By Francis Ogwo
Latest data from the National Bureau of Statistics (NBS) has revealed that the total staff strength of the Nigeria’s Deposit Money Banks (DMBs) dropped by 5,547 employees between the end of September 2019 and the end of September, 2020
According to the “Selected Banking Sector Data: Sectorial Breakdown of Credit, ePayment Channels and Staff Strength (Q3 2020)” report released by the NBS at the weekend, DMBs’ staff strength was 95,888 as at the end of September 2020 as compared with 101,435 in the same period last year.
This implies that 5,547 (5.5 per cent) employees either resigned or were sacked by the financial institutions during the period under review.
The figure also shows that the decline in banks’ workforce dropped downwards steadily from Q3 2019 meaning that the staff strength of DMBs, which stood at 81,682 as at Q3 2015, increased to 82,470 and 82,531 in Q3 2016 and Q3 2017 respectively. It further rose to 102,821 as at Q3 2018 before dropping to 101,435 at the end of September last year.
This was with a breakdown of the Q3 2020 numbers showing that at 95,888, banks’ staff strength was 1,390 more than the 94,498 recorded for the previous quarter. The figure stood at 96,975 in Q1 2020.
Further analysis of the NBS’ Q3 2020 data indicates that of the industry’s total staff strength of 95,888, the nation’s 22 commercial banks accounted for 93,779, six merchant banks accounted for 643, while two Non-Interest Banks had a combined workforce of 1,466 employees.
In addition, the NBS’ latest numbers show that commercial banks’ staff strength was composed of 210 Executive Staff; 17,331 Senior Staff; 36,665 Junior Staff and 39,573 Contract Staff. This means that junior and contract staff accounted for 81.3 per cent of commercial banks’ total workforce.
Analysts note that as part of efforts to stay profitable amid rising competition, coupled with a harsh operating environment, DMBs have, in recent years, resorted to hiring mainly employees that fall into the category of workers, known as contract or outsourced staff.
The Nigeria Deposit Insurance Corporation (NDIC) had issued a warning against the practice due to what it says is the involvement of such staff in bank fraud. In fact, in 2017, NDIC disclosed that findings by its research team revealed that most of the insider abuses perpetrated by banks were by contract staff, who were given sensitive duty schedules involving direct dealings with customers’ money and records. Commenting on the recent decline in the number of employees hired by banks, attributed the development to the impact of the coronavirus (COVID-19) pandemic. The firm, however, pointed out that despite the reduced hiring, occasioned by the pandemic, banks’ personnel costs rose in the first half of this year.
It stated: “The decline in banking sector staff strength does not come as a surprise as the coronavirus outbreak in Nigeria led to many banks closing some of their branches across the country which may have led to some redundancies, but more importantly the pandemic must have restricted expansion and new hiring.
“Nevertheless, the yearon- year decline in the staff count of the Nigerian banking sector did not feed into lower personnel expenses in H1 2020.
“For our eight coverage banks, total personnel expenses grew by 7.6% year-on-year to N227.5 billion in H1 2020 from N211.4 billion in H1 2019.
“The increase was largely driven by double digit growth in UBA (up 19.9% y/y) and Access (up 16.0% y/y). In particular, Access concluded an acquisition which may have impacted H1 2020 personnel costs.
“For UBA, we reckon that the bank implemented an upward pay review in Q4 2019, thus the low base of H1 2019 was responsible to steep y/y rise in personnel cost.” Also five DMBs which include Access, Zenith, UBA, GTB and Fidelity – spent a total of N230.98 billion on personnel expenses in the first nine months of this year.”
The figure is N19.70 billion more than the N211.28 billion the lenders spent on staff costs in the corresponding period of last year.
Nigeria is home to a concentrated banking sector, with the 5 largest banks accounting for 62% of total commercial bank’s assets in 2016. The remaining 17 banks held 38% of the market-share in total.