Tier-1 Banks Breach Earnings Release Deadline as CBN Delays Approval
The top big banks have failed to release their earnings scorecard to the public after submission to the Central Bank of Nigeria (CBN). The apex bank has been examining banks’ audited reports for two months after submission.
Some experts said the regulatory bar has been raised since the appointment of Yemi Cardoso as governor of the CBN, leaving no stone unturned as a result of erstwhile apex bank chief Godwin Emefiele’s regulatory mess.
The recent circular that prohibited local lenders from paying dividends with gains from foreign exchange revaluation, among other things, may have something to do with the delay in approving the results of the big banks for publication.
At the close of business on Friday, information obtained from the Nigerian Exchange showed that the combined market value of these magnificent banks rose to about N5.9 trillion amidst a delay in releasing their final quarter earnings results for 2023.
In their earlier regulatory filing, the four remaining banks notified the exchange after their board meetings that the results had been passed to the apex bank for review before final release to the public and shareholders.
Against requirements for listed companies on the main board, four of the five major balance sheet lenders have not yet submitted their results on the Nigeria Exchange.
Access Holdings reported to the Nigerian Exchange on January 30, 2024, that the group audited financial report, which included the payment of the final dividend for the year that ended on December 31, 2023, had been approved by the board of directors.
The group stated that the same has been forwarded to the Central Bank, adding that the regulator must approve the group’s final dividend.
A similar disclosure was made on January 31, 2024, by Zenith Bank Plc. The bank informed the Nigerian Exchange that the group audited report for 2023 was approved by its board of directors, and that the CBN’s approval was required before the final dividend could be paid.
Guaranty Trust Holdings Company Plc sent out the same notice, mentioning that the financial institution would send the apex bank its audited results on January 30, 2024. The audited report would be posted on the Nigerian Exchange website following approval by the CBN.
The Group Audited Consolidated & Separate Financial Statements for the year ended December 31, 2023, as well as the payment of a final dividend, subject to the approval of the Central Bank of Nigeria, were considered and approved by the Board of United Bank for Africa Plc at its meeting on Thursday, January 25, 2024, according to UBA’s regulatory filing.
Encouraged by its strong profitability performance, FBN Holdings released earnings, which represents a reversal of the prior trend. According to Nigerian Exchange, the deadline was missed by Zenith Bank Plc, Guaranty Trust Holdings, Access Holdings, and the United Bank for Africa Plc.
According to MarketForces Africa’s equities market tracking unit, these outstanding lenders’ shares have been marked with a market pick alert of “missing regulatory filling.”
The local bourse has marked listed companies tickers with “MRF” for missing deadlines in an attempt to improve market integrity and transparency, provide investors with timely information for investment decisions, and strengthen investor protection in the capital market.
The apex bank reaffirmed its earlier position that deposit money banks must not use foreign currency gains recorded in 2023 to pay dividends or offset operating expenses.
Analysts said this may impact final dividend payments in 2023, MarketForces Africa reported that following the devaluation of the naira in June, banks posted higher earnings performance, driven by revaluation gains.
This was a common trend among big banks, while some smaller lenders incurred costs as a result of their respective exposures to foreign currency liabilities. According to an unaudited financial statement posted on the Nigerian Exchange, Tier-1 banks pushed their earnings higher due to gains from their strong net open positions.
However, as part of efforts to sanitise the forex market in 2024, the CBN directed banks to sell down their foreign currency holdings to reduce exposures. This is to neutralise devaluation effects on banks’ books.
“Further to our letter dated Sept 11 2023 which referenced the impacts of FX policy reforms: prudential guidelines for the banking sector, the CBN wishes to reiterate that banks are required to exercise utmost prudence and set aside foreign currency revaluation gains as a counter-cyclical buffer to cushion any adverse movement in FX rate.
“In this regard, banks shall not utilise such FX revaluation gains to pay dividends or meet operating expenses,” a circular signed by Dr, Adetona Adedeji who is CBN’s Acting director of banking supervision, stated.
All four banks stated that the decision of the apex bank will determine their final dividend payment in their regulatory filing. The new CBN leadership appears to have a score to settle with banks. #Tier-1 Banks Breach Earnings Release Deadline as CBN Delays Approval Investors Lose N248bn as Bears ‘Raid’ Nigerian Bourse
