Eight publicly listed commercial banks in Nigeria incurred N112.15 billion in banking sector resolution costs to the Asset Management Corporation of Nigeria (AMCON) in the first quarter of 2023.
The eight banks surveyed include Access Holding Plc Guaranty Trust Bank (GTCO), Fidelity Bank, Stanbic IBTC Bank, United Bank for Africa (UBA), Union Bank, Wema Bank, and Zenith Bank.
The AMCON expense by the banks increased by 26 percent in the corresponding period of 2022, according to data compiled by BusinessDay.
“Specifically, the AMCON goal is to restructure bad loans, so what they do is rather than banks having bad loans on their books, they take over the losses and pay for it,” Ngozi Odum, an analyst at CardinalStone Partners Limited
According to BusinessDay findings, the remarkable growth in the banks’ total assets has been a key driver of this surge in AMCON’s charge.
Data sourced from the Nigerian Exchange Group showed the total assets of the eight banks increased by 24.77 percent from N47.30 trillion to N59.016 trillion in the first quarter of 2023.
Access Holding Plc
Access Holdings Plc, a Nigeria-based financial holding company, paid the highest AMCON charges in the first quarter of 2023, amounting to N33.32 billion, from N26.69 billion recorded in the same period of 2022, a 24.8 percent increase.
This is following a 30.3 percent increase in its total asset to N15.74 trillion in the first three months of 2023 from N12.08 trillion as of the same period of 2022.
Access Holding’s total asset increased on the back of a 17.52 percent increase in loans and advances to customers to N5.037 trillion in the first quarter of 2023.
Operating expenses amounted to N104.06 billion with AMCON gulping 32 percent in the first three months of the year.
Zenith Bank
Zenith Bank followed with an N28.69 billion AMCON payment in the first quarter of 2023; this is 34 percent higher than the N21.4 billion paid in the considering period of the previous year.
Zenith Bank’s total assets stood at N13.36 trillion, a 29.5 percent increase from N10.32 trillion in the first quarter of 2022.
Operating expenses in the period under review stood at N68.15 billion.
Guaranty Trust Holding Company Plc
GTCO paid an AMCON fee of N13.72 billion in the first quarter of 2023, 17.8 percent higher than the N11.64 billion recorded in the same period of 2022.
The bank’s total assets stood at N6.74 trillion in the first three months of 2023, from N5.50 trillion recorded in the same period of 2022.
Loans and advances to customers amounted to N1.86 trillion in the period under review.
Operating expenses stood at N36.37 billion in the first three months of 2022.
Fidelity Bank Plc
Fidelity Bank paid N11.56 billion to AMCON in the first three months of 2023, from N7.68 billion paid in the corresponding period of 2022.
Its total assets stood at N4.14 trillion in the first quarter of 2023, a 16.3 percent increase from N3.56 trillion recorded in the same period of 2022.
Loans and advances to customers accounted for 52.2 percent of total assets amounting to N 2.161 trillion
Operating expenses under which AMCON was stated stood at N29.46 billion with AMCON gulping 39.23 percent.
United Bank of Africa Group
UBA Group paid N10.18 billion to AMCON in the first quarter of 2023, an increase of 32.38 percent from N7.69 billion recorded in the same quarter of 2022.
Its total assets stood at N11.36 trillion in the first three months of 2023, from N8.89 trillion recorded in the same period of 2022, a 27.8 percent increase.
Loans and advances to customers in the quarter under review amounted to N3.301 trillion, gulping 29 percent of its total assets.
Operating expenses under which AMCON was stated stood at N69.38 billion with AMCON gulping 14.67 percent.
Stanbic IBTC Holdings
Stanbic IBTC Holdings paid N9.36 billion to AMCON in the first quarter of 2023, a 7.46 percent increase from N8.71 billion recorded in the same quarter of 2022.
Its total assets stood at N3.21 trillion in the quarter under review, from N3.10 trillion recorded in the same quarter of 2022.
Loans to customers which accounted for more of its total assets stood at N1.198 trillion in the quarter under review.
Union Bank of Nigeria Plc
Union Bank, one of Nigeria’s long-standing financial institutions, paid N3.93 billion to AMCON in the first three months of 2o23, a 9.47 increase from N3.59 billion recorded in the same period of 2022.
Its total assets stood at N2.93 trillion in the quarter under review, from N2.58 trillion recorded in the same quarter of 2022.
Loans to customers which accounted for more of its total assets stood at N981.59 billion in the quarter under review.
Wema Bank Plc
Wema Bank Limited paid an AMCON fee of N1.39 billion in the first three months of 2023, a decrease of 12.16 percent compared to N 1.59 billion recorded in the same period of 2022.
However, its total assets stood at N1.54 trillion in the quarter under review, an increase of 21.25 percent from N1.27 trillion recorded in the same quarter of 2022.
Loans to customers which accounted for more of its total assets stood at N523.9 billion in the quarter under review.
Why banks pay AMCON fees
AMCON was established in 2010 in a bid to stabilize the Nigerian banking system by efficiently resolving the non-performing loan assets of the banks in the economy.
Currently, it is being funded by a combination of loan recoveries, contributions from the Central Bank of Nigeria (CBN), sales of pledged assets, and a sinking fund assessed to the banks.
The federal government established AMCON with a 10-year mandate in response to the mounting bad loans and the requirement to prevent the banking sector’s impending collapse. The AMCON Act 2019 (Amended) gives the corporation broader authority to pursue obligors for unpaid debts.
Additionally, helping eligible financial institutions efficiently dispose of eligible bank assets in compliance with the Act’s rules is one of the key objectives of the Act.
Initially, banks were required to pay 0.3percent of all assets into the sinking fund. In 2013 it was raised to 0.5 percent of total assets (and 0.3 percent of contingent liabilities).
