According to our records, two banks quoted on the Nigerian stock exchange are yet to release any results following their third quarter 2015 results released last year. The banks are Stanbic IBTC and Skye Bank Plc. For the former, they’ve sent out press releases explaining why their results have been delayed. Stanbic in case you didn’t know has been in a running battle with the Financial Reporting Council of Nigeria over how to classify fees paid with our without the approval of NOTAP.
As for Skye Bank, what we have heard from them is a profit warning informing investors that their 2015 full year results will be, well, bad. They are not the only bank to issue profit warning as Ecobank, Diamond Bank, FCMB etc. all issued theirs. Except that, they have all released their results and even ended up paying some dividends. So what exactly is delaying Skye Bank’s results?
No one knows for sure except of course if you are in the top management of the bank or work closely with people who know what their reasons are. However, the feelers we get suggest the result may well be another “Oando” in the making. In case you don’t get the reference, Oando in 2015, delayed its 2014 results for almost a year and when it eventually released it, what we saw was the largest loss after tax by any quoted Nigerian company in recent history. The thought that Skye Bank could well be on this path is chilling to say the least.
The bank in its 2015 9 months results posted a 21% rise in pre-tax profits to N14.9 billion. It also reported an impairment charge of about N6.4 billion. Analysts believe the impairment charge at the end of 2015 could be much more than what we already know and speculate that it could severely impact on the bank’s capital adequacy. The bank earlier in the year informed investors that it was looking to raise capital “in a bid to shore up its capital base”. For hawkish investors that was a sign that things could be really bad for the bank. We are not aware that it has raised any capital.
A few investors we spoke to believe the bank could actually be in much more trouble than they had earlier thought. They believe the bank is heavily exposed to the oil and gas sector and as such could be on the hook for a massive impairment charge. Sources within the bank also suggest that the bank’s capital adequacy levels after taking in provisions for bad loans will need the bank to raise significant equity either through a strategic investor or via some form of bailout. Time it appears is all the bank has just that it appears to be running out.
Speculations abound and no one is really sure of what the result will look like when it is eventually released. The longer the result is delayed the more believable some of the rumours about the banks health is. Skye Bank’s share price is currently down 54% in the last one year and 24% year to date.