Post-TSA, Banks Reap Big from Savings Deposit Mobilisation

Obinna Chima

The full year 2016 audited results of 11 Nigerian banks have shown a significant shift towards savings deposit mobilisation by the financial institutions, reflecting the adjustment in their business strategies following the withdrawal of public sector deposits to the Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN).

The results of the banks reviewed by THISDAY showed that their savings account deposits increased by 31 per cent to N2.164 trillion in 2016, compared to N1.649 trillion in 2015.

The banks included Zenith Bank, United Bank for Africa Plc (UBA), Guaranty Trust Bank (GTBank), First City Monument Bank (FCMB), Access Bank, Fidelity Bank, Unity Bank, Union Bank, Sterling Bank, Stanbic IBTC and Wema Bank.

The amount is expected to rise when FirstBank, Ecobank Nigeria, Diamond Bank and Skye Bank, which have notified the Nigerian Stock Exchange (NSE) about delayed filings, release their results.

A breakdown of the amount reported by the banks showed that UBA’s customers’ savings deposits rose to N524.751 billion in 2016, higher than N407.036 billion it recorded in 2015, GTBank’s savings deposits also increased to N454.436 billion in 2016, higher than N332.781 billion recorded in 2015, just as Zenith Bank’s savings deposits increased to N358.951 billion in 2016, higher than N246.113 billion it posted in the previous year.

Access Bank Plc’s customers’ savings deposits similarly improved to N179.070 billion in 2016, from N137.963 billion in 2015, Union Bank also reported a growth in savings deposits from N146.433 billion in 2015 to N169.597 billion last year, while Fidelity Bank’s savings deposits climbed to N155.019 billion in 2016, from N119.140 billion recorded in the previous year.

Also, FCMB’s savings deposits rose to N139.771 billion in 2016, from N112.728 billion in 2015, while Sterling Bank realised N52.357 billion through savings deposit mobilisation in 2016, up from N41.728 billion in 2015.
Other banks that reported growth in savings deposits included Unity Bank – N46 billion in 2016, from N41.962 billion in 2015; Wema Bank –N45.339 billion in 2016, from N35.580 billion in 2015; and Stanbic IBTC –N38.630 billion in 2016, from N27.301 billion in 2015.

The growth in savings deposit mobilisation was a reflection of the structural shift in banks’ business model in Nigeria following the federal government’s enforcement of the TSA in 2015.
This development was evident in the aggressive campaigns and reward schemes churned out of the industry since the withdrawal of public sector deposits.
Across the industry, banks in 2016 intensified strategies to remain dominant in the retail segment of the market. A lot of banks also refreshed their retail products to make them attractive to customers.

As part of their campaign drive, several banks offered rewards to customers willing to deposit more cash with them through promotions where prizes such as cash, cars, generators, refrigerators, and other electronic gadgets were won through electronic draws.
Some of the factors responsible for the decision to continue to woo retail customers included the full implementation of the TSA, weak economic activities, the restrictive monetary policy stance in the country, as well as the drop in oil subsidy payments.

Afrinvest Securities Limited, in a report, pointed out that with the increased focus on the retail segment, “the future of banking is set to take a dramatic turn”.
“We believe banks will begin to specialise in specific areas of business to ensure they compete effectively in the new banking landscape.

“While most banks are hinged on product differentiation strategies using innovation to remain afloat, we keep a keen watch on the industry’s competitiveness as events unfold,” Afrinvest added.

Managing Director/Chief Executive, Fidelity Bank Plc, Mr. Nnamdi Okonkwo, recently said the next phase of growth in the banking industry would among others be driven by fierce competition in the retail banking segment.
The Fidelity Bank boss said his bank intends to remain steadfast by supporting Nigerian entrepreneurs through delivering special products and services.

“The need to respond to our growing customer base and deepen our operation in the growing retail market vis-à-vis our commitment to make financial services easy and accessible necessitated further expansion in our products and services distribution capabilities,” he added.
Similarly, the Chief Executive, GTBank, Mr. Segun Agbaje, said recently that the bank would continue to drive its presence in the Nigerian market through retail focused products.