Commercial banks make profit and obtain money from their operation through several means. Viz-bank obtains deposits from their customer and pay the customers interest which in West African varies from 2% to 3%. The amount of interest paid depend on how short or long the notice which customer have to give to them before withdrawing their money out to trades, produce buyers, building contractor and local manufactures, they change interest which are usually over5%
Banks obtain money for their operation by discounting bills of exchange. This bills of exchange are mainly treasury bills such as those frequently sold by the Nigerian Central Bank which mature in 19 days. Banks invest in short term securities. These investments are usually those that can readily sold in the stock exchange market. These investments bring some profit to the banks.
Customers to the bank can instruct them to transfer a country to another for instance, a customer to a bank in Warri to Benin or from Nigerian to America. The bank receives some interest for the job done.
Many West African importers of consumer goods and exporters of cash crops like cocoa, ground-nuts use the commercial bank which has branches in major world capitals as their agents. The banks are paid by these exporters and importers for performing these services. All these serve as the sources of income to commercial banks.
Banks obtain money for their operation by discounting bills of exchange. This bills of exchange are mainly treasury bills such as those frequently sold by the Nigerian Central Bank which mature in 19 days. Banks invest in short term securities. These investments are usually those that can readily sold in the stock exchange market. These investments bring some profit to the banks.
Customers to the bank can instruct them to transfer a country to another for instance, a customer to a bank in Warri to Benin or from Nigerian to America. The bank receives some interest for the job done.
Many West African importers of consumer goods and exporters of cash crops like cocoa, ground-nuts use the commercial bank which has branches in major world capitals as their agents. The banks are paid by these exporters and importers for performing these services. All these serve as the sources of income to commercial banks.
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