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- Shareholders of Nigeria's starring banks are becoming progressively disquieted arsenic their contributions to AMCON soars
- The important emergence successful AMCON levies has raised reddish flags astir its imaginable interaction connected slope profitability and shareholder returns.
- Many investors are present voicing concerns implicit the sustainability of specified payments, informing that the levies could proceed to wounded the banks’ bottommost lines
Legit.ng writer Victor Enengedi has implicit a decade's acquisition covering Energy, MSMEs, Technology, Banking and the Economy.
Shareholders of Nigeria's apical banks are progressively acrophobic arsenic their contributions to the Asset Management Corporation of Nigeria (AMCON) person surged to N393.03 cardinal by the extremity of the 2024 fiscal year.
This crisp emergence has raised alarms astir its imaginable interaction connected slope profits and shareholder returns, contempt the announcement of dividends by the banks.
Source: UGC
Financial disclosures for the play ending December 31, 2024, amusement that banks specified arsenic Access Holdings Plc, FBN Holdings Plc, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), and Zenith Bank collectively contributed N393.03 billion, a important summation from N244.98 cardinal successful the aforesaid play successful 2023.
This marks a 292.7% emergence successful mandatory contributions, attributed to a revision of the AMCON levy formula, which is based connected banks' full assets and off-balance-sheet exposures.
For instance, Access Holdings paid N112.23 billion, up from N68.81 cardinal the erstwhile year, FBN Holdings contributed N80.03 billion, an summation from N51.12 billion, portion GTCO paid N36.66 billion, compared to N27.31 cardinal successful 2023.
UBA's publication roseate from N40.36 cardinal to N71.91 billion, and Zenith Bank's outgo accrued from N57.38 cardinal to N92.20 billion.
According to The Sun, this improvement has sparked vexation among galore investors, who pass that if these levies continue, banks' profits could beryllium importantly reduced, starring to little dividend payouts.
Boniface Okezie, Chairman of the Progressive Shareholders Association of Nigeria (PSAN), has powerfully criticised the levies imposed by AMCON connected banks.
He argued that AMCON has outlived its intent successful the banking sector.
Okezie called for banks to halt backing AMCON, stating that the ongoing levies are harming shareholders’ profits and discouraging concern successful slope stocks owed to shrinking dividend payouts.
He said:
“This level of summation is alarming. We are efficaciously being penalized for the sector’s past inefficiencies, contempt beardown fundamentals and improved show among tier-1 banks. If the national authorities wishes to prolong AMCON, it should money the corp directly, not done levies connected banks."He besides pointed retired that contempt collecting ample amounts from banks, AMCON has been reporting losses successful caller years and has struggled to merchantability recovered assets from debtors.
AMCON was created successful 2010 to negociate non-performing loans and assistance stabilise Nigeria’s banking assemblage aft the 2008 fiscal crisis.
While the bureau has made strides successful recovering debts and cleaning up slope equilibrium sheets, it inactive depends heavy connected contributions from the banking assemblage to money its operations.
The caller summation successful slope levies has sparked renewed discussions astir the fairness and semipermanent viability of this betterment approach.
Source: UGC
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has not publically addressed AMCON oregon the raised levies.
However, astatine the 2023 Bank Directors’ Summit successful Abuja, Mustafa Chike-Obi, Chairman of the Bank Directors Association of Nigeria (BDAN), urged the federal government to halt the AMCON levy, highlighting its important fiscal load connected the banking industry.
7 banks amass N4.2tn nett successful 2024
In related news, Legit.ng reported that 7 large Nigerian banks made a total profit of N4.2 trillion successful the 2024 fiscal year.
Despite pugnacious economical conditions, respective apical banks showed beardown results successful their 2024 fiscal reports, with notable increases successful profits aft tax.
Banks similar Zenith Bank PLC, United Bank for Africa (UBA), Guaranty Trust Holding Company Plc (GTCO), First Bank, Fidelity Bank, Stanbic IBTC, and Wema Bank managed to gain this ample amount.
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Source: Legit.ng
