By Kelechi Mgboji Assistant Business Editor
Union Bank of Nigeria took a curious lead in loans impairment charges with 106 per cent increase in bad loans from N4.8 billion in 2014 to N9.9 billion in 2015.
Audited financial results of eight banks filed with the Nigerian Stock Exchange (NSE) showed that N86.3 billion was provided for loan impairment charges for the financial year ended December 31, 2015.
This was a 38.8 per cent rise from N62 billion in 2014, raising concern about banks prudent loan portfolio management.
Some of the banks were reportedly obtained huge credits from correspondent banks even when it was obvious they lacked foreign currency receivables.
However, Union Bank Chief Financial Officer, Oyinkan Adewale, said: “We have taken a prudent approach to our loan impairment provisions, due to a worsening operating environment and believe that there is an opportunity for recoveries as the economy improves.”
As GTBank grew loans book 7.5 per cent to N1.371 trillion, up from N1.275 trillion the previous year, its impairment provisioning jumped 74.8 per cent to N12.4 billion from N7.1 billion in 2014.
But its Interest Income rose 14.3 percent to N229.2 billion in 2015, implying that the bank made good profit from growth in loans and advances to customers which stood at N1.371 trillion, up from N1.275 trillion.
First City Moment Bank (FCMB) recorded significant loan impairment charges with 41 per cent rise, from N10.6 billion to N15 billion. Fidelity Bank had 33.9 per cent, from N4.3 billion to N5.76 billion in 2015.
Fidelity Bank said it has put a N22.4 billion loan to Oando on a watch list and taken a special provision of 5 per cent on the loan in line with CBN advice.
The loan accounted for 3.7 per cent of its total loan book and 15.2 per cent of its energy loan book.
However, FCMB explained that growth in loan impairment charges was due to exceptional charge of N5.4 billion on a legacy receivable asset and a significant loan impairment of N6.2 billion related to a customer, both reported in Q3 2015.
Fidelity Bank Chief Executive Officer, Nnamdi Okonkwo, said the increase in impairments was due to a more prudent approach adopted with respect to a special regulation which was charged directly to the Profit and Loss (P&L), causing a decline in profit.
Access Bank recorded a growth of 22.1 per cent in impairment charges and Zenith Bank 20 per cent.
Access Bank’s impairment charges moved from N11.65 billion in 2014 to N14 billion in 2015, and Zenith Bank’s from N13.06 billion to N15.67 billion.
United Bank for Africa (UBA) also made significant provisioning for bad loans, up to N5.05 billion, from N3.18 billion in 2014.
For Sterling Bank, loan impairment charges stood at N8.15 billion from N7.4 billion, a 10.3 per cent rise.
The CBN requires banks to make provision for possible impairments in loans portfolio for a financial year being reported.
