• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Opinions Blurb

Does This Mean Another AMCON Bailout Is Near?

Nairametrics by Nairametrics
July 1, 2016
in Blurb, Currencies
Dollar Crunch: Nigerian Banks are now finding it hard to repay LC’s

Nigerian Banks

Share on FacebookShare on TwitterShare on Linkedin

RelatedStories

Seplat Energy

SEPLAT posts N13.5 billion in trades as All-Share Index eyes 121,000 level, mid-cap stocks shine 

July 4, 2025
Weekly Stock Update: Nigerian Exchange Group record growth w-o-w, up by 0.48%

CUTIX, ELLAHLAKES, others rally 10% as All-Share Index reclaims 120,000 level 

July 3, 2025
Now that the euphoria of the introduction of a flexible exchange rate is gradually winding down, the realities are that the depreciation of the Naira by over 40 percent has jerked up the foreign exchange loans in commercial banks balance sheets. The implication of this is a further dampening of assets quality and endangering Non performing Loans (NPL).   
 
Since the economic down turn will make it practically difficult for borrowers across sectors to meet obligations owed to banks, the likelihood of a repeat of the financial crisis of 2009 is lurking. We are of the view that in order to avoid another catastrophe, the Assets Management Corporation of Nigeria (AMCON) may have to buy bad debts to avert a contraction in lending.
 
In 2009, the CBN injected N620 billion of liquidity into the banking sector and replaced the leadership of 8 Nigeria banks. 
 
Stabilizing the system and returning the confidence to the markets and investors may not be as easy as it was in 2009 as falling oil price since mid 2015 has deal a serious blow on government revenues and depleted external reserves. This leaves questions as to whether Nigeria has the money to salvage banks since a dearth of oil revenue has left states impotent and unable to pay salaries.
 
Banks that have Non (NPLs) in hard currencies may see a negative NPL ratio and it is more worrisome if the provisions on loans are held in naira. The most susceptible to these uncertainties are Firstbank Nigeria Plc, Diamond and Skye, according to a report from Rencap.
How is this so?
 
For banks that have sizeable FX NPLs, depreciation could hurt their NPL ratios. Had they been holding the requisite provisions on these NPLs in naira, that would put significant pressure on their provisions and coverage ratios, as they need to set aside more naira to maintain coverage ratios at the pre-depreciation level,”  Renaissance Capital analysts Adesoji Solanke and Olamipo Ogunsanya said in a June 27 note.
For banks that have sizeable FX NPLs, depreciation could hurt their NPL ratios. Had they been holding the requisite provisions on these NPLs in naira, that would put significant pressure on their provisions and coverage ratios, as they need to set aside more naira to maintain coverage ratios at the pre-depreciation level. For the banks that held the provisions in dollars, these dollar provisions would naturally inflate at a weaker exchange rate, but the banks do not need to set aside real naira in order to maintain coverage ratios. Based on feedback from management, FBNH and Diamond have the highest proportion of their NPL book in foreign currency, at 56% and 45-50%, respectively, with Diamond mentioning that it holds its provisions in naira. Overall, these sizable FX NPLs are a concern for us, but, unlike Diamond, FBNH has significant FX long positions that should help it to partly offset the impact of some of these asset quality challenges.
The 10-member Nigerian Stock Exchange Banks Index has declined almost 6 percent since surging to a 9-month high on June 23. That compares with a 4 percent drop in the NSE All Share Index over the same period, with Sterling Bank Plc, Unity Bank Plc, Zenith Bank Plc and FBN Holdings Plc among the biggest losers.
 
The economy has contracted by 0.4 percent, the worse since 2004 as a recession is imminent given the delay in the passage of 2016 budget that would have spur consumer spending. Nigerian banks have proven to be resilient over the years but we believe last some point they will require a bailout. Banks have taken huge provisions already in the last two years and have refinanced some of their loans. However, with their capital adequacy rations under intense pressure, they might have no choice but to sell some of their worst loans to AMCON.
Tags: All Share IndexNigerian stock marketNigerian StocksZenith Bank News
Nairametrics

Nairametrics

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

Related Posts

Seplat Energy
Equities

SEPLAT posts N13.5 billion in trades as All-Share Index eyes 121,000 level, mid-cap stocks shine 

July 4, 2025
Weekly Stock Update: Nigerian Exchange Group record growth w-o-w, up by 0.48%
Equities

CUTIX, ELLAHLAKES, others rally 10% as All-Share Index reclaims 120,000 level 

July 3, 2025
Stock market kicks off September in the red: ASI slips 0.15% amid declining trading volume 
Equities

Nigerian Stocks start July in red as All-Share Index slips 0.2%; Ellah Lakes leads daily volume 

July 2, 2025
Weekly Stock Update: Nigerian Exchange Group record growth w-o-w, up by 0.48%
Equities

Nigerian stock market soars 16.57% in the first half of 2025 — Top sectors behind the rally 

July 2, 2025
Weekly Stock Update: Nigerian Exchange Group record growth w-o-w, up by 0.48%
Equities

CWG and CAVERTON lead gainers as All-Share Index dips slightly; OANDO prints N19.8 billion trading value 

June 30, 2025
NGX
Financial Literacy

How to start investing in Nigerian stocks in 2025: A complete newbie’s guide

June 29, 2025
Next Post
Here Is What We Know About The N3 million CBN Loan Will Give To Each NYSC Member

Here Is What We Know About The N3 million CBN Loan Will Give To Each NYSC Member

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank








DUNS

Recent News

  • AGF approves prosecution of Andy Uba, Benjamin Etu over alleged N400 million fraud 
  • EFCC arraigns Abel Sokari, Nkiruka Chukwuma and firm over alleged €49 million fraud attempt 
  • FIRS begins renegotiation of double taxation treaty with Netherlands amid tax reforms 

Follow us on social media:

Recent News

Federal High Court, REA

AGF approves prosecution of Andy Uba, Benjamin Etu over alleged N400 million fraud 

July 7, 2025
EFCC arraigns Abel Sokari, Nkiruka Chukwuma and firm over alleged €49 million fraud attempt 

EFCC arraigns Abel Sokari, Nkiruka Chukwuma and firm over alleged €49 million fraud attempt 

July 7, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics