HomeNewsNigerian Banks Hire More Staff, Double Wage Bills Amid Rising Inflation

Nigerian Banks Hire More Staff, Double Wage Bills Amid Rising Inflation

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KEY POINTS


  • Nigerian banks have significantly increased hiring and doubled their wage bills to cope with inflation and rising operational demands.
  • First Bank’s personnel expenses rose by 45%, reflecting the broader trend across the banking sector.
  • Banks are balancing higher labor costs with efforts to maintain profitability in a challenging economic environment.

Lately, Nigerian banks have experienced high operational costs, and many of them have had to expand their employees and double their wages due to inflation and increased service requirements. Some of the large banks such as First Bank and UBA have recently intensified their recruitment drive which has boosted the personnel expenses. This increase is due to the general economic challenges that the institutions have been facing in the country in their bid to offer quality services and meet the needs of their customers.

As inflation in Nigeria rises to its highest levels, banks have been forced to review the salaries upwards and recruit more employees to address the challenges of operations and to compete for the scarce human resource in the market. Overhead costs of some of the largest banks have increased significantly, a sure pointer to the fact that cost of living and inflationary pressures have led to increased wages.

Increase in wage bills by 100% in the banking sector

First Bank of Nigeria, one of the largest banks in the country, said that personnel expenses rose by 45 percent and that its wages reached N62.3 billion in the first half of 2023 compared to N43.02 billion in the previous year. Similarly, the wage expenses of UBA and other leading financial institutions have increased drastically due to an increase in headcount to meet services demand and customers’ expectation.

BusinessDay has it that the increase in wage bills is as a result of inflation which has not only impacted on the general cost of goods and services but also the cost of doing business including the banking sector. With inflation on the rise, the challenge of cost control is becoming a major headache to banks as they seek to balance between the ever-rising costs and profitability.

As much as banks require more human resource to attend to the increasing operational demands, the costs that come with this have placed the banks in a fix. Increased wages and other inflationary costs have eroded the profit base and reduced the scope for manoeuvre among banks.

The final topic was the issue of managing rising costs and inflation pressures.

The Nigerian banking industry is under pressure to be profitable in a challenging environment. Inflation compounded by constant devaluation of the naira and recurrent economic woes is plunging the banks into greater operating overheads. This is just one of the many costs that banks are struggling to meet, and they also have to deal with increasing costs of utilities, transportation and technology.

However, to absorb the above rising expenses, most banks are looking forward to finding ways of cutting down their costs, for instance, going for automation of the business using digital banking to remove the need for several branches. Nevertheless, there is always some cost, which is associated with the implementation of the digital environment that has to be infused with technology investments for the effective functioning of banking services as well as cybersecurity prevention costs.

However, Nigeria’s banks continue to maintain their long-term strategic vision and objectives. They are trying to maintain the employment growth in parallel with the technological advancement in order to sustain their customer service in the face of inflation and economic instability.

Hope for economic stability

Despite the current unfavorable economic conditions, Nigerian banks are optimistic that inflation will reduce and therefore enhance the management of cost in order to support the profitability of the banks. CBN’s attempts to curb inflation rate and the banking sectors ability to make adjustments for these challenges are not entirely bleak. Until then, banks will remain in a quandary over the twin issues of increasing personnel costs and the need to adapt to a more digital economy.

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