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Ten commercial banks’ OPEX reaches 932.26 billion naira in first half of 2021, boosted by double-digit inflation, AMCON Levy, others

By Darasimi Adebisi

Despite the abundant profits reported by deposit banks around the country in their second quarter reports, it appeared that the double-digit inflation rate, among other factors, resulted in a total operating expense (OPEX) of 10 banks by seven percent to 932.26 billion naira in semester 2021 (H1) compared to 871.67 billion naira in the comparable period of 2020.

Analysis of bank results submitted to the Nigerian Exchange Limited (NGX) showed that regulatory costs such as the Asset Management Corporation of Nigeria (AMCON) charge 0.5 percent on total assets and the Nigeria Deposit Insurance Corporation (NDIC), currency, were other factors that contributed to the increase in OPEX of these 10 banks during the period under review.

Recently, the National Bureau of Statistics (NBS) announced that Nigeria’s inflation rate closed in June 2021 at 17.75%, compared to 17.93% and 18.12 recorded in May and April, respectively.

The inflation rate in January was 16.47 percent but rose to 17.33 percent in February. The office reported an inflation rate of 18.17% in March 2021.

Industry analysts believe that the rise in bank operating expenses is mainly due to regulatory costs.

Further analysis of the results showed that banks operating in the country recorded OPEXs below the inflation rate during the period, due to the reduction in staff costs.

For example, Access Bank Plc reported an increase of around 9% in operating expenses to 189.8 billion naira in the first half of 2021 from 174.3 billion naira in the first half of 2020, while operating expenses of Zenith Bank Plc rose 10.3 percent to 149.85 billion naira in the first half of 2021 from 135 naira. 0.85 billion in the first half of 2020.

Access Bank hinted that the nine percent OPEX growth was due to the franchise expansion following the acquisition in Kenya, Mozambique, South Africa and Zambia.

“The OPEX at the Bank level has remained stable despite the increase in regulatory costs (17%), depreciation and amortization (16%). We continue to optimize our costs despite the inflationary environment, ”explained the bank.

Guaranty Trust Holdings Plc (Guaranty Trust Bank) declared 89.34 billion naira of OPEX in the first half of 2021, an increase of 7.2% from 83.31 billion naira, as OPEX of Fidelity Bank Plc having fell 10 percent to 42.25 billion naira in the first half of 2021 from 46.84 billion naira in the first half. 2020.

GTCO in a presentation to investors and analysts attributed the increase in OPEX to the headline inflation rate and the marginal movement of the Naira / US dollar rate in the official market which resulted in the increase in general prices of goods and services.

According to the bank, “operating costs were largely impacted by a 27.3% growth in AMCON expenses and 9.3% in depreciation expenses”.

In addition, United Bank for Africa Plc reported a 0.5% increase in OPEX to N132.8 billion in the first half of 2021, compared to N132.13 billion in the first half of 2020, while that of FBN Holdings Plc increased by 10 % to N152.57 billion in the first half of 2021 compared to N139. 17 billion in the first half of 2020.

FBN Holdings explained that the 35.4% increase in regulatory costs was responsible for the surge in OPEXs, stressing that management continued to focus on cost control as a key priority.

In the same vein, Standard IBTC Holdings with 14% to N55.37 billion in the first half of 2021 against N48.54 billion in the first half of 2020 recorded the highest OPEXes of the period, while the OPEX of the sterling bank increased. from 11% to N35.5 billion in the first half of 2021. from 32.1 billion naira in the first half of 2020.

In addition, FCMB Group Plc declared N47.95 billion from OPEX, a nine percent increase from N44.05 billion in the first half of 2020, while Union Bank of Nigeria increased its OPEX of around four percent to 36.8 billion naira in the first half of 2021 compared to 35.4 billion naira. in H1 2020.

Commenting, the Head of Financial Institutions, Agusto & Co, Mr. Ayokunle Olubunmi, noted that the increase in banks’ operating expenses was attributed to the increase in the cost of the operating environment and regulatory costs.

According to him, “the increase in operating expenses differs from bank to bank. The AMCON direct debit and the NDIC premium also contribute to the OPEX of the banks. Keep in mind that the double-digit inflation rate and the fall of the Naira this year has had an impact on bank spending. Since banks do not operate in isolation, this should of course affect their OPEXs during the period. “

For his part, the CEO of Enterprise Stockbrokers, Mr. Rotimi Fakeyejo, said TODAY that the harsh operating environment of companies has had an impact on OPEX of banks.

He noted that banks were careful in managing costs by reducing personal expenses, among other things based on the need to remain profitable.

