Attractive TB Yields Threaten Banks’ Savings Mobilisation

Obinna Chima

Although Nigerian banks have been aggressive in their savings deposit mobilisation strategies in recent times, a review of their financial results has shown that the response from customers has not been impressive.

The development has been attributed to the growing awareness of investment in treasury bills, where yields have been much more attractive.

The nine months unaudited results for the period ended September 30, 2017 of 11 commercial banks compiled by THISDAY, showed that their combined customer savings deposits increased slightly to N3.473 trillion, higher than N3.430 trillion as of December 2016.

The bank results reviewed by THISDAY were those of Zenith Bank Plc, Guaranty Trust Bank (GTBank), United Bank for Africa (UBA) Plc, FBN Holdings, Diamond Bank Plc, Access Bank Plc, Fidelity Bank Plc, Stanbic IBTC, Sterling Bank Plc, Union Bank of Nigeria Plc and Wema Bank Plc.

For some years, there has been a structural shift in banks’ business model in Nigeria, evident in the aggressive campaigns and reward schemes they churned out to attract savings deposits.

Currently, almost all the banks have one promo running or the other, all in a bid to attract customers.
As part of their campaigns, several banks offer to reward customers willing to deposit more cash with them through prizes such as cash, cars, generators, refrigerators and other electronic gadgets that are won in electronic draws.

But the nine months’ results showed that the banks need to intensify efforts in mobilising savings deposits.
For instance, FBN Holdings was able to attract savings deposits totalling N974.073 billion as of September 30, 2017, compared with N952.689 billion as at December 2016.
It was closely followed by UBA with N553.996 billion in the third quarter ending 2017, compared with N524.751 billion.

Diamond Bank realised N455.112 billion in the period under review, lower than the N499.763 billion it recorded as of December 2016, while GTBank recorded savings deposits of N452.418 billion, compared with the N454.436 billion at the end of 2016.

Similarly, Zenith Bank’s savings deposits at the end of the third quarter 2017 stood at N356.853 billion, compared with the N358.951 billion in December 2016.
Access Bank Plc also recorded savings deposits of N191billion in the period under review (N179.070 in 2016), Union Bank – N178.671 billion (N169.597 billion in 2016), and Fidelity Bank Plc – N163.788 billion (N155.019 billion in 2016).

The Managing Director, Afrinvest Securities Limited, Mr. Ayodeji Ebo, recently attributed the development to the attractive yields in treasury bills.
Wema Bank’s CFO, Mr. Tunde Mabanwoku, also confirmed the slowdown in savings deposit mobilisation among the banks saying: “What we see now is that customers are increasingly benchmarking treasury bills rates.

“So, when customers come in and say they want to do fixed deposits and you tell them it’s 12 per cent, they would be comparing what you tell them with treasury bill rates.

“Customers are becoming a lot more aware of what is happening out there and they are saying if they can invet their money in treasury bills at 17 per cent, why should they place their money with a bank at 12 per cent?
“So, banks have had to increase their cost of deposits just to match or get close to the sovereign rate.”