Last week, on the floor of the Nigerian Stock Exchange (NSE), six of the troubled banks released their interim results to the investing public. The banks are: Intercontinental Bank, Bank PHB, Union Bank, Afribank, FinBank and Spring Bank.
The banks, according to the figures released by the NSE, reported losses after tax ranging from as low as N16.312 billion to as high as N328 billion. The enormous losses were as a result of Central Bank of Nigeria (CBN) sanctioned provisions for risky assets and loan losses on the balance sheets of the various banks due to diminution in investments and non-performing loans respectively.
Analysts at Cordros Capital Limited noted for instance that “the implication of these huge losses is that most of these troubled banks are operating on a negative shareholder funds. For instance Intercontinental Bank has a negative net worth of minus N258.69 billion, Union Bank has minus N146.15 billion and Bank PHB has minus N139.42 billion.”
“Furthermore, this shows that the banks are surviving mainly on depositor’s funds and borrowed funds and this could spell a great danger for the financial system if the situation is not reversed quickly and the banks shore up their depleted capital,” the analysts added.