Elements of Banking Overview

The income generated from placing funds, such as loans or investments.

Charges levied on foreign currency exchange transactions, reflecting the volume of the transaction.

Fees charged for managing accounts, including maintaining balances and processing transactions.

Fees associated with setting up letters of credit, reflecting the value of the transaction.

Fees associated with collecting bills on behalf of customers, reflecting the activity on the current account.

Banking services accessible through a mobile phone application.

A digital banking service accessed and managed through a web browser on a computer.

A service offered by banks that allows clients to make digital payments and transactions via a dedicated mobile application.

A Mobile Banking application designed for easily obtaining Digital loans.

Banking services that allow customers to conduct transactions exceeding a defined threshold, typically N2million daily.

A digital feature that allows customers to check the name of a beneficiary before making a funds transfer.

A service offered by banks that provides customers with a comprehensive menu of options for managing cheques including requesting, confirming, and issuing instructions.

A feature that allows customers to locate the nearest Access Bank branch or ATM.

Using a website or mobile app to access your bank account and make transactions like checking balances or transferring funds.

Plastic cards linked to your bank account for purchases or borrowing money. Debit cards pull money directly from your account, while credit cards allow you to borrow money and pay it back later.

Services like savings accounts, certificates of deposit (CDs), and investment opportunities offered by banks to help you grow your wealth.

Banks act as intermediaries, facilitating the exchange of one currency for another for travelers or businesses.

Banks help businesses and individuals import and export goods by handling payments, providing guarantees, and managing international transactions.

A method of international payment where a bank guarantees payment to the seller on behalf of the buyer, reducing the risk for both parties.

A method where a bank acts as an intermediary, transferring funds from the buyer's account to the seller's account, ensuring safe and secure international payment.

Banks provide a secure and efficient way to manage your money, make payments, and grow your wealth through various services.

The core capital of a bank, consisting of shareholders' equity and retained earnings. It measures a bank's financial health and helps absorb losses without disrupting operations.

A bank's supplementary capital, which is less reliable than Tier 1 capital. Includes revaluation reserves, hybrid capital instruments, subordinated term debt, general loan-loss reserves, and undisclosed reserves.

Regulations aimed at ensuring the stability and integrity of the Nigerian financial system, protecting depositors, and preventing fraudulent activities.

The primary law governing the activities of banks in Nigeria.

Banks are vital to the economy, and their failure can have widespread consequences. Regulations help to mitigate risks and protect the financial system.

Banks are required to maintain sufficient capital reserves to absorb potential losses and ensure their continued operations.

A financial instrument issued by a bank on behalf of a buyer, guaranteeing payment to a seller upon delivery of goods or services. The bank acts as a third-party guarantor, ensuring payment even if the buyer defaults.

Banks must be able to meet their daily financial obligations to customers, including withdrawals and other transactions.

Lending practices should be responsible and prudent to minimize the risk of defaults and protect the bank's financial stability.

A method of payment where a seller's bank acts as an intermediary, holding title documents until the buyer's account is funded and payment is made. The bank does not guarantee payment to the seller, but ensures documents are released only after payment.

The central bank's actions to control the money supply and interest rates to influence economic activity.

The monetary authority responsible for implementing monetary policy and overseeing the financial system.

Financial institutions that act as intermediaries, connecting borrowers and lenders. They help to allocate funds and facilitate financial transactions in the economy.

Tools used by the central bank to influence monetary policy, such as changing interest rates, reserve requirements, or open market operations.

The cost of borrowing money, typically expressed as a percentage of the principal amount.

The overall availability of funds in the economy. It can be influenced by monetary policy actions.

A loan is considered performing when both principal and interest payments are made on time and according to the agreed terms.

A loan becomes non-performing when either interest or principal remains unpaid for 90 days or more, or when interest payments are capitalized, rescheduled, or rolled over into a new loan for a period of 90 days or more.

A non-performing loan is classified as Substandard if the overdue amount exceeds 90 days, Doubtful if it's between 180 and 360 days overdue, and Lost if it exceeds 360 days overdue.

Banks set aside funds, called provisions, to cover potential credit losses. These provisions depend on the perceived risk of default for specific credit facilities.

Provisions are calculated based on the classification of the non-performing loan. For Substandard loans, 10% of the outstanding balance is provisioned, for Doubtful loans it's 50%, and for Lost loans, the full outstanding balance is provisioned.

Banks also make a general provision, typically 2% of their net assets, to account for the inherent risk associated with all credit facilities.

Provisions lower the value of assets on a bank's balance sheet and reduce profits. They are crucial for reflecting the true financial health of a bank.

CAMELS is a rating system used to assess the overall financial health of a bank. Provisions play a key role in determining a bank's Capital adequacy, Asset quality, Management quality, Earnings quality, Liquidity, and Sensitivity to risk.