Shareholders Express Dissatisfaction as Banks’ AMCON, NDIC Expenses Hit N490.54bn
Shareholders of 10 leading Deposit Money Banks (DMBs) in the country have decried the massive increase in operating cost fuelled by the Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC) levies, which reached a whooping N490.54 billion in 2023.
The 10 DMBs are: Zenith Bank Plc, Access Holdings Plc, FBN Holdings Plc, Guaranty Trust Holding Company Plc (GTCO), and United Bank for Africa Plc (UBA).
Others include: Stanbic IBTC Holdings Plc, Wema Bank Plc, FCMB Group Plc, Sterling and Fidelity Bank Plc.
The N490.54 billion banking sector resolution costs and deposit insurance premium in 2023 the financial year, represent 26 per cent increase over the N386.84 billion reported in 2022 financial year.
Analysis of the audited/unaudited reports of the banks showed that while AMCON banking sector resolution costs stood at N316.53 billion in 2023, representing about 25 per cent increase over N252 billion in 2022, NDIC deposit insurance premium moved from N134.5 billion in 2022 to N174.01 billion in 2023, a growth of 29 per cent.
A combination of expenses, which include marketing and advertising, fuel, repairs and maintenance and directors’ emoluments, constituted source of expenditure for the DMBs in the period under consideration.
While maintaining a stable financial system, the NDIC charges banks deposit premiums (based on a differential rate system amounting typically to between 0.3 and 0.5 per cent of insurable deposits. Simultaneously, the banks contribute to the AMCON to the tune of 0.5 per cent of bank Assets.
However, the banks’ shareholders over the years have expressed dissatisfaction with the creation of AMCON, stressing that the charges discourage investing in bank stocks with dwindling dividend pay out as a result.
Speaking on behalf of Nigerian shareholders, the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie explained that the corporation has over stayed its function in the banking sector, calling on its banks management to suspend funding AMCON as it is affecting shareholders’ profit.
According to him, “AMCON is lobbying the federal government to extend its operations. If the Central Bank of Nigeria wanted to sustain AMCON, fine but not banks funding the corporation. AMCON has overstayed its functions in the banking sector. AMCON is reporting losses despite collecting levy from banks and having challenges in selling recovered assets from debtors.
“The banking institution must continue to fund AMCON because it is not the bankers’ committee that form their board but the government. If the federal government wanted to keep the board of AMCON, they must think of funding it not collecting from banks.
“What was AMCON doing when some banks were having challenges recently? AMCON has not helped our banking sector and it has not posted any profit. I still do not understand why the Senate requested AMCON to continue to exist. AMCON’s 10 years has ended, according to the law but they continued to stay, playing games with shareholders’ funds. AMCON is killing the industry and not helping the banks when they are in financial crisis.”
Meanwhile, a breakdown of Tier-1 banks’ AMCON levy and NDIC’s deposit insurance premium revealed that Access Holdings incurred the highest amount in the 2023 financial year.
Access Banks’ AMCON levy rose to N68.81 billion in 2023, an increase of 30.5 per cent over N52.73 billion in 2022. Its NDIC’s deposit insurance premium closed 2023 at N35.65 billion, a growth of 58 per cent from N22.53 billion declared in 2022.
Further findings revealed that GTCO recorded the least with N27.3 billion AMCON levy in 2023, representing 17.3 per cent increase from N23.3 billion in 2022, while its NDIC’s deposit insurance premium stood at N17.01 billion in 2023, representing about 18 per cent from N14.4 billion in 2022.
Access Holdings’s AMCON levy 30.5 per cent growth is on the backdrop of significant increase in the asset value of the newly restructured bank, which grew on the back of multiple mergers and acquisitions.
As of December 2023, Access Holdings recorded a total asset value of N26.69 trillion, which is nearly 78 per cent higher than the N14.99 trillion recorded in the same period of the prior year. At almost N27 trillion, Access Holdings is the largest financial institution in the country based on total assets.
Responding, GTCO said the increase in its operating expenses resulted from growth in regulatory costs- NDIC and AMCON expenses and the impact of depreciation of functional currencies across all jurisdictions wherein it operates.