In a notice sent to the Nigerian Stock Exchange (NSE) today, Skye Bank Plc may have hinted at plans to release its backlog of financial statements dating back to 2016.
An excerpt from the notice states that the bank’s board will be meeting to discuss several issues including its unaudited results for the period ended June 2018.
Skye Bank last released its results for the financial year ended December 2015. From inference, the backlog of results would either have to be released before or alongside results for the most recent quarter.
Several tier two peers have since released financial statements for the second quarter ended June 2018.
Why the delay?
The Central Bank of Nigeria (CBN) in July 2016 dissolved the bank’s board.
The CBN took the action due to the inability of the bank to raise required capital and it being a systemically important institution. This means a collapse of the bank would have an adverse effect on the financial industry as a whole. Skye Bank was unable to raise the much-needed capital, despite being given over a year to do so.
Specifically, the bank’s Liquidity and Non-performing loan Ratios were below and above the required thresholds.
Liquidity ratio is the ratio of a banks liquid assets to its liabilities. In other words, a bank’s cash balance plus assets that it can easily convert to cash to the total liabilities owed by the bank, which is typically your deposits. In Nigeria, banks are supposed to have a liquidity ratio of 30%.
The NPL is a ratio of a bank’s bad loans to their total loans. The Central Bank set an NPL ratio of 5%, and expects banks to stay within this range.
The tenure of the current board was extended earlier this month. Since appointment, it has sold off several subsidiaries and pursued bad loans including those taken by entities controlled by the immediate past chairman Fola Ayeni.
How does it affect you?
Fundamental investors had long exited the stock in view of the challenges facing the bank. Nairametrics has consistently placed a SELL recommendation on the stock.
Despite the absence of results, the stock rallied sharply in the first quarter of the year and was one of the best-performing stocks year to date. Year to date the stock is up 34% outperforming the NSE which is down 4.75% year to date. The stock could witness a sell-off whenever its results are released.
Skye Bank is currently trading at N0.67 in today’s trading session on the NSE.