Nigeria Content Online

Nearly a year after
the bank reforms initiated by the Central Bank, some banks shareholders
are still lamenting, saying they are yet to reap the benefits of their
investments.

The share prices of
bank stocks at the Nigerian Stock Exchange (NSE) have depreciated in
the past 10 months, leaving most investors broke.

Some investors
believe the journey ahead for the banking sector will not be any rosy,
while others are of the view that the recent progress being made on the
establishment of the Asset Management Company of Nigerian (AMCON) will
soon ease the ‘survival struggle’ in the industry.

Bola Oke, a finance
analyst at Wealth Zone Limited, an investment firm, said the current
banks performance show that they are bouncing back to profitability.
“Havoc has been done in these banks. The present bank managers are just
turnaround managers, though we hear some of them have started spending
unnecessarily.”

However, Ms. Oke
said banks’ inability to declare good dividends and bonuses is not
making investors happy. “We (shareholders) cannot be happy since our
expectations were not met, even after the bank reforms. But we just
have to give the banks some time to get their foot back on the ground,”
she said.

Looking forward

Egbo Amaechi, an
executive member of the Shareholders Association of Nigeria, said all
indicators show that the banking sector is still struggling to recover.

“So far, progress
has been made. Remember that this time last year, financial results of
banks, like Oceanic and Intercontinental, that were overdue could not
be presented at the floor of the Nigerian Stock Exchange. Today, banks
are posting results, even when they are not encouraging,” Mr. Amaechi
said.

He said the success of the Asset Management Company will further boost the future performance of the banking sector.

Insolvency

Last week, Oceanic
Bank International, one of the rescued banks re-presented its financial
results to the NSE. The bank, however, could not meet the bonus of one
for 10 earlier promised its shareholders.

Ndi
Okereke-Onyiuke, the director general of the NSE, said the bonus cannot
be paid to the investors because “the bank is technically insolvent,”
adding that “there was no money in the bank’s reserve and there was no
money in the shareholders fund.”

After recording
loss after tax of N234.692 billion for the 15 months ended 31 December,
2008, and loss after tax of N89.007 billion for the year ended 31
December 2009, Oceanic Bank, for the first quarter ended 31 March
posted a profit after tax of N1.676 billion.

More results

In a related
development, Spring Bank and Afribank also posted profits after tax in
their first quarter results, after recording huge losses in their
previous financial results.

Spring Bank audited
result for the eight months ended 31 December 2009 shows a loss after
tax of N24.164 billion, compared with N10.228 billion during the 12
months period ended April 2009. However, the bank unaudited result for
the first quarter ended 31st March 2010 shows profit after tax of
N613.41 million, compared with loss after tax of N1.754 billion in 2008.

Afribank Nigeria audited result for the nine months ended 31
December 2009 shows loss after tax of N230.140 billion, compared with
N158.473 billion during the 12 months period ended March 2009. The bank
unaudited result for the first quarter ended 31 March 2010, shows
profit after tax of N1.919 billion, compared with loss after tax of
N230.140 billion during the nine months ended December 2009.