Shareholders Kick as AMCON, NDIC Expenses Cut 11 Banks’ Profit to N1.28tn

Kayode Tokede

Shareholders have expressed dissatisfaction over Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC) expenses that reduced profit before tax of 11 banks to N1.28 trillion in 2022 financial year from N1.16 trillion reported in 2021.

Over the years, shareholders have expressed dissatisfaction with the creation of AMCON, stressing that the charges discourage investing in bank stocks with dwindling dividend payout. 

Speaking with THISDAY, the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie said AMCON has over stayed its function in the banking sector, calling on its banks management to suspend funding AMCON as it is affecting shareholders’ profit.

According to him, “AMCON is lobbying the federal government to extend its operations. If the Central Bank of Nigeria (CBN) wanted to sustain AMCON, fine but not banks funding the corporation. AMCON has overstayed its functions in the banking sector. AMCON is reporting losses despite collecting levy from banks and having challenges in selling recovered assets from debtors.

“The banking institution must continue to fund AMCON because it is not the bankers’ committee that form their board but the government. If the federal government wanted to keep the board of AMCON, they must think of funding it not collecting from banks. What was AMCON doing when some banks were having challenges recently? AMCON has not helped our banking sector and it has not posted any profit.

 “I still do not understand why the Senate requested AMCON to continue to exist. AMCON’s 10 years has ended, according to the law but they continued to stay, playing games with shareholders’ funds. AMCON is killing the industry and not helping the banks when they are in financial crisis.”

Also speaking, the National Coordinator of Proactive Shareholders Association of Nigeria, Mr. Taiwo Oderinde disclosed to THISDAY that some shareholder associations are making move to sue AMCON.

He said the establishment of AMCON was through a fraudulent motive to reap from shareholders who invested in some of these DMBs.

According to him, “AMCON expenses has affected shareholders return on investment and it is a national fraud. We call on the new government to shutdown AMCON operations. NDIC levy is also affecting banks compared to what is happening in other countries. The new government has to look at it because shareholders have suffered a lot from AMCON and NDIC expenses.”

Meanwhile, THISDAY analysis of the banks’ 2022 results showed that if it wasn’t for the AMCON and NDIC expenses, the likes of Zenith Bank Plc, 10 others Deposit Money Banks (DMBs) operating in Nigeria could have reported N1.7 trillion profit before tax in 2022 financial year as against N1.52 trillion in 2021, according to THISDAY investigations.

The 11 DMBs paid a total of N414.99billion AMCON and Deposit insurance premium expenses in 2022, an increase of 17.68 per cent from N352.64billion in 2021.

Analysis of the banks’ results revealed that AMCON expenses closed 2022 at N270.32 billion, an increase of nearly 8 per cent from N250.33billin in 2021, while Deposit insurance premium expenses stood at N144.7billion in 2022, an increase of 41 per cent from N102.3 billion in 2021.

The AMCON, which was introduced in 2011 to recover the bad loans in the banking system charges 0.5 per cent of every banks’ total assets, including off-balance sheet assets, even so it started at 0.35 per cent levy.

While the NDIC has also adopted the differentiated premium assessment system, banks still pay between 0.35 per cent and 0.5 per cent of insured deposits as premium, hence explaining the huge cost to Nigerian banks.

The rising toxic loans and the need to save the banking industry from imminent collapse prompted the Federal Government to set up AMCON in 2010 with a 10-year mandate.

AMCON is saddled to recover nearly N5 trillion from debtors who for years hide under all manners of technicalities to tie corporation up in courts to stall repayment.

Other DMBs under investigation by THIDAY are: Access Holdings Plc, Guaranty Trust Holdings Plc, United Bank for Africa Plc (UBA), and FBN Holdings Plc, and Fidelity Bank Plc.

Six Tier-2 banks, Stanbic IBTC Holdings, FCMB Group Plc, Union Bank of Nigeria, Sterling bank and Wema Bank Plc,  were also investigated by THISDAY.

According to the banks’ audited result and accounts, Zenith Bank in 2022 has the highest profit before tax, while Access Holdings and FBN Holdings paid highest AMCON and Deposit insurance premium in 2022.

Zenith Bank in 2022 generated N284.65 billion PBT from N280.37 billion in 2021, while its AMCON expenses closed 2022 at N44.01 bbillion, an increase of 16 per cent from N37.92 billion reported in 2021.

Zenith Bank also saw its deposit insurance premium at N21.75billion in 2022, an increase of 26 per cent from N17.27 billion in 2021.

For FBN Holdings, it reported AMCON levy of N39.7billion in 2022, a decline of 28 per cent from N55.23billion in 2021, while its deposit insurance premium closed 2022 at N29.44billion from N3.18billion reported in 2021. 

The Holdings closed 2022 with N157.9 billion profit before tax, a decline of 5.25 per cent from N166.66 billion reported in 2021.

However, among the Tier-2 banks, THISDAY can report that Wema bank’s AMCON expenses increased to N6.47billion from N5.29billion in 2021, while its deposit insurance premium stood at N4.23billion in 2022 from N3.75billion in 2021.

Wema Bank, however, generated N14.88 billion profit before tax in 2022, an increase of 20 per cent from N12.38 billion reported in 2021. In addition, Unity Bank that paid AMCON levy of N3.24billion in 2022 from N2.96billion in 2021 and deposit insurance premium of N1.46billion in 2022 from N1.64 billion, reported N1.1billion profit before tax in 2022, a decline of 66per cent from N3.21billion reported in 2021.