2021 from the N4.3 trillion it reported for the corresponding period of last year. Zenith Bank raked in customer deposits of N5.68 trillion in the first three months of this year compared with N4.46 trillion that the Tier 1 lender reported for the same period of 2020. Similarly, Access Bank garnered N5.68 trillion customer deposits in Q1’ 2021 as against N4.46 trillion it reported for the corresponding period of last year.
FBN Holdings followed with customer deposits of N5.10trillion in the first three months of this year compared with N4.29 trillion in Q1’ 2020. GTB reported customer deposits of N3.60 trillion for Q1’ 2021 as against the N2.77 trillion it recorded for the same period of last year. Fidelity Bank led the group of Tier 2 lenders as it reported customer deposits of N1.75 trillion in the first quarter of this year compared with N1.35 trillion it recorded in Q1’ 2020. It was followed by FCMB with customer deposits of N1.32 trillion in Q1’ 2021 as against the N1 trillion reported by the Tier 2 lender in the corresponding period of last year. Union Bank grew its customer deposits to N1.12 trillion in the first three months of this year from N897.5 billion in the same period of 2020.
Deposits, however, declined to N866.97 billion in Q1’ 2021 from N1.17 trillion in the corresponding period of last year. At N348.3 billion in Q1’ 2021, Unity Bank increased its customer deposits by 13 per cent from N308.8 billion the first quarter of last year.
It had earlier been reported last month that audited FY’ 2020 financial statements of DMBs indicate that most of them reported significantly higher customer deposits compared with the previous year.
Although fierce competition for deposits among DMBs and also from Fintechs, has, in recent years, pushed lenders into devising innovative deposit mobilisation strategies, that have led to the growth in customer deposits numbers, analysts attribute the increase in deposits in 2020 and in Q1’ 2021 to the effects of the COVID-19 pandemic, as well as the Central Bank of Nigeria’s (CBN) policies, which resulted in a drop in interest rates for fixed income investments, thereby shrinking investment outlets for bank customers.
While the pandemic hurt businesses and individuals, the concerns and uncertainties it triggered made a lot of bank customers in Nigeria, like their counterparts in other parts of the world, to decide to leave their money in savings accounts rather than investing in risky ventures.
A bank official disclosed that COVID-19 restrictions also made lenders to aggressively deploy mobile apps, USSD codes, internet banking and social media to attract customer deposits. Indeed, commenting on Union Bank’s FY 2020 numbers, the lender’s former CEO, Mr. Emeka Emuwa, said: “The pandemic accelerated trends in customer behaviour and we have seen rapid increase in digital adoption with a 38% YOY increase in active users on our UnionMobile channel with total active users now at 2.9 million.
Our UnionOne and Union360 platforms for businesses grew by 11% from 25,000 users to 27,700 users. 94% of transactions in the Bank are now done digitally, up from 89% in 2019.”
Also, commenting on the bank’s Q1 ‘2021 performance, for instance, UBA’s Group Managing Director/ Chief Executive Officer, Mr. Kennedy Uzoka said: “This impressive 2021 Q1 results reflect the capacity of our business to sustainably grow earnings, even in a highly uncertain macroeconomic environment.
The Group achieved 5.6% year-on-year (YoY) growth in gross earnings to N155.4 billion, even as profit for the period grew 27% YoY to N38.2 billion.
Operating income for the period was N106.6 billion, a 13.5% growth when compared to 2020 Q1. We remain optimistic on the macroeconomic outlook of the countries we operate in, especially as COVID-19 vaccine distribution gains traction globally, whilst commodity prices and currencies continue to stabilize.