ZENITH Bank and United Bank for Africa (UBA) are the top Nigerian banks that recorded the highest salary growth for their employees in the first half of 2023, analysis have shown.
Meanwhile, the galloping inflation rate backed by regulatory charges, amongst others, pushed 10 banks’ total operating expenses by 26 percent to N1.19 trillion in half year (H1) ended June 30 from N943.23 billion in the half year ended June 30, 2022, analysis of the banks’ results revealed.
According to the latest financial statements of nine banks listed on the Nigerian Exchange Group (NGX), Zenith recorded the largest increase in personnel expenses of 43.9 percent to N56.3 billion in H1 from N38.9 billion in the same period of last year, followed by UBA, which rose by 32.7 percent to N69.4 billion from N52.3 billion.
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Unity and First City Monument Bank grew by 27.7 percent each, Wema Bank rose by 24.6 percent, Stanbic IBTC (19.4 percent), FBN Holdings (17.9 percent), Fidelity (13.8 percent) and Guaranty Trust Holding Company (GTCO) (12.4 percent).
Personnel expenses encompass all of a company’s expenditures in relation to staff remuneration and welfare within a specific financial reporting period. Such expenses may include salaries/wages, other benefits like health insurance costs, pensions and training.
The increase of 25.9 percent is 12 percentage points higher than the 13.9 percent increase in H1 last year.
“A lot of banks increased salaries in June, while some even doubled theirs. So, I expected the increase to reflect in their half-year results,” Ayodeji Ebo, Managing Director/Chief Business Officer at Optimus by Afrinvest Limited, said.
He added that banks are trying to cover up the high inflation and transport costs especially for those at the lower rank, by as close to 100 percent.
The Federal Government reforms, such as the removal of petrol subsidy and naira devaluation implemented in the second quarter of the year surged the cost of living of cash-strapped consumers.
With higher transportation fares, many employees are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.
This move made some banks to re-evaluate their employee benefits by increasing salaries and wages. Some of the banks were Wema, Zenith, GTCO, UBA and Union Bank.
In June, GTCO announced an increase in salaries for its junior and contract staff to help them cope with the increasing cost of living. The following month, Zenith announced the implementation of a company-wide salary increment for its entire staff.
That same month, UBA said its board of directors had immediately implemented a cost of living adjustment for its staff. The bank had previously implemented a cost of living adjustment for staff on October 1, 2021 and on April 1, as a result of the persistent economic challenges.
“We are aware of the impact of recent economic policy pronouncements on prices and your capacity to meet your financial commitments to family and personal needs. As an organisation focused on the wellbeing of our people, I am pleased to inform you that the Board of UBA Plc has approved a welfare allowance for all employees,” Oliver Alawuba, Chief Executive Officer at UBA, said.
Apart from GTCo and Zenith, Fidelity also commissioned more staff buses to ease the burden of commuting for employees.
Data from the NGX shows that Zenith’s Profit After Tax (PAT) rose by 161.9 percent to N291.7 billion in H1, UBA reported a growth of 437.8 percent to N378.2 billion, GTCO’s PAT saw an increase of 261.6 percent to N280.5 billion and Fidelity grew by 165.9 percent to N62 billion.
In a recent article, HR Daily Advisor, a global multi-platform media company said that higher wages may improve the public’s perception of an organisation and lead to an improved reputation.
“Employees will be more likely to stay if the pay level is better than your competitor’s, reducing recruiting costs due to fewer turnovers and resulting in having to train fewer new people,” it said.
It added that better-paid employees may mean more satisfied employees, boosting employee morale.
“And higher wages may mean employees can meet their financial obligations with less stress and less stress is better for both the employee and the employer,” it said.
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