Banks Adopt ‘Survival’ Strategies on Frail Macro Environment

Obinna Chima

The tough macroeconomic environment is obviously taking its toll on commercial banks as well as other financial institutions with most of them adopting various strategies to remain afloat.
The impact of the tough operating environment clearly manifested in the recently released half year results posted by the banks, which were largely below market expectation, even though some banks did well.

Nigeria’s economy contracted by 2.06 per cent year-on-year in the second quarter of 2016, as against the 2.4 per cent recorded in the corresponding quarter of 2015, thus confirming the economy to be in a recession.

The deepening of Nigeria’s economic decline was largely due to the troubled oil and gas sector, which contracted by eight per cent year-on-year in the second quarter of 2016, as against the 6.8 per cent in the comparable period in 2015.

Owing to this, from downsizing of workforce, to freezing staff promotion, giving staff targets, reduction of salaries and other emolument, as well as embarking on aggressive deposit mobilisation by deploying more staff into market-facing units, banks are doing all to ensure that they improve their revenue.

An auditor with a first generation bank said: “Banks are struggling. Even as an auditor whose job entails visiting branches, normally if I use my personal car to visit any of the branches, they refund us by calculating the mileage and number of kilometres we covered and refund. But we have been told that due to budget constraints, even if we use our cars, we should not make any request for refund.

“In fact, we were told recently that due to budget constraints, we should reduce the number of times we visit the branches. For the low risk branches, the instruction is that we should do the risk assessment online, while for the high risk branches, we can be visiting once in two months.”

Also confirming the situation in the banking sector, the Managing Director, Wema Bank Plc, Segun Oloketuyi, said as a result of development, his bank had continued to watch its cost of operation. He said some of his branches now close at 4pm as part of the cost-saving measures.

He said: “We haven’t retrenched in this bank in the face of economic pressure and we are not about to do one either. We have done adjustment where it needs to be done. Adjustment doesn’t mean salary because I didn’t cut anyone’s salary either. But we have adjusted the way we do things. For instance, you don’t need to put on the light when there is nobody.

“We ensure that we do our jobs between 8am and 4pm in some branches and still deliver quality services to our customers. We have cut down on running diesel for long hours till 8pm. For my staff who are doing MBA and other academic programmes, you can go read at home because we are not going to be providing you light and air conditioner to do that in the office anymore.

“What I am saying is that some people stay long hours in the office not because they are working. They shut down when the bank officially closes and switch over to do their own things. We don’t need to put on a huge generator in this office just because someone wants to study. So, in this head office, our generator goes down at 7.30pm and then we put on a smaller generator for essential services such as the data centre, the lift and the MDs office.”