5 banks lose over N1 trillion•The worst now behind us – CBN

Then Bank PHB posted a 439 billion naira group pre-tax loss for the 15 months to the end of September, hit by high provisions after the sector-wide audit by the central bank. Bank PHB said provisions for risk assets, loan losses and goodwill impairment totalled around 370 billion naira, while exceptional items were 80.7 billion […]

Then Bank PHB posted a 439 billion naira group pre-tax loss for the 15 months to the end of September, hit by high provisions after the sector-wide audit by the central bank. Bank PHB said provisions for risk assets, loan losses and goodwill impairment totalled around 370 billion naira, while exceptional items were 80.7 billion naira. The group’s financial year used to end in June but it is shifting to the calendar year in line with a central bank directive to establish a uniform reporting period across the banking sector. It said it had carried out its own stress test and launched an aggressive debt recovery plan which was fundamental to repairing its balance sheet.

One of the banks, Springbank, posted a pre-tax loss of 23.3 billion naira for the five months to September, hit by provisions of 18.16 billion naira following a central bank audit of the sector. The bank, one of nine rescued in a $4 billion bailout earlier this year, said gross earnings in the period reached 9.29 billion naira.

Finbank posted a 94.35 billion naira pre-tax loss for the 11 months to September, hit by provisions and exceptional items totalling more than 120 billion naira. Gross earnings for the period came in at 59.5 billion naira. Finbank, like aforementioned banks, is changing its financial year to the calendar year in line with a central bank directive to establish a uniform reporting period across the banking sector, which means year-ago comparisons are not immediately available.

Intercontinental Bank posted a pre-tax loss of 447.45 billion naira for the seven months to September, hit by exceptional items of 437 billion naira. The bank said gross earnings in the period reached 119.77 billion naira. All five banks are changing their financial years to the calendar year in line with a central bank directive to establish a uniform reporting period across the banking sector.

According to the CBN in a press release signed by its Head of Corporate Affairs, M.M Abdullahi, there are two key reasons for the current reported losses. The first one is: “Following more detailed investigations, the new management of these banks found the situation in a number of the Affected Banks to be worse than had been originally thought.  A number of issues only came to light after the CBN had put in place new management teams who therefore had access to greater and more up to date information. As a result of these findings, the banks had to make provisions over and above the CBN’s initial recommendations.” Secondly, it said: “Nigerian banks, like other banks in countries around the world have faced a very challenging operating environment this year.”

Abdullahi added that “CBN is confident that the worst is now behind us.  The current management teams of the affected banks have made significant progress towards restoring stability in their operations and continue to work diligently to ensure that sustainable, long term solutions are implemented with a view to building a solid platform for future growth.”