From ThisDay Live


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Commercial banks

Afghanistan dispatches: “commercial banks run out of US dollars” – JURIST – News

EXCLUSIVE JURIST – Law students and lawyers in Afghanistan file reports with JURIST on the situation there after the fall of Kabul to the Taliban. Here, a lawyer from Kabul with experience in the country’s financial sector presents his observations and perspective on the circumstances facing the country’s banks and banking system under the new regime. For reasons of confidentiality and security, we retain his name and institutional affiliation. The text has only been slightly retouched to respect the author’s voice.

The Acting Governor of the Central Bank of Afghanistan issued another letter urging commercial banks not to allow corporate bank accounts to 1) withdraw money for any purpose and 2) carry out electronic transactions inside and outside Afghanistan.

Afghanistan pays around US $ 7 billion electronically through correspondent banking services. The last restriction will significantly increase the price of imported products.

In addition, only the main offices of commercial banks are open. No branch is currently operating, at least as far as I can see in Kabul. In addition, commercial banks are strapped for US dollar liquidity because they do not receive it from the Central Bank. The US Treasury has decided to stop the supply of physical dollar banknotes to Afghanistan. It also raised the prices of raw materials. As an example, I bought a 16 liter bottle of oil for 1400 AFN. Today was AFN 2500.

In another incident, one of the members of the Central Bank’s Supreme Council in an interview with Reuters urged the US Treasury and the IMF to take the necessary steps to provide the Taliban-led government with limited access to the country’s reserves. . It has been in the media all day today and many have commented on it.

In Afghanistan, there are currently 11 commercial banks, but five are not in a stable situation. Some time ago, the central bank looked at some of these banks and concluded that at least two of them would become insolvent within the next year. Given the current situation, they will be insolvent sooner than expected. In addition, in Afghanistan, only about 4 million people use banking services out of almost 35 million people. This low number of customers is due to the fact that Afghans do not trust the banking system and think their money will be safer with themselves. This situation will worsen further due to recent policies implemented by the Central Bank.

Surprisingly, some of the people who support the US / IMF idea of ​​giving the Taliban limited access to the country’s foreign exchange reserves are people who have opposed the rise of the Taliban. But the impacts the frozen accounts are expected to have on the country’s poor may be the only reason they said what they said.

Meanwhile, the Taliban are at direct war with the only party rising up against them in the Afghan province of Panjshir. It is very difficult for them to finance such a war and we fear that if they have access to more money from investments now frozen, they will use it to finance their war.


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Commercial banks

Vietnamese commercial banks urged to meet their rate cut commitments

The State Bank of Vietnam (SBV) has asked commercial banks to reduce interest rates on loans in line with previous commitments.

As part of the recently released Official Dispatch # 5901 / NHNN-TD, the SBV is demanding lower interest rates and the provision of free banking services to support customers affected by the Covid-19 pandemic.

SBV deputy governor Dao Minh Tu said the central bank would strengthen oversight of the dispatch’s implementation.

As a result, the governor called on board chairmen and chief executives of commercial banks to take responsibility for society and join forces with the government to fend off the pandemic and help people, businesses and l ‘economy to overcome the difficulties through effective means and practical solutions such as reducing interest rates and fees.

Tu called on commercial banks to respect their commitments to reduce lending rates, which they had registered with the Association of Banks of Vietnam in the official dispatch No. 248 / NHNN-PLVN of July 16, in order to maintain the reputation of each bank and of the banking industry as a whole.

The latest SBV dispatch noted that the implementation of programs to reduce interest rates and service charges should be substantial and effective with specific results. Banks should make their policies public and specifically inform customers about the policy of reducing interest rates and service charges so that customers can access bank support policies.

The SBV said it would publish the results of the implementation of each bank’s commitments in the media on a monthly basis. In addition, it would strengthen the oversight of the commitments of the entire commercial banking system and each commercial bank branch in the provinces and cities of the country.

According to Tu, besides restructuring debts and interest owed and keeping the classification of debts unchanged, lowering interest rates is one of the most practical and specific solutions to support businesses at this time. Since the last outbreak of the pandemic, commercial banks have cut interest rates of around 18.83 trillion dong ($ 830 million) for businesses, according to preliminary statistics.

Following the directives of the government and the Prime Minister, the SBV asked the commercial banks to share the responsibility and to support the companies in further reducing interest rates after trying to minimize operating costs and reduce their own. profits.

The SBV noted that commercial banks are businesses too, but at present, sharing with businesses and people is the common responsibility of the whole of society, of every bank, and of every bank employee.

Previously, under the leadership of SBV, the Association of Vietnamese Banks held a meeting with the participation of 16 commercial banks who voluntarily agreed to cut interest rates by around 20.3 trillion dong by the end. this year, depending on the size of the bank, to support the economy.

