Data from four of the Tier 1 banks in Nigeria revealed that two of the biggest audit firms in the country earned N3.17 billion as audit fees for the year ended December 2019. The two big audit firms are PricewaterhouseCoopers (PWC) and KPMG.
The fees were earned by auditing the financials of Access Bank, GTBank, Zenith Bank and United Bank of Africa. Data obtained by Nairametrics research revealed that the duo audit firms increased their earnings by 12.49% year on year after earning N3.17 billion in 2019, against N2.81billion recorded in 2018. The banks under review made a combined N1.90 trillion in revenues for the period.
What it means
PWC audits all the accounts of the five top banks in Nigeria, except Zenith Bank, which is handled by KPMG. Findings revealed that while PWC earned N2.28 billion out of the N3.17 billion, KPMG got only N892 million out of the total.
Zenith Bank increased the audit fee of KPMG from N822 million in 2018 to N892 million; GTBank increase its audit fee of PWC from N791.3 million to N857.82 million within the same period; Access Bank also increased the said fee to PWC from N612.97 million to N819.9 million, and UBA also paid PWC the sum of N608 million for audit compared to the N592 million in 2018.
What happened in 2017
PWC in earned N2.7 billion from its clients (banks only), an increase of about 15% from N2.35 billion in 2016. Auditing six commercial banks, KPMG was next as the audit firm earned N2 billion in 2017, an 15.2 increase from the N1.74 billion received as fees in 2016.
Ernst & Young, in its case generated N415 million from two commercial banks, Fidelity Bank Plc and Sterling Bank in 2017, an increase of about 18.9% from N349 million in 2016.
Meanwhile, commercial banks with large subsidiaries pay more fees to auditing firms as checking of their books involved more assets home and abroad.
For instance, FBN Holdings with various business groups-Commercial Banking, Insurance, Merchant Banking & Asset Management and others paid PWC N856 million in 2017 from N803 million the firm collected in 2016.
Also, PWC earned N712 million from GTBank in 2017 from N596 million in 2016 while UBA paid the same auditing firm N607 million in 2017, an increase of about 24% from N490 million in 2016.
Access Bank paid PWC N529 million in 2017, 15% increase over N460 million in 2016.
Out of the six firms audited by KPMG, Zenith Bank paid the firm highest value in the year under review at N693 million in 2017 from N626 million in 2016, followed by Stanbic IBTC Holdings’ N340 million and FCMB, N324 million in 2017.
Meanwhile, Union Bank paid KPMG N249 million in 2017 from N180 million in 2016 while Wema Bank and Diamond Bank paid the same auditing firm N120 million and N220million in 2017 respectively.
In 2016, Nairametrics had reported that PWC, KPMG, E&Y, Deloitte earned N 6.4 billion as audit fees from Nigeria’s biggest companies. The fees were earned by auditing about 28 of Nigeria’s biggest firms cutting across the banking sector, consumer goods, cement and oil and gas.
According to the data obtained by Nairametrics research, the big four increased their earnings by 9% year on year after earnings about N5.78 billion in 2015. The 28 companies under review made a combined N6.2 trillion in revenues for the period thus audit fees as a percentage of revenues was 0.1% of revenues.
According to our research, PWC carted away with the most fees earnings about N2.5 billion in 2016 (2015: N2.2 billion) from auditing 7 companies on our list. KPMG was next as the audit firm earned N2 billion in 2016 a 15% increase from the 1.7 billion received as fees in 2015. The auditors also got to audit about 10 of the companies in our list.
Ernst and Young, another of the big 4, also earned about N1.1 billion in 2016, auditing 6 of the companies on the list and a 4% dip from the N1.2 billion earned in 2015. It is important to note that of the 28 companies in our list, the oil and gas firms went the way of EY.
Deloitte recorded the largest percentage increase in earning after income rose by 30% to N530.2 million compared to N406 million earned a year earlier. Deloitte relied majorly on income from Dangote Cement which rose 38% year on year in the period under review. Deloitte was able to audit the financial statements of 4 of the companies in our list.
America’s Trump finally bans TikTok, WeChat
President Trump issued directives banning any U.S. transactions with Chinese tech companies.
China’s tech industry is having a rough time right now. The stock price of China’s tech juggernaut, Tencent, lost 5.04% on Friday morning after America’s President Donald Trump issued executive orders targeting TikTok and WeChat.
