RECENTLY, one of the directors of the Central Bank of Nigeria (CBN), issued a circular to all the banks in the country, regarding the publication of their financials as at September 30, and they were given the directive to disclose all their loss provision in respect of oil and gas and margin account.  After the examination by CBN- NDIC joint examination, they were asked to make provisions.
This is a welcome development and it is good for the market especially at this time when there is a lot of uncertainties with regard to how much provision were asked to be made by each of these banks; the ones that were cleared and the ones that were taken over. This directive coming at this time is going to clear all the uncertainties or most of the uncertainties that are related to these banks. True to this, we have seen most of those banks that have released their financials as at September 30; banks like UBA, GTB, Access, Sterling, Skye Bank and many others, have come out and published their results on or before October 31, 2009.
In the publication of their results declared the Nigerian Stock Exchange, they gave us their financials as at September 2009. It really helped us in the sense that we now see the true pictures of most of these banks. Even the banks that were cleared to our greatest surprise, the fact that they were cleared did not mean they did not declare loss, because of the huge provision they were asked to make. Banks like UBA, Sterling , Access and also Skye, these were banks that were cleared based on the fact that they were examined, however they all declared losses.
So, the beauty of it now is that we have seen the true picture of these banks and we hope that the CBN will insist on the few ones that have not yet complied should comply immediately. Also, we would love to see that those banks taken over by the CBN declared their results. Unless this is done we will not get out of the situation which we have found ourselves; because our market works on information and the more information we have, the better we are. We are not saying that because the banks make provision and they declared loss that is the end of the bank; not at all. Despite the fact that some of the banks have declared losses, people are seriously bidding because we have seen it all and we can see the clear picture of the banks.
But for those banks that were taken over by the CBN, none of them have declared their results. Today, we see that since the declaration made by the other banks, these banks keep losing five per cent everyday. I think it is in the interest of the banks and in the interest of the CBN and the stakeholders that their results should be declared.
I believe that if the results of these banks are declared, it will also make the investors to make good decisions, rather than the dumping the shares of the banks in the market on a daily basis and they keep on losing five per cent.
I believe that most of these banks are worth more than they are now but the reason they keep going down is simply because there is no other information except hearsay and hearsay in most cases doesn’t do well to the investors. So, it is good that the CBN ensures that as they have given the directive, those that have not complied comply should be made to do so.
This would give these banks equal settings that now we have seen their true pictures, now we have seen their performance, now we have seen the provision if every bank have declared up to September 30. the investors should not panic about the information because by now it is clear that for the last quarter of the year, we don’t envisage any other provision by these banks because all those provisions that they ought to have declared they have declared them. The second issue is that we are envisaging that most of these provision they are making good recovery. And this recovery means additional profits to the bank. So, what we are saying in the last quarter of most of these banks means they will not make any other exceptional provision but rather they are going to make exceptional gain due to recovery and therefore their shareholders value and the expectations of the investors will be realised.
We have just read the breakdown of the recovery made by the EFCC from the debtors of these banks and we have seen that banks like Oceanic and Intercontinental have made over N35 billion recovery. The question we now ask is how much have they provided, because when the investors know how much they have recovered we can do our calculation and know how much will be added to their profit.