Skye Bank Plc and Sterling Bank Plc have recorded net loss of about N18 billion as provisions for classified loans ate deep into profitability. Audited report and accounts of the two banks for the 12 month period ended September 30, 2009, showed that the two banks altogether recorded exceptional items totaling N45 billion as provisions and write downs for bad loan assets.
The Central Bank of Nigeria (CBN) has insisted that all banks must fully disclose and make adequate provisions for non-performing loans, a directive that has seen many banks account in the red.
Skye Bank’s report showed a net loss of about N13.3 billion in 2009 as against profit after tax of N15.13 billion in 2008. Pre-tax loss stood at N12.63 billon in 2008 compared with pre-tax profit of N20.45 billion in corresponding period of 2008. The bank, however, expanded the top-line by 36 per cent with gross earnings of N101.45 billion in 2009 as against N74.62 million in 2008.
In the same vein Sterling Bank recorded net loss of about N4.6 billion in 2009 as against net earnings of N6.58 billion in 2008. Pre-tax loss had stood at N4.35 billion in 2009 compared with profit before tax of N7.98 billion in 2008. Sterling Bank also reported marginal increase in gross earnings from N36.30 billion in 2008 to N37.77 billion in 2009.
Both banks indicated that provisions for bad loans adversely affected their performance during the period. Skye Bank indicated that it recorded an exceptional item of N34.18 billion while Sterling Bank reported exceptional item of N10.83 billion. Both Skye Bank and Sterling Bank have been cleared as sufficiently in stable condition for sustainable operations by the recent audits of the CBN. The apex bank had on August 14, 2009 cleared Sterling Bank Plc in the first batch of the industry-wide audit, the same day it took over and replace the management of five banks adjudged to be in grave situation.
The first batch of troubled banks include Union Bank of Nigeria (UBN) Plc, Intercontinental Bank Plc, Oceanic Bank International Plc, Afribank Nigeria Plc and Finbank Plc. The CBN on October 2 released the report of the second batch of its special examination giving nine banks including Skye Bank clean bill of health while taking over the management of three other banks. Two other banks were given deadlines to recapitalize their operations.
The nine banks that were cleared included Access Bank Plc, Citibank Nigeria Limited Ecobank Nigeria Plc, Fidelity Bank Plc, First City Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited and Zenith Bank Plc. All the Public Limited Liability Companies are quoted on the NSE. The apex bank stated that Unity Bank, another quoted bank, was adjudged to have insufficient capital but not in grave situation because it has a healthy liquid position. Both Unity Bank and Wema Bank have been directed to recapitalize their operations by June 30, 2010.
The apex however, took over the management of three other banks including Bank PHB Plc, Spring Bank Plc and Equitorial Trust Bank, bringing to eight total number of banks under the management of CBN appointed management.
Sanusi Lamido Sanusi, governor, Central Bank of Nigeria, has blamed banks for huge concentration of their exposures to the stock market and oil and gas sector, poor corporate government and depleted capital.