Nigerian banks see inflation drive wage bills up in H1’24

Onome Amuge

Financial data from Nigeria’s top banks has shown that many commercial banks in the country have been experiencing rapidly increasing operating costs as a result of soaring wages and salaries for new hires, due to worsening inflation in the country.

As a result, some banks have been forced to increase the pay of new employees by almost double, within just over a year, to cope with the inflationary pressure. 

Financials from the 10 banking groups in Nigeria, including Access Holdings, UBA, FBN Holdings, GTCO, Zenith Bank, Stanbic IBTC Holdings, Wema Bank, FCMB Group, Sterling Holding Company, and Jaiz Bank, revealed a 96 percent increase in wages and salaries from the first half of 2023 to the first half of 2024.

The data indicates that the 10 banking groups incurred N615.8 billion in wages and salaries in H1 2024, a jump from the N314.4 billion incurred in H1 2023, largely attributed to worsening inflationary pressures in the country.

The financial data from the 10 banking groups revealed that Access Holdings incurred the highest wage bill among the banks, with a 145 percent increase in personnel expenses from N61.9 billion in H1 2023 to N151.5 billion in H1 2024. 

Similarly, First Bank reported a 110 percent year-on-year increase in personnel expenses, rising from N63.9 billion in H1 2023 to N134.2 billion in H1 2024.

The financials also indicated that UBA’s personnel expenses grew 92 percent, reaching N126.6 billion in H1 2024, from N65.9 billion in H1 2023. 

Likewise, Zenith Bank’s personnel expenses soared by 64 percent, reaching N63.5 billion in H1 2024, up from N38.6 billion in H1 2023. 

Stanbic’s wage expenses increased by 44 percent, climbing from N28.2 billion in H1 2023 to N40.6 billion in H1 2024.

In the same vein, GT Bank’s personnel expenses experienced a  98 percent growth, rising from N19.9 billion in H1 2023 to N39.3 billion in H1 2024. 

FCMB Group’s personnel expenses also increased significantly by 74 percent year-on-year, climbing from N15.2 billion in H1 2023 to N26.6 billion in H1 2024.

The trend of significant increases in personnel expenses was also experienced by Wema Bank which reported a 77 percent jump in personnel expenses, from N8.8 billion in H1 2023 to N15.6 billion in H1 2024. 

Sterling Bank also saw a 41 percent rise in personnel expenses, climbing from N8.9 billion in H1 2023 to N12.5 billion in H1 2024.

In addition, Jaiz Bank’s personnel expenses increased 78 percent, soaring from N3.1 billion in H1 2023 to N5.5 billion in H1 2024.

While some of the banks experienced marginal increases in employee count, the financial reports indicate that the majority of the growth in personnel expenses can be attributed to the  wage increases for existing employees.

For instance, Zenith Bank reported a 511-employee increase between H1 2023 and H1 2024, going from 8,635 employees to 8,146 employees, but this only represented a marginal growth in headcount. Similarly, UBA’s employee count  increased by 338 (3%), from 9,751 in H1 2023 to 10,089 in H1 2024.

With inflationary pressures taking a heavy toll on both individuals and businesses, companies have been compelled to increase wages for the few remaining staff to maintain their workforce. 

In the case of most banks, they have not only been faced with increased wage expenses, but also increased outsourcing costs, which are expenses associated with hiring third-party contractors to perform specific tasks.

The trend of substantial increases in outsourcing costs was largely observed at GT Bank and First Bank, which reported significant year-on-year growth in these expenses.

GT Bank’s outsourcing costs experienced a 69 percent rise during the half-year, increasing from N8.6 billion in H1 2023 to N14.5 billion in H1 2024. 

Similarly, First Bank reported an almost 300 percent increase in outsourcing costs during the half-year, jumping from N4.3 billion in H1 2023 to N16.4 billion in H1 2024.

Wema Bank also reported a significant increase in its outsourcing costs, experiencing a 272 percent year-on-year growth in this expense. Specifically, the bank reported N8.85 billion in outsourcing costs for the H1 2024 period, higher than the N2.38 billion reported for H1 2023.

The sharp rise in labour costs for banks has resulted in some of them becoming the top-paying employers in the country. Stanbic IBTC Holdings, for instance, reported an average monthly salary of N2.11 million per employee for H1 2024, while Zenith Bank reported an average of about N650,000 per month during the same period. 

UBA, on the other hand, reported a comparatively higher average of N2.09 million per employee, however, this figure is inclusive of their foreign operations, which employs