Nine Nigerian banks earned a total of N2.59tn in fee and commission revenue for the year 2024, The PUNCH reports

According to the financial statements for the year ended December 31, 2024, released on the Nigerian Exchange Limited, the banks reviewed include Stanbic IBTC Holdings Plc, FCMB Group Plc, Wema Bank Plc, United Bank for Africa Plc, Fidelity Bank Plc, Guaranty Trust Holding Company Plc, Zenith Bank Plc, Access Holdings Plc, and First HoldCoPlc.

In banking, fee and commission income refers to revenue generated from various fees and commissions charged for services provided to customers. This can include charges for account maintenance, transaction fees, and fees associated with credit cards, digital banking, and other financial services.

United Bank for Africa emerged as the leader among the nine banks, with its fee and commission income surging to N589bn in 2024, a remarkable 91.8 per cent increase from N307.3bn in 2023. The growth was driven by higher foreign currency transaction fees, an increase in credit-related income, and the expansion of digital services across its African operations.

Access Holdings also posted growth, with fee and commission income reaching N514.1bn in 2024, up 85.4 per cent from N277.5bn in 2023. This increase is largely attributed to the bank’s expansion in digital banking services, particularly credit-related fees and commissions.

First HoldCo Plc recorded a 38.2 per cent growth, with fee and commission income climbing to N304.5bn in 2024 from N220.3bn in 2023. The rise was driven by greater demand for digital services and foreign exchange-related transactions.

Guaranty Trust Holding Company saw a solid 78.3 per cent increase, with fee and commission income rising to N221.2bn in 2024 from N124.2bn in 2023.

Zenith Bank experienced a robust 89.4 per cent growth in fee and commission income, reaching N206.9bn in 2024, up from N109.3bn in 2023.

Stanbic IBTC Holdings Plc reported a 54.5 per cent increase in its fee and commission income, which rose to N170.4bn in 2024 from N110.3bn in 2023. The growth was driven by the bank’s fee and commission revenue and account transaction fees.

Wema Bank recorded the most dramatic increase among the banks, with its fee and commission income surging by 123.7 per cent to N55.6bn in 2024, up from N24.96bn in 2023.

Fidelity Bank also posted a solid growth of 30.6 per cent in fee and commission income, which climbed to N73.3bn in 2024, up from N56.1bn in 2023.

FCMB Group Plc recorded a 29.3 per cent increase in fee and commission income, which rose to N58.8bn in 2024 from N45.4bn in 2023.

A Professor of Economics at Babcock University, Olusegun Ajibola, attributed the surge in fee and commission income recorded by Nigerian banks in 2024 to the growing shift from cash-based transactions to a cashless economy.

Ajibola said the adoption of alternative banking channels such as online banking, point-of-sale terminals, and mobile transfers has significantly deepened in Nigeria under the current digital financial ecosystem.

“There is a deliberate shift from cash-based transactions to cashless channels, and this is deepening the use of alternative banking platforms for everyday financial transactions. These systems are not free. They come with infrastructure and technology costs, which banks recover through fees and commissions,” he said.

He added that embracing these digital platforms is costly for banks, hence, the surge in revenue derived from alternative channels is not just a profit strategy but also a cost-recovery mechanism.

Ajibola noted that beyond replacing traditional banking methods, the new model represents a global approach to managing modern banking, where earnings are no longer heavily reliant on interest income from loans and advances.

“In every part of the world, this is a strategic shift; banks are increasingly focusing on fee and commission-based income, and Nigerian banks are keying into that model. It allows them to diversify their revenue base and earn sustainably outside of loans,” he added.

The PUNCH reported that in 2023, digital banking channels brought in roughly N438bn for 10 financial institutions, as an analysis of their annual reports shows.