The Nation Newspaper

Tag: bank

  • KPMG to banks: focus on customer service, financial stability

    African banking customers have been fairly clear about what they expect from their banks, and what they are not yet getting, KPMG report on the sector, has said.

    A customer satisfaction survey conducted by the auditing firm in Angola, Botswana, Cameroon, Chad, Côte d’Ivoire, Ghana, Kenya, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe, showed that banks in Africa will need to focus on maintaining their financial stability, while also sharpening their customer service capabilities if they hope to capture and grow their markets.

    The survey conducted in October, explained that while more than one in five respondents said their top criteria for selecting a bank is their ability to remain stable, it was attention to customer service that seemed to separate the leaders from the rest of the pack.

    It said customer care factors were seen as being among the most important indicators for many respondents, leading to 43 per cent to say that they would change their banks as a result of poor service quality.

    “Not surprisingly, therefore, customers were also quick to call for improvements in this area; around 16 per cent said they wanted to see friendlier staff while 14 per cent said they would like faster and more effective complaints resolution from their banks,” it said.

    The survey also highlights a number of other key areas where African banks could make improvements to gain market advantage. One in five respondents prioritised a reduction in wait times for transaction processing and requests as their top area for improvement while 17 per cent said they wanted to see improvements in the way services are delivered through channels.

    It said alternate banking channels are starting to gain a foothold in many markets, creating another opportunity for banks to differentiate themselves and build loyalty among customers.

    Already, more than six per cent of respondents said they would switch banks if they offered more innovative products and services versus eight per cent who said they would switch because of the proximity of branches.

    It said 94 per cent of banks’ customers voted ‘staff friendliness’ as the most important factor influencing their satisfaction with their bank. Yet, while eight in 10 expressed satisfaction with this element, only three in 10 customers said they were very satisfied with their bank staff’s knowledge of banking products and only 10 per cent indicated that they were extremely satisfied that their complaints were being promptly addressed.

    When it comes to value for money, almost one in five of Africa’s banking customers expressed dissatisfaction with the cost of maintaining their accounts while 15 per cent said they were indifferent. Respondents also said they would like their banks to be more proactive in notifying them of changes in interest rates, tariffs and terms and conditions.

    However, interest rates seemed to be the biggest pricing frustration for respondents in 12 of the 14 countries surveyed who said they were least satisfied with the rates they were offered for deposits and investments.

     

  • Savannah Bank Plc

    SIR: It is now five years that the licence of Savannah Bank was returned to her. Since then the bank has not been able to operate. No information from the bank as to the position of things since they used the Nigerian judiciary to take back their licence thereby sitting on depositors money. The court gave the Bank 18 months to recapitalize and consolidate. Since then, it has broken all the banking rules and regulations and yet the court, Central Bank of Nigeria and the NDIC are looking the other way.

    Depositors money has been ‘judicially’ held since February, 2002 and no newspaper is writing or probing what is happening. It is part of your social services to the people to periodically probe and publish the position of things to keep the bank on its toes on its responsibility to the Nigeria citizens.

    The Societe General Bank of Nigeria which was closed five years after Savannah Bank has since reopened and paid depositors their money.

    • S. O. Balogun Akure.

  • Banks scramble for merchants’ accounts

    There is intense lobbying by banks to get merchants to subscribe to their Point of Sale (PoS) terminals, free. The banks are not only scheming to install a PoS at no costs to the merchants, but are promising to reduce the 1.25 per cent transaction charge per customer.

    It was learnt that the shop owners and retailers at strategic business centres were being targeted by banks to ease the implementation of their e-payment policy under the cash-less banking initiative. Lagos State has over 150,000 PoS deployed by banks at merchant shops.

    A senior management staff member of a middle-level bank, who spoke on condition anonymity, said lenders had included merchants as part of their intelligent marketing schemes.

