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Nigeria: Secrets Behind Banks’ Huge Profits
Muti ThisChijama Ogbu, via Punch Online, writes about sharp practices within the Nigerian banking sector and how this is driving their unprecedented profit returns:
For Nigeria’s banking sector, it is beginning to feel like the good days are here. The capital market has become an easy recourse where they rush to raise money cheaply. Their performance indicators are pushing upwards as never before and their share prices have jumped to the ceiling. In many instances have burst through to the sky…
The big question: How do the banks come by these profits when other sectors are not doing well? The surprising thing is that you hardly see much activity in some of these banks reeling out these mind-boggling figures. Where then lies their secret?
I recently spoke with a banker, who was until recently a managing director of one of the new generation banks in the country. What he told me are the odd things banks do to make huge profits were quite revealing. He told me that some of the profits being declared by the banks were mere paper profits, meant to deceive their shareholders…
Read the full text: Secrets behind banks’ huge profits
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Bassey | Jan 9, 2008 | Reply
If this is true, then Nigeria is facing another banking crisis again very soon, and this time it will more devastating that what was experienced in the 80s.
If this is true, I wonder what the Nigerian Stock Exchange and the Central bank is doing. This allegation must be thoroughly investigated, and it appears this will happen given the national assembly’s directive suspending further public offerings.
If this is true, will these governing authorities have the guts to do a proper investigation and sanction those guilty?????
Nigerians might never know the truth at the end….This is the sad truth!
bankelele | Jan 10, 2008 | Reply
Allegations are serious in light of the emergence of Nigeria banks as a challenge to South African dominance of the continent. But are the accounts not audited, or results published? and are annual general meetings held with shareholders.
In Kenya, the Nigerian model of increasing share capital and resultant bank consolidation is being pushed strongly. It would be a shame if that model was faulty
wole | Jan 12, 2008 | Reply
The Nigerian economy has always been a cash economy, the aggressive promotion of investment in stock by the Nigerian Stock Exchange opened the eyes of many to the art of investment in stock hence many take these monies to the stock market to buy shares rather than the usual trading (buying and selling). The banking sector receive the bulk of these monies because (1)bank shares are the most dynamic and cheapest of the lot unlike oil stocks which are very costly and conservative; hardly appreciates over time; hardly declare bonus shares (2) banks prefer raising operational fund from the stock exchange because it is a surer and more stable source of funds devoid of government regulations and control as is the case with the money market.(3) The Nigerian Banking sector have been the most improved sector of the economy with good governmental policies coupled with improved and upgraded facilities guaranteeing a more attractive and efficient service delivery. However that is not to say that there have not been cases of abuse (like the last First Bank Plc public offer)the best measure to adopt to curb the incidence of abuse is for the Security Exchange Commission to play a more active role in ensuring that Banks play the game by the rules by applying the Security Exchange Act more vigorously on erring banks without fear or favor. Other than these i feel that the healthy interplay of market forces vide the stock market have positively impacted on the banks more than anything else. These profits are real because banks in Nigeria own vast assets both in Nigeria and abroad; they employ more; pay more and on time. These are indices which show that bank profits are beyond paper declarations.” i stand to be corrected