TSA, Zero-CoT To Chop Deposit Banks’ Revenues By 20%

Nigerian banks are grappling with an estimated 20 per cent reduction in their revenues following implementation of the Treasury Single Account (TSA) as well as removal of Commission on Turnover (CoT)

With  predictions that the Nigerian economy will face hard times in 2016, the banking sector may be worst hit as the impact of TSA and removal of CoT fully sinks in.

While banks had so much free funds in their coffers from federal government revenues, the implementation of TSA has already seen more than N2 trillion withdrawn from the banking sector, a figure that would continue to increase.

The Central Bank of Nigeria, (CBN), zero-CoT directive which kicked off in January  is widely believed to further reduce banks’ revenue generating ability in 2016.

The CBN had introduced a gradual phase out of CoT from N3 per mile in 2013, to N2 per mile in 2014, N1 per mile in 2015 and zero-CoT in 2016.

Commenting on this, the managing director and chief executive of Afrinvest, Ike Chioke, has said many banks in the country will have to lay off staff by the second quarter of the year to remain profitable.

Speaking in Lagos at the weekend, Chioke said he expects Nigerian banks to consolidate and or raise capital in the course of the year. He noted that banks will have to make more provision for losses in the 2016 financial year as companies begin to feel the crunch of the economy.

“If they can raise capital and stay independent that will still be good. We are also projecting that we will soon see the effect of all these things on the banking sector. ”

Likewise, analysts at Financial Derivatives Company Limited in the monthly economic bulletin noted that the removal of the Qcommission on turnover and the single treasury account is expected to wipe out 20 per cent of revenues in the banking industry.