In addition to the general support program, four major public commercial banks – Vietcombank, VietinBank, Agribank and BIDV – have promoted a pioneering role in the banking system, pledging to make a further cut in interest rates of around $ 1 trillion. dongs each to help businesses and individuals. in Ho Chi Minh City, Binh Duong and other cities and provinces that have faced the most difficulties due to the pandemic.

The four banks will also offer free fees for all banking services to individuals and businesses in the localities.

In addition to the interest rate cuts, the SBV has also ordered lending institutions to reduce fees for payment, money transfer, and other credit and monetary services for businesses, in an estimated total of around 1 100 billion dong to date.

VIET NAM / ASIA NEWS NETWORK


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Commercial banks

Tackling high lending rates from commercial banks

President Nana Addo Dankwa Akufo-Addo

President Nana Addo Dankwa Akufo-Addo urged the Bank of Ghana (BoG) to close the gap between its monetary policy rate and commercial bank lending rates to bolster the country’s rapid growth.

He said it was not fair that the central bank’s monetary policy rate stood at 13.5% while commercial banks lent to the private sector at 21% or more, adding that he was stifling the competitiveness of the sector, which was the engine of growth of the economy.

“To question the issue of high interest rates in Ghana and how the problem needs to be resolved to improve the competitiveness of the private sector in the country… I think the Bank of Ghana is best placed to lead this thought process and action.

“This is a gap that we must close if we are to achieve the vision of a Ghana with a globally competitive economy,” he said when swearing in to the 13 board members. Newly constituted Directors of the Central Bank at Jubilee House, Accra. , Friday.

The board, chaired by BoG Governor Dr Ernest Addison, includes Dr Maxwell Opoku-Afari, First Deputy Governor, Miss Elsie Addo Awadzi, Second Deputy Governor, Charles Kofi Adu Boahen, Minister of State, Ministry of Finance, and Prof. Eric Osei Asibey.

The others are Dr. Kwame Owusu- Nyantekyi, Dr. Samuel Nii-Noi Ashong, Mr. Jude Kofi Bucknor, Mr. Joseph Blignam Alhassan, Mr. Andrew Adinorte Boye-Doe, Ms. Angela Kyerematen-Jimoh, Ms. Comfort Ocran and Ms. Regina Ohene-Darko Adutwum.

The president told the board that the Central Bank has distinguished itself over the past four years and performed its duties impeccably, has proven to be a good banker for the government and a safe guardian. of the nation’s money.

He was encouraged by the many corporate governance measures that have been put in place by the BoG to mitigate future bank failures and “to ensure that we have a strong banking sector that can drive the government’s transformation agenda” .

President Akufo-Addo also welcomed the recent policy measures introduced by the BoG, saying they were in line with the overall goal of moving Ghana to a situation beyond aid.

He noted that the BoG’s recently introduced national gold purchase initiative has been a game-changer that would help transform the country’s domestic gold production value chain, and “will allow us to add value. value to our gold and establish transparency in the small-scale gold mining industry. in Ghana.

The President praised the central bank’s leading role in the digitization of the economy and said that the recent announcement of the central bank-backed pilot digital currency, the EDC, which would completely transform the architecture of Ghana’s payment systems would deepen financial inclusion and improve access to credit for small and medium enterprises.

He also praised the bank for its initiative and partnership with Singapore regulators and Ghana’s Ministry of Finance to develop a network of digital platforms serving as a global public infrastructure to boost SME growth in both countries.

“All of these have re-established the Bank of Ghana as an institution of excellence, reflecting the international recognition of the bank,” he said.

The President instructed the Board of Directors to draw on the vast experience of the members to ensure the formulation of the policies necessary for the achievement of the Bank’s objectives.

“I count on the board of directors with its diversity of experiences, talents and skills to support the bank’s agenda and help formulate the policies necessary to achieve its objectives. It’s an accusation I’m sure you would keep, ”he said.

In his remarks, Dr Addison pledged that the board would pursue prudent policies to consolidate the gains made over the past four years.

“Given the rich and diverse experience of the board, there is no doubt in my mind that together we can build on the solid foundations that were laid by our predecessors and take this institution to even greater heights.” , did he declare.


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Commercial banks

Tackling High Commercial Bank Lending Rates – Chairman of the BoG

President Nana Addo Dankwa Akufo-Addo urged the Bank of Ghana (BoG) to close the gap between its monetary policy rate and commercial bank lending rates to bolster the country’s rapid growth.

He said it was not fair that the central bank’s monetary policy rate stood at 13.5% while commercial banks lent to the private sector at 21% or more, adding that he was stifling the competitiveness of the sector, which was the engine of growth of the economy.

“To question the issue of high interest rates in Ghana and how the problem needs to be resolved to improve the competitiveness of the private sector in the country… I think the Bank of Ghana is best placed to lead this thought process and action.

