Article Summary
- Ten banks paid N227.3 billion to AMCON as sector resolution cost in 2022.
- Aggregate bank assets increased by 23.7% to N60.69 trillion by the end of 2022.
- Access, Zenith Bank and UBA recorded the highest AMCON expenses in 2022.
- Listed banks incurred N109.6 billion in deposit insurance premiums, bringing the total regulatory cost to N333.6 billion in 2022.
Ten publicly listed commercial banks in Nigeria incurred N227.3 billion in banking sector resolution costs for the Asset Management Corporation of Nigeria (AMCON) in 2022.
Compared to the prior year (N192.14 billion), AMCON spending by banks increased 18.3% year-over-year. This is based on data drawn from banks’ audited reports by Nairalytics.
The increase in AMCON’s banking sector resolution cost follows a 23.7% increase in banks’ total assets. Nairametrics’ findings revealed that the total assets of the ten banks increased from N49.1 trillion reported in December 2021 to N60.7 trillion in 2022, representing an increase of N11.62 trillion in one year.
A breakdown of data compiled by Nairalytics showed that Access Bank incurred the most at N52.73 billion, while Wema Bank recorded the least at N6.47 billion. It’s worth noting that First Bank and Unity Bank were not included in the list of banks, as the groups have yet to release their audited results for the year.
Other banks that were not included in this article are Ecobank and Jaiz Bank. Both banks did not report their regulatory expenses.
Why Banks Pay AMCON Fees
AMCON was established in 2010 in an attempt to stabilize the Nigerian banking system by efficiently resolving non-performing loan assets from banks in the economy.
- It is currently financed by a combination of loan recoveries, Central Bank of Nigeria (CBN) contributions, collateral sales and a sinking fund allocated to banks.
- The federal government established AMCON with a 10-year term in response to the accumulation of bad loans and the requirement to avoid the imminent collapse of the banking sector. The AMCON Act of 2019 (as amended) gives the corporation broader authority to pursue debtors for unpaid debts.
- In addition, helping eligible financial institutions to efficiently dispose of eligible bank assets in accordance with the Law’s rules is one of the key objectives of the Law.
- Initially, banks were required to pay 0.3% of all assets in the sinking fund. In 2013 it rose to 0.5% of total assets (and 0.3% of contingent liabilities).
Deposit insurance premiums gobbled up N109.6 billion
The ten listed banks also incurred a sum of N109.6 billion in deposit insurance premiums paid to the Nigerian Deposit Insurance Corporation (NDIC), bringing the banks’ total regulatory cost to a whopping N336.9 billion for the year.
- This is slightly less than the 355.61 billion naira paid to shareholders as total dividends for the year.
- This implies that bank profit and ultimate shareholder value could have been higher without the regulatory costs for AMCON and NDIC.
- Banks posted an aggregate after-tax profit of N935.9 billion in the review year, which is 9.5% higher than the N854.9 billion recorded in the previous year.
Breakdown of banks’ AMCON payments in 2022
- Access bank – N52.73 billion
Access Bank incurred N52.73 billion in AMCON expenses in 2022, an increase of 27% compared to N41.51 billion in the previous year. This follows the significant increase in the value of the newly restructured bank’s assets, which grew thanks to multiple mergers and acquisitions.
As of December 2022, Access Bank recorded a total asset value of N14.99 trillion, 27.8% higher than the N11.73 trillion recorded in the same period of the previous year. At almost N15 trillion, Access Bank is the largest financial institution in the country based on total assets.
- Zenith Bank – N44.01 billion
Zenith Bank recorded N44.01 billion as sector resolution cost for the year ending 2022, up 16.1% from the N37.92 billion incurred in the previous year. Zenith Bank, which is also the second largest bank by asset value and the most capitalized bank in the stock market, saw its total assets grow by 30%.
Zenith Bank’s total assets increased from N9.45 trillion recorded at the end of December 2021 to N12.29 trillion in 2022, due to an increase in loans and advances to customers, which increased by 19.6% year-on-year. to N4.01 trillion in the same period.
United Bank for Africa incurred N31.59 billion in AMCON fees in 2022, surpassing the N27.98 billion recorded the previous year by 12.9%. UBA represented 13.9% of AMCON’s total spending from the ten banks.
Similarly, the total assets of the pan-African bank increased by 27.1%, from 8.54 trillion naira at the end of 2021 to 10.86 trillion naira as of December 2022.
Others include:
- GT Bank: 23.29 billion naira (+6.4% yoy)
- Fidelity Bank: N18,290 million (+19.1% YoY)
- Stanbic IBTC – N14.6 billion (+13% YoY)
- Union Bank: Naira 14.33bn (+24.9% YoY)
- FCMB: 12.84 billion naira (+21.9% yoy)
- Sterling Bank: 9.17 billion naira (+25.9% yoy)
- Wema Bank: 6.47 billion naira (+22.3% yoy)