    “You know e-payment is where everybody is going, and banks have to ensure that they are not left behind in the ensuing competition. They are also aware that merchants are critical to the success, or otherwise of their e-payment initiatives,” he said.

    On infrastructure, the Bankers’ Committee said the Central Bank of Nigeria (CBN) was working with the Nigeria Communication Commission (NCC) and telecommunications operators to ensure that there are dedicated communication links for the PoS systems. It said the PoS was key to the successful implementation of the cash-less banking initiative. “If the PoS or mobile phone is stolen, the money for the user is safe as the devices do not hold the money,” it said.

    To make the platforms secured and reliable, the Committee said that all PoS must have a minimum of two SIMs from telecommunication operators, even as there is minimum of 24 hours battery life, and sometimes, car charges are attached.

    The Committee disclosed that the literacy required in operating the PoS is minimal as many Nigerians can use a mobile phone needed to make mobile payments. Besides, biometrics is being installed in some Automated Teller Machines (ATMs) and PoS to further check fraud in the industry.

    It advised merchants to recognise that there are other ways in which the PoS terminal can benefit them, such as selling other services and earning commissions. For instance, mobile credit can be sold through the terminals, or it can used to collect bill payment for firms such as the Power Holding Company of Nigeria (PHCN).

    Also training will be provided by the acquirer’s payment terminal service provider (PTSP). Part of the deployment process is to ensure a practical training of how to use the PoS for the merchant and their staff.

     

  • Why banks fail, by NDIC

    What is responsible for bank failures? Banks failbecause of insider abuses, weak internal control system, poor corporate governance, says Nigeria Deposit Insurance Corporation (NDIC).

    NDIC Deputy Director Research, Usman Wali told members of the National Association of Banking and Finance Students (NABAFS), of Federal Polytechnic, Nasarawa that the corporation’s role in protecting depositors’ interest was key to the nation’s financial stability and economic development.

    He said the visit was crucial to the enhancement of NDIC’s public awareness on its mandate and activities, adding that the corporation is focusing on its core mandate of deposit guarantee, banking supervision, distress resolution and liquidation.

    He said the NDIC insured deposit liabilities of Deposit Money Banks (DMBs), Microfinance banks (MfBs) and licenced Primary Mortgage Banks (PMBs). Depositors of insured banks will get N500,000 for DMBs and N200,000 for MfBs and PMBs in the event of failure.

    Representatives of Bank Examination Unit (BEU) Shehu Aladire said on-site and off-site activities of the corporation are aimed at efficiency and compliance with rules.

    He listed four types of on-site bank examination as maiden, routine, target and special examinations.

     

  • Banks starving SMEs, says group

    THE Association of Micro Enterprises of Nigeria (AMEN) has blamed banks for starving small businesses of cash.

    Speaking in Lagos, its President, Prince Saviour Iche, said it was ‘heartbreaking’ to see so many businesses collapsing because lenders refused to assist them.

    Specifically, he criticised Bank of Industry (BoI), saying that it has done nothing to assist micro enterprises.

    The small-scale industrial sector, Iche added, if properly harnessed and given financial backing, technological and market back-up, can trigger economic development.

    Despite billions of naira claimed to have been pumped into the economy, Iche said small businesses were getting them.

    He said banks have refused to even consider the request of micro entrepreneurs simply because they were start-ups and their turnover wasn’t high enough.

    According to him, the industry was awashed with stories of healthy small businesses mucked around by banks, either by withdrawing a finance or with massive increases in their charges.

    He insisted that one of the key priorities for banks is to support small businesses if they want more jobs created.

    The goal of banks, he added, should be encouraging investment practices and the SMEs.

    He added that efforts were made by the government to create an investment-friendly environment, adding that these were not enough.

    He urged the government to engage infrastructure in economic activities, and to fast-track the process.

    The unemployment problem, which has crippled the youth because of lack of jobs in the formal sector, Iche said, could be absorbed by the small-scale industries.

