Nigeria’s bad bank the Asset Management Corporation of Nigeria or AMCON has managed to reduce its losses despite a spike in Operating expenses, led by impairment of goodwill, aircraft fuel expense and personnel expenses.
AMCON was set up to bail out insolvent Nigerian banks.
In its 2014 Full year audited results which can be seen here, AMCON reported that Operating expenses surged by 159 percent to N199.6 billion last year. The group 2014 Full year losses thus amounted to N275 billion (2013: N630 billion).
- The remuneration paid to AMCONs directors also jumped by 87.5 percent to N829 million in 2014 from N442 million in 2013.
- AMCONs (Parent Company) personnel expenses as a whole more than doubled to N7 billion from N2.76 billion in 2013.
- The corporation also took a huge impairment charge of N148.9billion as it took a huge write down on Goodwill for Aero Contractors (N11.2billion) and Consolidated Discount Limited (N137.7billion)
- The Group results which were prepared according to IFRS shows 2014 losses declining from the loss recorded in 2011, 2012 and 2013 of N2.4 trillion, N702 billion, N627.5 billion respectively.
- The bank also reported that it spent N1.4billion on advertising expenses.
- AMCON also reported that its retained earnings is now at a whopping negative N4.2trillion as the bank continue to rack up losses after losses.
- It currently has negative equity of N3.5 trillion. Any company with this sort of balance sheet should be facing bankruptcy.
- However, AMCON has time which is why it will not go bankrupt. With luxury of time, it will hope that most of its assets increase in value so much that it will be enough to wipe out the negative reserves.
- Whilst this seems to be the plan, we doubt this will happen any time soon and indeed if it will every happen. Soon, the bank will run out of money leading the CBN/Taxpayers to lend it more.