Three Nigerian banks, Access, Stanbic IBTC and Union have average wages that are well above the industry average, BusinessDay’s analysis of the 2017 annual report of 13 listed banks on the Nigerian Stock Exchange shows.
Access Bank tops the list with an average wage per employee of N16.19 million, a 2.92 percent upgrade from the N15.73 million it shelled out in 2016. The average wage per person for the tier one lender is more than double the industry average of N7.98 million.
Sources say Access Bank is offering superior pay to its staff in a bid to avert the threat of a brain drain that is sweeping across the financial industry. Stanbic IBTC ranks second, with an average wage per employee of N10.95 million, 10.6 percent more than the N9.90 million paid in 2016. Stanbic IBTC is majority owned by Standard Bank of South Africa which recently increased its stake in the bank, following a string of good performance that has seen the bank report one of highest returns on equity (ROE) in the country.
Union Bank came a close third with an average staff wage of N10.54 million, which was 4.4 percent lower than the N11.03 million incurred in 2016.
Wema bank came next with an average pay of N9.68 million.
Deputy managing director of Wema Bank, Ademola Adebise, said in an interview with BusinessDay in March that the bank was hiring younger staff to lead its digital revolution. Wema saw a 2.3 percent rise in employee strength to 1,034 from 1,011 year-on-year.
The two other banks that shelled out more than the industry average on staff wages and salaries in 2017 were Ecobank Transnational Inc. and First Bank of Nigeria Holdings (FBNH).
The average pay per employee at ETI and FBNH came to N8.74 million and N8.47 million respectively. BusinessDay analysis shows that all 13 banks paid out a total of N560.7 billion in wages and salaries to a total of 74,426 staff in 2017, a marginal decrease of less than 1 percent from the N560.8 billion paid out to some 73,605 staff in 2016.
On a cumulative basis, average wages in the 13 commercial banks dipped 1.5 percent to N7.98 million in 2017 from N8.1 million the previous year, as employment in the industry rose 1 percent while cumulative wages slightly fell.
Only Fidelity Bank, FCMB and Union Bank of the 13 surveyed banks recorded a decrease in average wage for the period. The growth in average pay of workers at Sterling, Diamond and First Bank Nigeria Holdings was marginal at 0.27 percent, 0.81 percent, and 1.53 percent respectively.
Tier-one lender, Access bank recorded a 2.9 percent growth in average wages.
The banks that saw relatively higher average wages were Stanbic IBTC, UBA, GTB, and Zenith, with an average growth of 9 percent.
“Very few banks have implemented salary increases in the last one year,” a management level banker at one of the tier-one banks told Business Day.
“The motivation behind Stanbic and UBA’s salary raise was a surge in profitability, while some simply upped wages for staff retention given the brain drain in the system,” the management level banker said anonymously by phone.
Stanbic IBTC recently implemented wage increases in March, and unsurprisingly led the banks with the most wage rise last year, after a 10.6 percent jump to N10.9 million from N9.89 million in 2016.
The tier-one lender saw average pay rise on the back of a 14.6 percent upgrade in wages to N33.1 billion. The bank also employed more people in the period following a 3.6 percent rise in staff numbers to 3,031 from 2,926 the year before.
Following the precedent of Stanbic IBTC, average pay is likely to rise this year, according to Aderonke Adesola, a banking analyst at the Lagos-based investment bank, Chapel Hill Denham.
“Last year was a recovery year but some banks still struggled with asset quality and as such were a bit constrained in implementing pay increases,” Adesola said. “But as asset quality improves, the banks are in a better place to raise employee salaries this year,” she added.
Guaranty Trust Bank, the country’s largest bank by market capitalization, also raised employee salaries in January to the surprise of unsuspecting employees, a bank source said.
“The motivation was to retain our best hands and cushion the impact of low purchasing power,” a source from the human resource department said.
“We have also had a number of promotions recently and that has translated to some staff earning more.” GTB, which saw the third largest increase in average pay, saw a 10.17 percent growth in average wages to N5.79 million from N5.26 million in the period under review.
GTB’s total wages rose at a faster pace than new employees, following a 10.8 percent growth in wages and a 0.6 percent growth in new recruits. United Bank for Africa (UBA) was second in the league of biggest average wage rises, with a 10.58 percent jump to N5.6 million in 2017 from N5.06 million in 2016. For the tier-one lender, the pay rise was driven by an increase in overall wages despite a cut in new recruits, following a 7.13 percent jump in total wages to N66.8 billion compared to a 3.1 percent reduction in the number of staff employed to 11,925 from 12,308 year-on-year.
“There is a massive brain drain in the sector, especially at the non-management level, and the best hands are migrating to Canada and the likes, where they are buoyed by attractive pays,’’ another banker told Business Day on condition of anonymity.
“As the sector awakens to this threat, however, I expect more banks to start offering more competitive wages within the next one year,” the banker said.
“Salaries have been flat and I can’t think of anyone who has had a pay raise in my bank in the last one year.” Stagnant wages have made it especially hard for bankers, who along with workers in other sectors, are reeling from a more than 50 percent naira devaluation in the last two years and record-high inflation that has battered purchasing power.
The situation has even led to widespread calls by government workers for an increase in minimum wage from the current N18,000, but they must wait till September for the recommendation of a committee that has been set up by President Muhammadu Buhari to look into an increase.
The spring in the step of Nigeria’s economy showed up in the results of the country’s banks in 2017, following improved profitability. An improvement in unpaid loans, higher interest income from holding government debt and a rise in profit helped lenders bolster their capital buffers, although there is room for improvement.
The gross domestic product of Africa’s largest oil producer expanded in 2017 by 0.95 percent, after contracting the year before for the first time in 25 years. Growth slowed in the first quarter of 2018 to 1.95 percent from 2.11 percent the quarter before but was a yearly increase from Q1 2017.
An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the nation’s lenders.
Culled from: Business day Nigeria