Banking industry's profit has become a manifest of tale of mixed fortunes. While the nation's Deposit Money Banks regale with huge numbers in the harvest of earnings, their customers are losses and deprivations, mostly facilitated by low-level financial literacy.
Indeed, a combined numbers of five top-flight financial institutions, among others, in the country- Access Bank, Ecobank, Guaranty Trust Bank, United Bank for Africa and Zenith Bank showed N653 billion profit after tax.
It is an indication that the banking industry is fast-regaining its lost mojo in the wake of Treasury Single Account (TSA) era. It is also a sign that the industry is coping despite global and domestic headwinds; the direct impact of government's fiscal crisis; assessed long-standing risky environment and its negative impact on credit creation, as well as loan performance.
However, it is obvious that a chunk of the billions declared by banks represent lost earnings to customers, particularly, the savings category, where the low and middle-income classes patronize most. The loss, of course, is a mix of ignorance for customers on one hand and banks' deliberate strategy to reap off customers, on the other hand.
But is a clear case of non-ethical banking, engrained in a greedy system that is propelled by "Winner Takes All" perspective. Otherwise, we ask: "Why would banks not pay 10 per cent interest rate on savings products, at least for the class of people in that segment?
Save for Wema Bank's ALAT, which offers 10 per cent, even if one would argue that it is a fixed savings product, it was usual to think that it is not possible for any bank in the country.
But it is an indication that five per cent to 10 per cent savings products are profitably possible. So, it is enough of the "stories" about costs, otherwise, all banks would have been out of business by now.
Banks will be in a hurry to adjust interest rate payments on loans at a slight inflationary pressure and upward review of the Monetary Policy Rate, even without prior notice to customers. That would not be case when the two variables take the other way.
Even when the customer is smart enough to renegotiate, it would take long to be effected.
"Granted, majority of customers don't read. But the industry has not helped with voluntary and essential information. By the way, how many are well lettered?" a trader and bank's customer, Chuma Nzerem, retorted.
The Consumer Protection Framework of the Central Bank of Nigeria (CBN) Section 2.3 (1) states: "In addition, financial institutions have a responsibility to make reasonable effort towards ensuring that consumers of financial products are knowledgeable about the products/service they wish to purchase." Banks have not been thorough about this rule, but to their advantage.
The enforcement of TSA, triggered unsettled operations for the banking industry, as well as desperation for profit, which must be earned through hard work and normal banking business. It was the end of the easy access to cheap and zero-cost funds, belonging to government, in their possession.
It was closely followed by the commencement of the zero Commission on Turnover (CoT) by January 2016, which further sapped the non-interest earnings' portfolio of banks and created more panic in the industry.
But with less than six weeks from inception, banks rolled out multiplicity of charges that have affected customers. CBN, foreseeing the panicky reaction to the zero CoT policy, approved a negotiable CoT charge, which should not be more than N1 per N1000 withdrawal on current account.
However, banks took advantage of the reversed CoT policy to create account maintenance fee, which was not been the modus operandi. Today, the majority, if not all banks, charges card maintenance fee.
The revised guideline to Banks and Other Financial Institutions in Nigeria 2017, noted that where a charge is stipulated as "negotiable", banks and OFIs are required to draw the attention of customers to their rights to negotiate and the two parties are required to mutually agree on the applicable interest and/or charge via a verifiable means. This is an obvious missing links in bank-customer relationship. They are not always fast about drawing the attention of customers to their rights to negotiate.
Section 2.1 of the guide said when any bank intends to introduce a new rate different from the agreed rate, the bank should notify the customer of the new rate at least 10 business days in advance of the application of the new rate.
It is obvious that banks have severally breached this law, as majority of bank customers say they did not received notice before changes in their terms of loans and that is part of the sources of the billions they declare.
Nzerem lamented that the customers are not properly briefed, especially the frequency at which charges hit customers' accounts, to allow them the opportunity to opt in or out.
"These banks act as if they are above the law and they make the billions they boast of out of it. They do whatever they want to do and repeatedly. How can you say that you want people to bring money to the bank, only for you to withhold information and increase deductions with reasons that are not clear and sometimes, without proper communications?" he queries.
There are no fewer than 10 identifiable charges associated with banking activities currently- maintenance fees, now on monthly basis. There is Value Added Tax (VAT) virtually charged on every fee against bank customer, including the SMS alert charge.
There are also charges for online transfers; over-the-counter; and mobile App transfer; Remote-on-Us (charges incurred for using other banks' Automated Teller Machines to withdraw money more than three times in a month); and the controversial stamp duties charge. Some banks have also reviewed upwards the cost of acquiring cards from N600 to N1000, with a VAT charge afterwards.
"These institutions are just taking advantage of the ignorance of the majority. What about the 'extortions' from some of us that don't know how to channel our complaints? Many things are going wrong in the relationship between banks and customers," Elias, who runs a dry-cleaning shop, said.
Nigeria banks have surreptitiously used the low knowledge and outright ignorance of millions of customers as their bargaining strengths. Till date, how many times in a month a savings account customer will make withdrawals and lose the right of interest rate payment, irrespective of the amount left in the account is still a wide imagination.
If this is not an important subject, why would the revised guide to bank charges, published by CBN in May 2017, contain the provision, which said the savings accounts are entitled to a "minimum of 30 per cent of Monetary Policy Rate (presently at 14 per cent)" but "not applicable if a customer makes more than four withdrawals in a month"?
Since May 2017, when the guide was released, no bank has elected to speak on the subject.
It is one of the least things some of the financially informed Nigerians know about. But it is basically one of the bargaining chips banks have deployed to enrich the industry and have deliberately refused to speak on it.
Speaking on the genuineness of the huge profits declared by banks, a financial expert, Egie Akpata, said they are real, as far as accounting standards and the regulators are concerned.
However, he said that the stock prices of some banks are so low in terms of earnings ratio and price to book ratio, that it is possible that the market has reservations about these results.
"Interest rate and withdrawal terms of savings accounts are set by CBN. Most savings account holders are not aware that if they have more than four withdrawals, they don't get interest that month.
"CBN should do more publicity to enlighten the public of this rule. They can also increase the withdrawals to a more practical level. But savings account holders need to explore the many investment options out there if interest is their primary reason for having a savings account balance. Based on current rules, a savings account is one of the worst ways to invest for interest," he said.
The Guardian's recent random sampling of 100 persons in Lagos State found that 90 do not know what would make them lose their right of earning interest rate on savings account.
About 80 said they were aware that there is interest rate for savings deposit, while 70 said they had never received interest rate on their accounts before.
Surprising, 10 persons had an idea of the number of withdrawals that would make them lose interest rate on savings accounts, but only three got it right.
Coincidentally, one works in the bank and two others are family members of journalists. All of them have two savings accounts each.
Last weekend, The Guardian surprisingly discovered a directorate level financial analyst in one of the investment banks in the country, who confided in The Guardian that the knowledge of a number of withdrawals that is associated with interest rate on savings accounts is new. Indeed, half knowledge is dangerous.
Certainly, the scarce answer to this question holds the key to tens of billions of naira not paid to customers, as interest rate and the reason majority of the customers are falling prey to banks by ignorance.
Worrisome also is the observation that the answer is so obscure that some banks' workers have no clue, while others are not sure, leaving only but few with accurate knowledge. Why is this knowledge such a scarce commodity? The answer is part of the huge billions banks make.