Shareholders of banks in the country may begun have started moves to curb the rising costs of directors’ emoluments and auditors’ fees to the bottom-line and their effects on dividend payments to shareholders, who are the real owners of the financial institutions. Indications to this development emerged recently during the annual general meeting, AGMs, of some of the banks.


Most shareholders at the meetings loudly complained against unattractive dividend payout in spite of the recent growth in profit performance of some deposit money banks (DMBs) and questioned the rationale behind the increasing rate of directors’ pay and auditors’ fees which could be justified in relation to the dividends paid to shareholders.

Going by their numbers, the banking sector operators declared impressive earnings which look more attractive than even 2012 performance.

Shareholders of banks in the country may begun have started moves to curb the rising costs of directors’ emoluments and auditors’ fees to the bottom-line and their effects on dividend payments to shareholders, who are the real owners of the financial institutions. Indications to this development emerged recently during the annual general meeting, AGMs, of some of the banks.

Most shareholders at the meetings loudly complained against unattractive dividend payout in spite of the recent growth in profit performance of some deposit money banks (DMBs) and questioned the rationale behind the increasing rate of directors’ pay and auditors’ fees which could be justified in relation to the dividends paid to shareholders.

Going by their numbers, the banking sector operators declared impressive earnings which look more attractive than even 2012 performance.

According to shareholders comments at the annual general meetings, shareholders are now calling on banks management to balance the directors’ emoluments as well as audit fees in relation to dividends declaration.

Also, they frowned at the rate at which credit losses are increasing, saying that the management should be more judicious; otherwise such losses would be deducted from their remunerations.

On audit fees, Diamond Bank shareholders are asking that the management should renegotiate fees charged by their auditor, KPMG, for the coming year as they see the present fees as outrageously high.

They observed that accounting and auditing fees are rising yearly irrespective of whether business is doing well or not.

Accounting as well as auditing firms have come under fire lately as a result of dwindling economic performance which makes their fees in relation to their clients’ business performances exorbitant.

Shareholders said that management team should be made to bear the brunt of any penalties and credit losses reflecting on the financial statements.

They are asking the management to be charging any of such avoidable expenses against directors’ total emoluments.

Analysts had predicted that banks would faced a tough time achieving profitability after the CBN’s jerked up the cash reserve ratios on both public and private funds.

Also, toward the end of the third quarter 2014, CBN devalued the Naira which further impact on general foreign exchange segment performance across the banking sectors.

For the year, deposit money banks are generally returned better performance as a fall-out of the reforms of last year.

The 2015 first quarter results of most banks were encouraging, especially with the peaceful election concluded, the entire stock market rebound and more favourable environment would have been created to stimulate banking operation.

In the 2014 audited results, banks declared staggering profits against analysts’ expectations when the CBN raised regulatory bar to ensure safe and sound banks. In all, few banks improved on gross earnings in the period. The general observation concerning this exploit that occurred is the tight fisted approach some banks managed their overheads.

Apart from that, some banks deferred tax position aided their profits performances while some increased their other income line item as different from non-interest income sources.

In all, the initial outcry relating to the apex bank decision that hiked cash reserve ratio (CRR) was reduced to nil. After all, banks did make money anyway.

Favourable tax position in one year must eventually become unfavourable in another year. Banks that paid less tax now other than for allowable expense would pay higher tax next year. That means potential reduction for subsequent year. There is even a likelihood that some smart bank may have adopted some level of financial engineering to impress with their performance although experts were not willing to confirm it.

It may be recalled that, banks declared even less in 2012 as the economy returned to boom from earlier recession. There was strong indication that the result enjoyed the out-of-recession effects as more business came into limelight.

Different from the case in 2014, there were increased CRR which technically placed banks on their toes as CBN sterilised significant chunk of total money available for doing business. Trillions became less useful for lending, forcing banks to go off-shore again.

It was also noticed that the banks that went offshore in order to guide against foreign exchange risk created equivalent currency base loan portfolio to enjoy right funds match.

As shown in their 2014 results, more foreign currency loans were made to Energy, Oil and Gas companies in spite of dwindling oil market aggregate revenues. Analysts agreed that the banking sector would have been in uproar by now after the CBN twice devalued the naira– one official, the other quite indirect.