Nigerian Banks Turn To Renewable Energy To Cut Cost
In a bid to cut the increasing cost of running their branches across the country, many Deposit Money Banks (DMBs) are now opting for renewable energy.
Lesdership gathered that the new strategy by the banks is to enable them spend less on diesel and maintenance of their power generating plants.
While some of the banks are already at the pilot stage of test-running solar panels in some of their branches, others have perfected the use of inverters in running their Automated Teller Machines (ATM) across the country.
It was also gathered that some of the banks now use Uninterrupted Power Supply (UPS) devices in some of their operations without reverting to power generating plants.
One of them, Sterling Bank, recently commenced the pilot scheme of its solar plan. Likewise, Fidelity Bank which spent over N372 million in 2015 on power generation said it has now adopted the use of UPS’ and inverters to power its ATMs and major operations.
This cost cutting measure has become even more popular among the banks as a recent directive from the federal government and tussle with labour unions put paid to their plans to cut personnel cost by shedding staff weight.
The managing director of Wema Bank, Segun Oloketuyi, said the bank had become very prudent in the management of its resources to deliver on its set goals.
He said one of the strategies the bank had adopted was to allow some of its departments that have no reason to stay beyond a certain time, close early, to reduce energy consumption.
LEADERSHIP reports that the price of diesel has lately, risen to as high as N210 per liter, spiking the cost of operations as irregular power supply has necessitated the use of power generating plants not only for the banking halls, but also for the ATMs.
Recall that in 2015 as well as early this year, at the peak of the fuel scarcity, many banks limited their hours of operation due to unavailability of diesel, while some banks could no longer operate their ATMs.
Consequently, some of the banks as a cost cutting measure, have resorted to the use of inverters to run their ATMs and for major operations.
Last year, five banks spent N18.78 billion on fuel and maintenance costs, an expense that is eating into their declining income.
While some banks with smaller branch network spent close to N400 million on fuel and maintenance costs, bigger banks with expansive branch network were the worst hit as they had to spend more on diesel and servicing of their power generators.
One of the top tier banks spent no less than N10.36 billion on fuel and generator maintenance in 2015 while another spent about N5.78 billion on generating power to run its operations last year.
The growing cost of operation, alongside the rising non-performing loans in the banking industry are evident in the six months’ result of banks for the first half of 2016 as they continued to post lower profits. Eight banks recorded a total profit of N111.13 billion, indicating a 14.3 per cent decline compared to N129.73 billion profit recorded in the first half of 2015. Although the 2015 results of the industry had shown a declining profit, there are indications that the situation would not get better as analysts predict a lower profit from the industry at the end of the 2016 financial year.
According to the Managing Director and Chief Executive of SunTrust Bank, Nigeria’s first full financial technology bank, Muhammed Jubrin, the cost of maintaining a large branch network has been a dead weight for the banking industry.
He stated that SunTrust Bank, which recently commenced operation, would only have the minimum number of branches required to operate as the cost of operation of most banks was growing under the weight of branch network which cost a lot of money to maintain.
According to experts, while most renewable energy options require higher capital investment initially, in the long run, the costs associated with generation and maintenance over the lifetime of the systems are marginal. As such, they are economically viable especially in developing nations.