    The AMEN chief added, however, that this could only be achieved if concerted efforts were made to transform into a meaningful platform.

    He urged the nation to wake up to assisting the small-scale industrial sector, noting that it could be the engine to drive the economy.

    To this end , he said there was need to create a SMEs credit portfolio to look into the requirements of this sector .

    One objective of this idea, he said, is to develop a financing mechanism for SMEs, which would enable business owners to access the loans without being subjected to unattainable requirements put forward by the traditional banking sector.

    The requirements of collateral, business plans, proper maintenance of business records and the impressive deposits would not be a factor in considering loans for the SMEs.

     

  • Nigerian banking stocks attractive, says Investec

    Nigerian banking stocks are attractive and have potential for fundamental growth that will drive returns over the next two to three years, Investec Asset Management has said.

    Investec, which manages some $105 billion, said quoted banks are set for profit growth of about 20 per cent a year over the next two to three years.

    Analyst, banking stocks, Investec Asset Management, Mishnah Seth, told Bloomberg that Nigerian banks look favorable and they were cheaper than their South African peers.

    According to her, from a valuation perspective, Nigerian banks are cheaper and would give you superior growth over the next two years than their South African competitors.

    Analysts said the privatisation of power plants and transmission and electricity distribution companies and other expansionary activities would provide fertile ground for banks’ earnings to grow.

    Telecommunication companies, including MTN Group Limited and Globacom Limited, plans to invest at least $5 billion in Nigeria in anticipation that Africa’s biggest market of 114 million subscriptions, will expand to 200 million by 2017, according to Informa Telecoms & Media estimates.

    African equity analyst, Exotix Limited, Ronak Gadhia, said banks have large headroom to grow their earnings from the expansionary activities in the telecoms and oil and gas sectors.

    “There’s a lot for the banks to do. Telecommunication companies are pretty expansionary, oil and gas still needs quite a lot of investments,” Gadhia said.

    South African banks deserve to trade at a premium to lenders in Nigeria because of the West African nation’s regulatory environment, Peter Mushangwe, an analyst at Johannesburg-based Legae Securities, said in an e-mailed response to questions from Bloomberg.

    “We view 2012 as having been largely a recovery phase, which includes earnings recovery and stability to asset quality, but we are not yet in a normal valuation phase, as is the case with South African banks,” he said. “It will come but it may take its time.”

    Central Bank of Nigeria (CBN) introduced a 50 per cent cash-reserve requirement on public sector funds on July 23, this year after highlighting the risk of excess liquidity in the banking system. The regulation, which applies to about N1.3 trillion deposits, could result in N500 billion of liquidity being withdrawn, increasing funding costs and hurting profitability, Fitch Ratings said July 31 in a statement.

    Investors are overlooking other risks such as the violence in some parts of the country to gain a foothold in a country at a different stage of development.

    The gross domestic product of Nigeria, the continent’s most populous nation with more than 160 million people, may exceed that of South Africa by 2016, according to Renaissance Capital, the investment bank owned by Russian billionaire Mikhail Prokhorov. Currently, Nigeria ranks 139th out of 174 countries in Transparency International’s Corruption Perceptions Index, compared with 69 for South Africa.

    Barclays Africa Group Limited, which owns South Africa’s Absa, the nation’s third-largest lender, trades at about 11 times profit, on par with Nedbank, the fourth-largest. Guaranty Trust Bank, Nigeria’s largest, has a price-to-equity ratio of 8.2, compared with Ecobank’s ratio of 4.6. Nedbank has an option to buy 20 per cent of the Lome, Togo-based Ecobank. The banks all declined to comment or didn’t immediately respond to requests for comment on valuations.

    Even with tighter monetary policy, Nigerian lenders are forecasting loan-book growth of 20 per cent this year, Gregory Kronsten and Olubunmi Asaolu, analysts at FBN Capital Limited in London, wrote in a recent note.

