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Etisalat Loan: 10 Banks’ Provision For Loans Loss Rises By 3%



By Kayode Tokede, Lagos

The involved 10 banks in 9mobile, the mobile operator formerly known as Etisalat Nigeria take over loans loss provision increased by three per cent to N206.1billion in the half year (H1) ended June 30, 2017, findings by LEADERSHIP has revealed.

The lender in half year of 2016 loans loss provision was N200 billion, to underline sound loan provisioning and disclosure practices for deposit money banks in the country over macro economy facing Nigeria.

Of the involved banks, the likes of Zenith Bank Plc, United Bank for Africa Plc, Ecobank Nigeria and Stanbic IBTC Holdings loan loss provision increased significantly while that of Access Bank Plc and Fidelity Bank Plc inched up marginally.

Guaranty Trust Bank Plc, FBN Holdings, Union Bank of Nigeria and FCMB involved in the Etisalat Nigeria loans deal recorded drop in loans loss provision in the period under review. Specifically, Zenith Bank loans loss provision increased by 198 per cent to N42.9 billion in H1 2017 from N14.23 billion in H1 2016.

Managing director/CEO of Zenith Bank Plc, Mr. Peter Amangbo, had revealed that his bank made a provision on 30 per cent on its loans to the network operator. Stanbic IBTC Holding loan loss provision increased by 65.1 per cent from N8.45 billion in H1 2016 to  N13.95 billion in H1 2017 while Eco Bank Nigeria loan loss provision rose by 62.4 per cent to N42 billion ($138 million) from N25.99 ($85 million) billion in H1 2016.

UBA’s loans loss provision also increased significantly by 38.4 per cent to N9.4 billion from N6.8 billion in H1 2016. The lender recently said it has made a prudential provision on loans made to Etisalat Nigeria now. The lender did not give details of the provision but said it had a N38billion ($125million) exposure to 9mobile.

UBA said the exposure was secured, and part of a syndicated loan with 12 other banks extended to Etisalat Nigeria four years ago. For Access Bank and Fidelity, loan loss provision rose marginally by 1.5 per cent and 0.5 per cent in the half year under review.

Access Bank loan loss provision closed at N10.36 billion in H1 2017 from N10.2 billion in 2016 while Fidelity Bank loan loss provision that was at N4.8 billion in H1 2016 closed at N4.8 billion in H1 2017.

It will be recalled that group managing director of Access Bank, Herbert Wigwe had said banks

were reluctant to take provisions on loans to the power sector and the provisions the bank (as well as other members of the consortium) had  made its loan to 9mobile. He hinted that the consortium of banks has taken impairment on the loan lent to the company.

They also made provisions for loans to companies that do business with the firm.  The Access Bank boss said the affected banks had to take a collective impairment charge as far as 9Mobile was concerned in their 2017 half year results.

Wigwe, who put Access Bank’s exposure to 9Mobile at about N11 billion, said the bank made a provision of about 30 per cent on its loan to the network operator. More so, GTBank loan loss provision dropped significantly by 81 per cent to N7.2 billion from N37.5 billion in H1 2016.

First Bank of Nigeria Holdings loan loss dropped by 13.6 per cent to N60.4 billion from N69.9 billion in the corresponding period. Group managing director Mr. UK Eke, said, “Our focus on enhancing the quality of our loan book is reflected in a decline in non-performing loans, a reduction in our impairment charge following improvement in the asset quality outlook, and we will continue to prioritise this area through the rest of this year.”

In conclusion, Union Bank of Nigeria loan loss provision dropped by 38.8 per cent to N5.4 billion from   N8.78 billion while FCMB loan loss decline by 26.1 per cent from N13.5 billion to N9.9 billion in H1 2017.