How Do Banks Make Their Money?

Richybank,

Almost everyone is right.

It depends on the kind of account you operate; savings or current. If you operate savings account, no charges will be made on your money instead you receive interest-which amounts to nothing- on your money. However, if you receive text messages and emails from your bank, there are fees charged to it - though very little.

If you operate current accounts, you rather pay some charges to the bank instead. With your current account, you make use of cheque books which has been overridden ATM. If you withdrew with cheques then be ready to pay charges too.

If you collect loan(s) you will be charged.

Overall, either savings or current, a charge (COT) is deducted from our account if your cash a certain amount of thousands (N5 per a thousand).

However, banks do deduct some hidden costs/charges which will be known to the customer after a thorough check on the statement of account.

Most Nigerians do not pick up their bank statement from their banks, so how would they know what is happening to their monies.

Example; I collected loan to run an international business, i was told what i will be charged but i wasnt told about other charges which later cropped up in my bank statement. What do you call that? Normal banking operation? I asked my banker and he told me that those monies were necessary. Well, I have collected the loan, what do I do. Another thing I looked at foolishly was that it was a little money (N200, N20,etc) put together amounts to about N500 or less. But this happens monthly and imagine if it happens to about 5000 nigerian, how much will that be monthly.

Well, lets hope someone will come to really sweep corruption out of Nigerian system.

Regards!

They simply makes it from us. Chikena!

Brotherly

Banks dey Run from Aba Road to obigbo With Molue in Ph, thats how they make their money

banks make their money in lots of ways: charges and commissions, differential between lending rates and deposit rates, investing in various businesses etc.

The problem with most Nigerian is that we hardly read the little print. We are eager to collect loans and do not take care/time to read about the other charges often called loan management fees/servicing charges etc but are just interested in the ineterest rate on the principal. Its the same everywhere. In UK, banks also charge for some text messages (not the free weekly ones that tell you of your account balance but do not tell you of debits/overdrafts to your account). Try and get an unplanned overdraft in UK and you'll pay £20 quid per month. And if you've been in the UK for less than one year forget getting a credit card or a planned OD.

Nigerian banks have however found ingenious ways of generating charges. The CBN allows that ATM withdrawals are not free. It now leaves each bank with the modus operandi for charging customers. which is why First Bank charges NGN100 or so per month while banks like Oceanic/UBA/Zenith charge more than NGN5 even for using their own ATMs per transaction. UBA goes further by charging what is called a withdrawal from another branch or system charge if you use an ATM not resident in the branch where you opened your account.

Talking of investments, your best choice would be banks. They earn steady income though the issue of bad debts is a worrying one. The minimum amount to withdraw over the counter is often above NGN40,000.00 and yet the maximum amount you can often withdraw from each machine is often NGN20,000.00. Which means each person wishing to withdraw more than NGN40,000 will need to use the same ATM machine more than once and thus generate more income for the bank.

Those who say banks do not give out loans should be wary of such comments. What of those buy generator/laptop/car/fridge-freezer promos? Or is their tendency to loan to people with steady income a crime? Will anyone loan out funds to a butcher in Bodija market or a bus conductor in Iyana Ipaja? Is the present boom in the Nigerian property market not being fuelled by mortgages from banks? The only issue is that a teacher in a secondary might not be able to access the loans.

Afterall even in the West, the fact that you have a good credit record in US is of no matter if you move to UK or Germany. You need to start afresh.

But going back to the real issue, investing in bank stocks is a wise choice. Take your time to analyse the stocks. The charges turn to more profits for the banks and thus more dividends for the investor

In banking stocks i would recommend:
First Bank,
GTB Plc
and to a lesser extent
Zenith bank.

Talking of charges, how come a manufacturing company's stock price rises when it lays off?

The first two have a track record of good corporate benefits performance, steady even if small growth.

helo!!!!!
     banks makes moni from dead pple,who no get person to claim the moni.