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Published On: Mon, Aug 15th, 2016

AMCON losses widen in  2015 on asset write-downs

The Assetment Management Company of Nigeria (AMCON) last week revealed that it posted a 2015 loss of N304.35 billion, wider than last year’s loss of N275.49, after it wrote-down the value of collateral recovered from its purchase of bad loans.

The corporation’s Executive Director,  Mr Aminu Ismail said the 2015 loss was also partly due to interest paid on a 3.8 trillion naira ($12.3 bln) bond due to the central bank which it used to acquire the bad loans.

AMCON was set up in 2010 to absorb bad loans as part of resolving a financial crisis in Africa’s biggest economy. Ismail said N1.26 trillion in non-performing loans (NPLs) out of a total of N3.7 trillion had been settled.

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Ismail said NPL ratios jumped to 93 percent of its total bad loans in 2015, up from 57 percent a year earlier, as the weak economy impacted debt repayment.

On the banking side, NPLs had started building up again. Nigeria’s main rating agency, Agusto & Co, expects NPLs to jump to 12.5 percent of total loans this year, up from the central bank’s target level of 5 percent at the end of last year.

Ismail said AMCON stopped buying NPLs two years ago and was now focused on recoveries to enable it to wind-down its activity by 2023, when its debt to the central bank matures. He said the decision to acquire NPLs would be that of the government and the central bank.

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The central bank shored up mid-tier lender Skye Bank SKYEBAN.LG this month with a loan and replaced its management after its capital fell below levels required by regulators and it has been urging people not to panic about the banking system.

But pressure is building, with loan books – nearly half of them in dollars – hammered by a shrinking economy, a plunging currency and acute foreign exchange shortages in Africa’s biggest oil producing nation following the slump in oil prices.

 

 

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