Five attributes of Highly Profitable Banks, beyond the bottom line

Reap & Arcenciel Limited recently investigated the fundamentals of the banks that are hitting the big numbers in Nigeria. Numbers tell the difference between a successful organisation and a failed one. Our findings reveal the followings as attributes common to the highly profitable banks, which we believe also apply in other industries:

Deposit driven by service, not loans: Deposits of highly successful banks, particularly at the retail end, are service rather than loan driven. Many customers are attracted by service efficiency and not the prospect of getting a loan; the reverse is the case in marginally profitable banks.

Highly Profitable Banks groom leaders for their Industry: Many CEOs and EDs in peer or competing companies, at some point in their careers, passed through these highly profitable banks. By producing individuals that eventually lead other companies, highly profitable banks shape the tradition that ultimately define the industry.

Many Senior staff in highly profitable banks are lifers rather than immigrants: Employees in highly profitable banks are usually on for the long haul. These institutions offer the ultimate in terms of career rewards and life fulfilment. Many people who leave these institutions for peer banks do so, negotiating on very strong positions.

Highly profitable banks are pioneers of new Industry developments: New industry concepts usually come from highly profitable institutions. Others follow. Other industry players wait for them to move before they do.

Deposit largely private and not public sector: Though introduction of the Treasury Single Account (TSA) has reduced the dependence of on FG-deposits, investigations show that banks who were most affected when this was introduced were marginally profitable banks. They had a higher level of public-sector deposit to total deposit ratios than the highly profitable banks.

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