Despite the general drop in the number of active customers’ accounts across the banking sector, due to the COVID-19 pandemic, six commercial banks’ customer deposit increased by N2.297tn to N18.717tn in the first quarter of 2020.
This was against the N16.419tn the banks reported in the comparative period of 2019, an increase of 92.41 per cent.
The banks are United Bank for Africa, Zenith Bank, Access Bank, GTBank, Fidelity Bank, and First City Monumental Bank.
According to the three months’ financial results which the banks presented to the investing public through the Nigerian Stock Exchange, UBA customers’ deposit increased to N4.673tn in the first quarter of 2020 from N4.099tn at the same period of 2019.
Zenith followed with 24.96 per cent increase in its customers’ deposit, to N4.462tn in the Q1 of 2020, from N3.571tn in the review period of 2019; Access customers’ deposit rose by 4.72 per cent to N4.456tn in first three months of 2020, from N4.255tn in 2019; and GTBank’s customers’ deposit was N2.768tn in the same period, from N2.532tn in 2019.
Fidelity recorded N1.352tn in its customers’ deposit in the Q1 of 2020, from N1.016tn in the review period of 2019, an increase of 85.96 per cent while FCMB reported a marginal increase in its customers’ deposit, of N1.004tn in the Q1 of 2020, from N943.086bn in the comparable period of 2019.
Analysts and market observers, who spoke with Financial Street, believed that the banks had re-strategised by introducing new products to drive their deposits. They noted that the increased number of inactive bank accounts reflects the rate of poverty and lack of access to credit by individuals in the country.
Speaking on the development, the President of Bank Customers Association of Nigeria, Dr. Uju Ogubunka, said regarding the reasons for the increase in inactive bank accounts, “Among several other reasons, many bank account holders have lost their jobs and have not been able to secure new ones; no credit balances in their accounts to draw from; and no credit facilities to keep their accounts active.”
He added, “Some people travelled out of the country in search of better opportunities and education; inactive businesses without inflows; living from hand to mouth without need for bank accounts; school graduates without jobs; dislocation from place of residence. Some customers opened new account in another bank and abandoned the existing one. Some customers have grievances or complaints against their banks and decided to stay action on the accounts.”
A financial analyst, Henry Edobor, noted that the major cause of inactive bank accounts was because of poor economic climate, especially during the coronavirus pandemic.
“It is only when one has excess money that he would be able to bank and save. So some people stop banking transactions in their accounts because of their numerous wants. Others decide to hold their money because they are disappointed by their banking activities. Sometimes when you go to the bank, they give so many reasons for failed transactions such as network failure.”
“Just recently, the Nigerian Inter-Bank Settlement System released some up-to-date data on the state of bank accounts in Nigeria, and some of the revelations were baffling. But none was more so than the fact that as of June 2019, only a paltry 59 per cent of the bank accounts in the country can be classified as active,” he said.
Edobor explained that the decreasing percentage of active bank accounts in the banking system had been consistent since December 2018 when the active percentage of total bank accounts dropped sharply from 66 per cent in November to 60 per cent in December of the same year.
Commenting on the issue, Access Bank‘s Group Managing Director, Herbert Wigwe, said, “Our operating performance in 2020 was impacted by the residual effects of macro-economic conditions of 2019, characterised by slow economic expansion and adverse credit conditions, which resulted in making conservative provisions on our loan book. Despite the macro and regulatory headwinds, our underlying business remained strong as reflected in the gross earnings growth.”