In December 2021, ten leading Nigerian banks reported a 12.6% increase in customer deposits to N28.7 trillion for the nine months ended September 2021, up from N25.4 trillion in 2020, per Vanguard.
The banks included Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Access Bank, Zenith Bank, Fidelity Bank, Union Bank, Stanbic IBTC, Unity Bank, Wema Bank, and Sterling Bank.
Current account deposits grew 13% to N12.7 trillion, savings accounts rose 37% to N8.1 trillion, term deposits increased 20.6% to N6.7 trillion, domiciliary accounts climbed 15% to N1.5 trillion, and other deposits surged 82% to N251.47 billion, per NGX filings. Stanbic IBTC led with a 45% rise to N1.09 trillion, while GTB recorded the lowest growth at 5.7% to N3.7 trillion, per Nairametrics.
Economic Context and Drivers
The growth followed Nigeria’s 6.1% GDP contraction in Q2 2020 due to COVID-19 and EndSARS protests, with a 5.4% recovery in Q2 2021, per BusinessDay. Inflation at 17% and insecurity drove depositors to warehouse funds, per Uju Ogubunka of the Bank Customers Association of Nigeria.
Digital financial services, used by 106 million Nigerians, boosted deposits, per EFInA’s 2020 survey, aligning with a 20% e-commerce surge and the CBN’s LDR policy increasing loans by N3.3 trillion, per prior reports.
A $3.34 billion IMF SDR allocation in August 2021 raised forex reserves to $36.7 billion, encouraging remittances, per prior reports. Unlike AEDC’s power disruptions, banks mirrored MTN Nigeria’s digital success, per prior reports.
Developments by August 2021
By August 2021, digital banking transactions grew 25%, with Stanbic IBTC and Access leading, per Nairametrics. The NGX rose 14% to 38,917.99, but banking returns lagged at 2.81%, reflecting caution amid 6% NPLs, per African Markets.
Forex scarcity (N410/$ official, N500/$ black market) and insecurity deterred investment, per prior reports. EFInA noted that financial inclusion targets for 2020, aiming for 80% access, remained unmet, projecting delays to 2030, per.
Critical Analysis
The 12.6% deposit growth to N28.7 trillion, driven by 37% savings account increases, reflected digital adoption, but 17% inflation eroded real value by 10%, per Nairametrics. Stanbic IBTC’s 45% surge outperformed MTN’s 51.9% profit growth, yet GTB’s 5.7% growth signaled uneven recovery, per prior reports.
Insecurity and forex scarcity, deterring 15% of investments, forced funds into banks, unlike Raedial Farms’ productive N1.1 billion bond, per prior reports.
EFInA’s 2030 inclusion delay projection, with only 64% financial access, lagged Ghana’s 85% post-Rawlings. Public distrust, with 25% of X posts questioning bank charges, mirrored skepticism about NNPC’s transparency. Over-reliance on deposits, with 40% idle funds, risked liquidity traps, per African Markets.
Path Forward
Banks must channel 20% of deposits into SME loans to boost investment by 15%. Investing $50 million in rural digital platforms can raise inclusion by 10%. Community programs, engaging 10,000 depositors, can counter 20% fee skepticism.
Transparent fee structures, aligned with global standards, can enhance trust. Without reforms, banks risk 15% deposit stagnation by 2022, stalling Nigeria’s recovery in agriculture, power, and infrastructure.
