Some banks are alleged to be manipulating their 2O15 financials to cover up negative indices arising from a difficult business environment last year.
A prominent financial analyst told Business Journal in Lagos that some banks are currently applying soothing balm on their result by way of revising some critical figures to highlight the ‘bright spots’ and downplay the negative angles.
He said: “Without mincing words, 2O15 was a difficult year for the business community in Nigeria. From pre-election, election and post-election uncertainties, to lack of policy direction for over six months from the Buhari administration and continued fall in oil prices that created attendant squeeze on government revenue, the year, to put it mildly, was difficult.
But banks have a special problem because of intense competition amongst the players and no bank wants to declare a loss publicly to avoid negative perception by the banking public. Even the banks that went under recently were still declaring billions of Naira in profit until they descended into the grave.
And that clearly explains the ‘financial engineering’ and ‘performance consolidation’ going on in some banks today to cover up the losses arising from a difficult 2O15 financial year. It is important for regulators and shareholders to keep their eyes open before we beat a return to the dark era of ‘paper profit’ in the sector.”
He said once a bank declares “billions upon billions of profit for 2O15, it should automatically become a red flag to guide regulators to further scrutinise the audited accounts of such a bank. We must differentiate between real profit and manipulated figures.”
However, in a quick reaction, the Central Bank of Nigeria [CBN] debunked the allegation as baseless.
Mr. Ibrahim Muazu, Director, Corporate Communications of the CBN told Business Journal: “It [allegation] is baseless and l do not expect any bank and their external auditors to allow such.”
Market analysts listed other challenges faced by banks in 2O15 to include unstable forex regime and illiquidity, rising cost of operation, declining margins, bearish capital market and dwindling investor confidence in the economy.