“This is a gap that we must close if we are to realize the vision of a Ghana with a globally competitive economy,” he said when swearing in to the 13 board members. Newly constituted Directors of the Central Bank at Jubilee House, Accra. , Friday.

The board, chaired by BoG Governor Dr Ernest Addison, includes Dr Maxwell Opoku-Afari, First Deputy Governor, Miss Elsie Addo Awadzi, Second Deputy Governor, Charles Kofi Adu Boahen, Minister of State, Ministry of Finance, and Prof. Eric Osei Asibey.

The others are Dr. Kwame Owusu- Nyantekyi, Dr. Samuel Nii-Noi Ashong, Mr. Jude Kofi Bucknor, Mr. Joseph Blignam Alhassan, Mr. Andrew Adinorte Boye-Doe, Ms. Angela Kyerematen-Jimoh, Ms. Comfort Ocran and Ms. Regina Ohene-Darko Adutwum.

The president told the board that the Central Bank has distinguished itself over the past four years and performed its duties impeccably, has proven to be a good banker for the government and a safe guardian. of the nation’s money.

He was encouraged by the many corporate governance measures that have been put in place by the BoG to mitigate future bank failures and “ensure we have a strong banking sector that can drive the government’s transformation agenda” .

President Akufo-Addo also welcomed the recent policy measures introduced by the BoG, saying they were in line with the overall goal of moving Ghana to a situation beyond aid.

He noted that the BoG’s recently introduced national gold purchase initiative has been a game-changer that would help transform the country’s domestic gold production value chain, and “will allow us to add value. value to our gold and establish transparency in the small-scale gold mining industry. in Ghana.

The President praised the central bank’s leading role in the digitization of the economy and said that the recent announcement of the central bank-backed pilot digital currency, the EDC, which would completely transform the architecture of Ghana’s payment systems would deepen financial inclusion and improve access to credit for small and medium enterprises.

He also praised the bank for its initiative and partnership with Singapore regulators and Ghana’s Ministry of Finance to develop a network of digital platforms serving as a global public infrastructure to boost SME growth in both countries.

“All of these have re-established the Bank of Ghana as an institution of excellence, reflecting the international recognition of the bank,” he said.

The President instructed the Board of Directors to draw on the vast experience of the members to ensure the formulation of the policies necessary for the achievement of the Bank’s objectives.

“I count on the Board of Directors with its diversity of experiences, talents and skills to support the bank’s agenda and help formulate the policies necessary to achieve its objectives. It’s an accusation I’m sure you would keep, ”he said.

In his remarks, Dr Addison pledged that the board would pursue prudent policies to consolidate the gains made over the past four years.

“Given the rich and diverse experience of the board, there is no doubt in my mind that together we can build on the solid foundations that were laid by our predecessors and take this institution to even greater heights.” , did he declare.


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Commercial banks

Exempt the public sector and commercial banks from the deposit insurance regime: AIBEA

Before Lok Sabha passes the deposit insurance bill, the Bank Employees Association of India (AIBEA) urged Finance Minister Nirmala Sitharaman to exempt banks in the sector from his jurisdiction. public and / or commercial banks, which are covered by Article 45. of the Law on Banking Regulation.

Commercial banks pay around 12,000 crore in premiums to the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is an unwarranted expense as it would otherwise have benefited banks, said CH Venkatachalam, general secretary of the ‘AIBEA, in a letter. to the Minister of Finance on Sunday.

Overhaul of deposit insurance

Venkatachalam pointed out that Section 45 allows the government and the RBI to merge any bank with another bank to avoid closure and loss of customer deposits.

“This is why, while hundreds of banks closed before 1960, with this amendment to the Banking Regulation Act, not a single commercial bank has been liquidated or closed,” he said, adding that ‘there was therefore no question of commercial banking. close. The AIBEA strongly felt that deposits from commercial banks and, above all, from public sector banks, do not need to be covered by the deposit insurance scheme, he said.

Boost for depositors

He pointed out that, year after year, public sector banks and all commercial banks were required to pay a huge premium to DICGC, but the claim rate was zero as there was no likelihood of liquidation. The letter from AIBEA pointed out that the claim settled so far, since 1962, was only 5,200 crore, and that also for the cooperative banks.

The AIBEA missive comes at a time when the government is seeking to increase deposit insurance coverage to ₹ 5 lakh from the current ₹ 1 lakh. The Lok Sabha is expected to consider the bill for adoption on Monday.

The AIBEA letter also highlighted the fact that of the 2,067 banks covered by the DICGC, the 1,923 cooperative banks were the only ones threatened with closure and their deposits need protection. Even in their case, the premium should only be charged up to the deposits covered by the insurance, rather than the total assessable deposits, which is much higher, the association said.


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