Rising Inflation Drive Banks to Raise Staff Wages, Outsourcing Costs Skyrocket

Based on the data monitored by journalists, the total wages and salaries borne by ten prominent banking groups in Nigeria during the first half of 2024 (H1 2024) amounted to a staggering N615.8 billion.

This represents a significant surge of 96 percent compared to the N314.4 billion incurred by the same banks in the first half of 2023 (H1 2023).

The banking groups that incurred these costs include Access Holdings, UBA, FBN Holdings (First Bank), GTCO (GT Bank), Zenith Bank, Stanbic IBTC Holdings (Stanbic), Wema Bank, FCMB Group, Sterling Holding Company (Sterling), and Jaiz Bank.

Among these institutions, Access Holdings recorded the highest expenditure on wages, reporting N151.5 billion for H1 2024.

This figure reflects a dramatic 145 percent rise from the N61.9 billion it incurred during the corresponding period in 2023.

First Bank followed closely, with personnel expenses escalating to N134.2 billion in H1 2024, showcasing a notable year-on-year increase of 110 percent compared to N63.9 billion recorded in H1 2023.

In a similar trend, UBA witnessed an impressive wage bill growth of 92 percent year-on-year, as its wage expenditure reached N126.6 billion during the six-month period, up from N65.9 billion recorded in H1 2023.

Zenith Bank, another heavyweight in the banking sector, also experienced a substantial rise in its wage bill, which grew by 64 percent year-on-year to N63.5 billion, compared to N38.6 billion in H1 2023.

Stanbic, meanwhile, saw its wage expenses climb to N40.6 billion during the same period, up from N28.2 billion in H1 2023.

GT Bank reported an almost twofold increase in its wage bill, which surged by 98 percent year-on-year to reach N39.3 billion, up from N19.9 billion in H1 2023. FCMB Group’s personnel expenses grew by 74 percent, reaching N26.6 billion in H1 2024, compared to N15.2 billion in the corresponding period of 2023.

Wema Bank similarly experienced a significant 77 percent rise in its wage bill, which climbed to N15.6 billion from N8.8 billion in H1 2023.

Sterling Bank also saw an increase, though somewhat smaller, with a 41 percent year-on-year rise to N12.5 billion, up from N8.9 billion as of H1 2023.

Part of this increase in personnel costs is linked to an expansion in the workforce at some of these banks.

Data reviewed by BusinessDay revealed that this expansion, while moderate, contributed to the rising wage bills.

For instance, Zenith Bank increased its workforce by 511 employees between H1 2023 and H1 2024, bringing its total headcount to 8,146.

UBA’s workforce also saw a modest 3 percent increase, with its employee count rising from 9,751 to 10,089 during the same period.

The rising inflationary pressures affecting individuals and businesses have forced many companies, including banks, to significantly raise their staff wages.

Aside from salary hikes, banks have also seen an increase in outsourcing costs—expenses associated with hiring third-party contract staff.

For example, GT Bank’s outsourcing costs grew by 69 percent year-on-year, reaching N14.5 billion in H1 2024, compared to N8.6 billion in the previous year.

First Bank’s outsourcing costs skyrocketed by nearly 300 percent during the half-year, reaching N16.4 billion, a substantial rise from N4.3 billion in H1 2023.

Wema Bank also experienced a significant increase, posting N8.85 billion in outsourcing expenses for H1 2024, which represents a dramatic 272 percent growth from N2.38 billion incurred in H1 2023.

These increases in labor costs have positioned some of these banks as top-paying employers within the country.

Stanbic IBTC Holdings, for instance, reported that its wage per employee stood at N2.11 million per month in H1 2024.

In comparison, Zenith Bank’s average wage per employee was around N650,000 per month, which pales next to UBA’s figure of N2.09 million per month.

It is worth noting, however, that UBA’s workforce includes about 4,150 employees from its foreign operations.

Ike Ibeabuchi, an analyst specializing in emerging markets, offered some insight into the trends driving these increases in hiring and wages.

He emphasized that banks’ quest for expansion has fueled the hiring of more personnel, stating that “wage rises have become a sensible thing to do due to high inflation and naira devaluation.”