    Standard Bank increased its loan book by 12 per cent in the first half, while losses on bad debts soared 29 percent.

    Nedbank (NED) sees an increase of 5.0 per cent to 10 per cent in loans in the second half. Barclays Africa recently predicted “mid-single digit loan growth” this year. Poor asset growth is a key risk to South African lenders’ earnings, Legae’s Mushangwe said.

    The number of South Africans with impaired credit records rose by 189,000 to 9.53 million in the first quarter, the National Credit Regulator had said in June.

    In Nigeria “credit risk is still not significant given the clean up that they did in the crisis,” Exotix’s Gadhia said. “Profitability should remain fairly strong.”

     

  • Banks’ profit to drop over ratio hike, AMCON levy

    Banks’ profits are expected to drop over policies of the Cen-tral Bank of Nigeria (CBN) that raised cash reserve ratio (CRR) to 50 per cent from 12 per cent and the levy paid to the Asset Management Corporation of Nigeria (AMCON), to 0.5 per cent from 0.3 per cent, analysts have said.

    The CRR is a portion of banks’ deposits kept with the CBN. At the Monetary Policy Committee (MPC) meeting last month, raised the CRR from 12 per cent to 50 per cent. The AMCON policy is expected to add about four per cent to banks’ total operating costs, thereby hampering profits.

    Analysts at Afrinvest West Africa Plc expressed concerns over both policies, saying there will be ‘unavoidable impact’ of the new 50 per cent CRR on majority of the banks.

    The CRR policy, they said, implied significant increase in the banks’ cost of funds, a tensed pressure on the Net Income Margin (NIM) as a larger proportion of the deposits will be held in CBN’s coffers as reserves.

    Afrinvest said the affected banks might have to sell their investment securities to call back the 38 per cent and might also re-navigate their deposits mobilisation strategies, re-price risk assets in line with their “cautious” lending strategy and adjust business model.

     

  • Kano establishes 20 micro-finance banks

    Twenty out of the 37 newly established micro-finance banks (MFBs) in Kano State have begun operation.

    Alhaji Rabi’u Ibrahim, the Managing Consultant of MFBs in Kano State, disclosed this in an interview with journalists in Kano.

    He said that the remaining 17 banks would soon start operation as soon as the construction of their business premises was completed.

    “Prior to the establishment of the 37 micro-finance banks, there were eight existing micro-finance banks in the state.

    “So, with the new 37 micro-finance banks, the number of the banks has risen to 45 in the state,’’ he said.

    Ibrahim said that the establishment of the banks in the state would bridge the existing gaps in micro-finance banking in the country.

    He noted that Lagos State had over 200 micro-finance banks, while Imo had over 100 MFBs.

    “A total of 444 workers have so far been recruited to work in the 37 new micro-finance banks in the state.

    “We recruited a minimum number of 12 staff for each of the 37 banks, from the managing directors down to messengers and cleaners,’’ he said.

    Ibrahim noted that most of the recruited staff had already received training organised by a financial institution in the state.

    The 37 newly established micro-finance banks were inaugurated on January 8 by Malam Sanusi Lamido Sanusi, the Governor of Central Bank of Nigeria (CBN).

     

  • ‘Public sector deposits hit N2.5t’

    ‘Public sector deposits hit N2.5t’

    Public sector deposits in banks stood at N2.5 trillion, about 20 per cent of total deposits between January and March, Currencies Analyst at Ecobank Nigeria Olakunle Ezun has said.

    Ministries, Departments and Agencies (MDAs) of states and the Federal Government as well as the local governments comprise the public sector.

    In an emailed report titled: “Nigeria: Indirect monetary policy tightening,” Edun said aside the Cash Reserve Ratio (CRR) which rose by N650 billion, after the Central Bank of Nigeria (CBN) increased the ratio to 50 per cent, an additional N955 billion will be removed from the economy.