The Hang Seng Tech index, which tracks the 30 largest technology companies listed in Hong Kong that pass the screening criteria, also fell 2.51% to close at 7,386.66. On Mainland China, the Nasdaq-style start-up board Chinext slipped 2.065% on the day to about 3,059.87.
Note that WeChat, which belongs to Tencent, and TikTok whose parent company is ByteDance, are both based in China.
What happened: President Trump, yesterday, issued directives banning any U.S. transactions with the Chinese tech firms —Tencent and ByteDance. The ban will take effect in 45 days and could attract retaliation from the Chinese.
According to Trump, WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.” He went on to say that the application also captures personal information of Chinese nationals visiting the U.S.
China’s response: China’s foreign officials disclosed on Friday at a media briefing that it was strongly against President Trump’s executive orders. It said that China will defend the legitimate rights and business interests of China according to foreign ministry spokesman Wang Wenbin.
INEC to introduce election results viewing portal
INEC says the policy would be tested at the Nasarawa State Constituency Bye-Election.
The Independent National Electoral Commission, INEC, has announced the introduction of a dedicated public portal called the INEC Result Viewing (IreV), which would enable Nigerians to view real-time results in polling stations.
This was announced Thursday evening in a statement signed by Festus Okoye, INEC’s Commissioner and Chairman of Information and Voter Education Committee.
— INEC Nigeria (@inecnigeria) August 6, 2020
“ The Commission is aware that result management has remained a major source of mistrust in our electoral process. INEC is determined to address any source of this concern through enhancing the level of transparency in the conduct of elections,” INEC said.
INEC also said that it is an important principle for votes during elections to be correctly counted. This new initiative is a major step towards achieving that goal. However, INEC said this does not constitute electronic collation of votes just yet. Instead, “the collation of election results shall remain as provided for by law, a manual process of completion.”
IreV would be tested during the Nasarawa State Constituency Bye-Election scheduled for August 8th, INEC said.
Concerned Nigerians are advised to visit inecresults.com, create an account, and fill in their details which will lead them to the portal to oversee the collation of votes.
FBN Holdings announces N25 billion capital injection into FirstBank
The fresh equity capital injection is coming on the heels of FBN Holdings’ recent divestment from FBN Insurance.
N25 billion worth of equity capital has been injected into First Bank of Nigeria Limited by its parent company, FBN Holdings Plc. The move is coming on the heels of FBN Holdings’ recent divestment from FBN Insurance Ltd.
A statement signed by FBN Holdings’ Company Secretary, Seye Kosoko, as seen on the Nigerian Stock Exchange’s website, noted that the N25 billion is part of the net proceeds from the recent divestment from FBN Insurance Limited.
Following this N25 billion capital injection, First Bank of Nigeria Limited’s Capital Adequacy Ratio (CAR) has increased to 16.53%. This is before capitalising year to date profit for half-year 2020.
More details: While commenting on this development, FBN Holdings’ Chief Financial Officer, Oyewale Ariyibi, said that the “divestment has unlocked significant value embedded in the former subsidiary which is being leveraged to strengthen the core baning business for which the Group is renowned.”
The company also explained that the overriding objective of these recent moves is to “optimise capital across the Group to drive business growth, enhance efficiency, and improve overall shareholders’ value.”
The backstory: Back in April this year, FBN Holdings Plc first disclosed ongoing talks with Sanlam Emerging Markets (Proprietary) Ltd over a possible sell-off of its 65% stake in FBN Insurance to the South African firm. Fast-forward to early June, FBN Holdings again informed stakeholders that it had completed the divestment process. All the while, no mention was made about the value of the transaction until now.
Note that FBN Holdings Plc reported a profit after tax of N49.5 billion for the half-year period ended June 30th, 2020. This represents a 56.3% increase when compared with N31.6 billion reported in H1 2019. The company’s Chief Executive Officer, UK Eke, recently commented on performance, noting that “the H1 2020 financial results are impressive and reconfirm our consistent focus on enhanced shareholder value.”
FBN Holdings’ share price on the Nigerian Stock Exchange is currently trading at N5.05. The company has a market capitalisation of about N181.3 billion, according to information gleaned from Bloomberg.