Banks’ operating expenses hit N3.3tr in th
WHILE the Nigerian banking industry continues to grapple with the pangs of the Treasury Single Account (TSA), latest industry cost performance report on the sector has shown that publicly quoted banks may have spent N3.3 trillion on operating expenses between 2012 and 2014.
Similarly, with the trend sustained over the period under review, analysts have projected a further rise in the operational costs by 15 per cent by the end of December.
According to analysts at Fulfigate Associates, a review of 15 publicly quoted banks reports from 2012 to 2014 showed that the nation’s banking industry remains burdened by increasing operating expenses in the last three years from 2012 to 2014, with expenses rising year-on-year by N102 billion and N130 billion, representing 10 per cent and 12 per cent in 2013 and 2014 respectively.
“Total industry operating expenses for three years-2012 to 2014 stand at N3.3 trillion, with 69 per cent of total operating income for the period going into financing this expense.
Top five spenders are First Bank with N529 billion, representing 15.85 per cent of the industry total; followed by Zenith Bank with N402 billion, representing 12 per cent; and Access Bank with N291 billion, representing 8.72 per cent of industry total expenses.
Others are Ecobank, N279 billion, representing 8.34 per cent; and UBA, N253 billion, representing 7.59 per cent of industry expenditure bill..
“These five banks alone account for 52.56 per cent of the industry’s total operating expenses in the last three years. The least spender is Wema Bank with N60 billion, representing 1.79 per cent of the industry’s spending within the period”, the report showed.
A breakdown of the industry operating expenditure profile showed that other operating expenses took the largest chunk of 54 per cent; compared with personnel expenses with 39 per cent; and depreciation/amortisation with seven per cent.
The analysts noted that top three spenders on other operating expenses within the last three years are First Bank with N333 billion (19 per cent); Zenith Bank with N199 billion (11 per cent) and Access Bank with N167 billion (nine per cent). Again, Wema Bank is the least spender on other operating expenses with N28 billion (1.5 per cent).
“The cost income ratio which shows how much is spent to generate a given level of revenue shows that only six publicly quoted Nigerian banks are efficient in the last three years, achieving below 70 per cent which is the industry’s benchmark.
“GTB emerged the most efficient bank in this regard, spending 41kobo to generate N1 of income. Other banks include Zenith, 58 kobo; UBA, 64 kobo; Access, 67 kobo; Stanbic IBTC and First Bank 69 kobo.
On the outlook, analysts at Fulfilgate forecast that with the trend over the last three years (2012-2014) and current indices as at September 2015, total expenditure of banks will grow by 15 per cent to N1.419 trillion by December, over 2014 figure of N1.234 trillion.