The effect of maintenance charge structures on profitability in banking: a case study of Citibank Nigeria
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Background of the Study
Maintenance charges are fees levied by banks to cover the costs of account management and service provision. Citibank Nigeria has implemented various maintenance charge structures as part of its strategy to sustain operational efficiency and profitability. In recent years, the bank has revised these fee structures to better reflect the costs of providing increasingly digital services while ensuring customer affordability (Afolabi, 2023; Musa, 2024). These adjustments aim to support revenue generation without compromising service quality, but their impact on overall profitability remains a subject of debate.
The evolution of banking has driven Citibank Nigeria to adopt a dual approach: optimizing maintenance charges to cover operational costs and using competitive pricing to attract and retain customers. As customers become more digitally savvy, they demand transparency in fee structures and value for money. The bank’s efforts to streamline its internal processes through automation and digital innovation are partially funded by these maintenance fees, which can contribute to improved profit margins when effectively managed (Chinwe, 2023). However, if maintenance charges are perceived as excessive or unjustified, they may deter customers from using the bank’s services, ultimately affecting profitability.
Balancing the need for sufficient fee income with customer satisfaction is critical. The bank has employed advanced analytics to monitor the correlation between maintenance charges and key performance indicators such as customer account retention, transaction volumes, and overall profitability. This study intends to evaluate how different maintenance charge structures influence Citibank Nigeria’s profitability. By analyzing both financial performance data and customer feedback, the research aims to determine whether the current fee structures support sustainable profit growth or if they require further adjustment (Ibrahim, 2025).
Statement of the Problem :
Citibank Nigeria’s maintenance charge structures are designed to enhance profitability, yet there is evidence that these charges may negatively affect customer behavior and, by extension, profitability. Customers have reported concerns about high maintenance fees, which can discourage frequent banking transactions and lead to a decline in active account usage (Okeke, 2024). Such customer dissatisfaction could result in reduced fee income over time, offsetting the intended benefits of higher charges.
The bank’s reliance on maintenance fees to support digital transformation initiatives further complicates the scenario. If fees are perceived as overly burdensome, customers may seek alternative banking options, leading to a loss of market share. Moreover, inconsistencies in the application of maintenance charges across different account types can create confusion and foster a perception of unfairness among customers. These factors contribute to a potential decline in overall profitability despite the theoretical revenue benefits of higher fee structures.
This study aims to assess whether the current maintenance charge structures at Citibank Nigeria are effectively contributing to profitability or if they are inadvertently driving customer attrition. The research will analyze financial performance metrics and customer satisfaction data to establish a clear relationship between maintenance charges and profitability. The goal is to provide actionable recommendations for optimizing fee structures that maximize revenue without undermining customer loyalty (Afolabi, 2023).
Objectives of the Study:
To examine the relationship between maintenance charge structures and profitability at Citibank Nigeria.
To assess customer perceptions of maintenance charges.
To recommend optimal fee structures that enhance profitability while ensuring customer satisfaction.
Research Questions:
How do maintenance charge structures affect Citibank Nigeria’s profitability?
What is the impact of maintenance fees on customer behavior and account usage?
How can fee structures be optimized to improve both profitability and customer satisfaction?
Research Hypotheses:
H1: Maintenance charge structures have a significant effect on bank profitability.
H2: High maintenance fees are negatively correlated with customer account activity.
H3: Optimized fee structures improve profitability without reducing customer retention.
Scope and Limitations of the Study:
The study focuses on Citibank Nigeria’s maintenance charge structures and their impact on profitability from 2023 to 2025. Limitations include the influence of external economic factors and potential discrepancies in customer perception across different regions.
Definitions of Terms:
Maintenance Charge Structures: Fee frameworks applied to manage account services.
Profitability: The bank’s ability to generate profit relative to its operational costs.
Customer Account Activity: The frequency and volume of transactions made by account holders.
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