    Last week, the CBN raised the CRR from 12 to 50 per cent during the Monetary Policy Committee (MPC) meeting.

    The hike, he said, suggested that the tightening effect would be immediate, which in turn could require CBN repost to rebalance liquidity demand and supply.

    The monetary policy, he said, may remain relatively unchanged in the months ahead. “Assuming no significant change to key indicators, we think the Monetary Policy Rate (MRR) will be held at 12 per cent in subsequent MPC meetings, although further indirect tightening may occur if liquidity remains above target,” he said.

    Ezun said oil production remains a key variable and the recent moderate contraction in production to 1.88 million barrel per day in June from 2.1 million barrel per day in December 2012 highlights on-going oil theft/bunkering. It also showed the impact of delayed investment that has been caused by Petroleum Industry Bill uncertainties.

    “If production continues to fall and in combination with a fall in global oil prices below $100 per day, there is a risk that Nigeria’s growth could slow owing to the high level of government spending throughout the economy,” he predicted.

    Ezun said liquidity tightening will push up the short end of the yield curve by around 40 to 50 basis points.

    “We also expect the longer end of the curve to move up, but by a smaller margin. The amount of the rise will be countered by the level of repost the CBN conducts in the days and weeks ahead to rebalance credit demand and supply. Assuming our positive inflation outlook and currency stabilise, we think foreign investors can continue to invest in one year and shorter maturity government securities with confidence that real returns will remain solid and currency risk minimized,” he said.

    He explained that pressure on forex reserves would also rise, leading to currency weakness even as the relatively expansionary fiscal stance is another concern, particularly if fiscal revenues come under strain. He noted that oil revenues account for around 75 per cent of total fiscal revenues.

    “The somewhat low balance of Excess Crude Account of $5.3 billion in May 2013 highlights the limited recourse to supplementary financing should revenue growth slow.

    “Inflation remains comfortable and the MPC estimated that the inflation outlook was good with single digit inflation likely by year-end. Inflation is likely to accelerate to low double digits driven by robust domestic demand and on-going government spending, and despite the recent choking-off of liquidity.”

     

  • Banks adopt new IT solution for cash-less

    To enhance cash-less banking, banks are striving to become Payment Card Industry Data Security Standard (PCI-DSS) certified and further secure their payment channels, the Central Bank of Nigeria (CBN) has said.

    Last year, CBN directed banks to comply with the standards to improve electronic payment channels and operate in line with  best global practices. Financial institutions including Sterling Bank Plc, Guaranty Trust Bank Plc, Stanbic/IBTC Bank Plc, among several others, have been certified.

    Head, Shared Office Department, CBN, Mr Chidi Umeano, said banks were showing interest in complying with the standards, adding that many have complied with the standards.

    He said: “A lot of banks have complied with the directive on PCI-DSS. There has been appreciable progress on this issue. Those that have not complied with the standards have expressed commitment to enhancing the securities of their payment channels. They are at various stages of compliance.”

    Also, the Enterprise Solutions Director, Microsoft Nigeria,Mr Ade Famoti, said many banks were working or leveraging components of Microsoft products to meet PCI-DSS compliance.

    He said many banks found out that the time, resource and process cost associated with PCI-DSS compliance have limited their ability to comply with the standards, hence their decision to leverage on the expertise of Microsoft.

    “Many organisations discovered that the time, resource and process costs associated with PCI DSS compliance limit their ability to implement a secure development process.

    “This is where we come in – helping businesses address PCI DSS security requirements when creating software or systems, while speeding adoption of the security development lifecycle in their organisations,” he added.

    The CBN’s spokesman, Mr Ugochukwu Okoroafor, said the issue of PDI-DSS compliant is very important to CBN, adding that it is part of effort to ensure the success of the cashless project.

    Okoroafor, however, said he needs to confirm the level of compliance of banks to the standards because the issue is sensitive.