H1 2017: Customer resistance, other factors cost 5 banks N363bn decline in deposits

THE top five banks in the country recorded N363 billion decline in customers’ deposit in the first half of 2017, H1’17, reflecting their inability to meet up with demand for higher interest rate by customers. The banks are Access Bank, First Bank, Guaranty Trust Bank, United Bank for Africa Plc (UBA), and Zenith Bank Financial Vanguard analysis of the recently released H1‘17 financial statements of the five banks revealed that total customers deposit dropped by 2.85 per cent to N12.29 trillion at end of June 2017, from N12.65 trillion at the end of December 2016.

Financial Vanguard had last month exclusively reported that bank customers were pressurising for higher interest rate in a bid to take advantage of the high interest rate regime occasioned by the monetary policy of the Central Bank of Nigeria (CBN) in its quest to curb inflation and stabilise the naira exchange rate.

The report, which revealed N233 billion declines in deposit of Tier-2 banks, showed that banks were de-emphasising costly Fixed Deposit accounts and focusing on Savings Deposits which attracts lower interest rate, indicating banks’ resistance to customers’ demand for higher interest rates on their deposit.

Financial Vanguard analysis of the H1‘17 financial statements of the five tier-1 banks revealed a pattern similar to tier-2. While collectively the five banks recorded declined Fixed and Current account deposits, they, however, recorded increase in their Savings Account Deposits.
Vanguard, September 4, 2017

 

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