How Do Banks In Nigeria Make Money?

February 19, 2020

How do banks make money in Nigeria? Have you ever wondered?

Bankers are allegedly some of the most well-paid people for entry-level positions but it’s not pretty clear where the income comes from.

So, how do financial institutions earn this money?

Fees, fees, everyone gets a fee.

This is one of the easiest ways banks make a tonne of money from people. Imagine card maintenance fee, SMS charges, Atm fees for withdrawing from other banks, being collected from a large number of people. In the battle of banks vs customers, banks always walk away with a neat sum. Something light.

From Deposits.

It’s like this, your bank says take this interest for saving your money with us, and they, in turn, loan out your money to other customers at a high-interest rate and make more money than whatever you are getting as interest returns.

The game is the game.

Don’t panic about the lending, your money is insured against loss by the Nigeria Deposit Insurance Commission.

Income from investments.

This ranges from Treasury bills to Bonds to Real estate. Essentially, longterm assets that can be profitable to them is what they invest in. Some with a lot of money go as far as investing in big building projects either to resell or to rent out.

So, there you have it. A summary of how banks in Nigeria make money. Did I miss any? Let’s have a conversation in the comment section.

Hassan Yahaya

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