Business

CBN finally releases audited accounts, profits surge to N103.8 billion in 2022

Published

1 year ago

August 11, 2023 9:42 am

BodexNG

The Central Bank of Nigeria released its long-awaited audited accounts for the year ended December 2022 showing it made a profit after tax of N103.8 billion up from N75.1 billion reported a year earlier.

The results which are published on the website of the apex bank included audited results for 2016, 2017, 2018, 2019, 2020, and 2021.

The apex bank’s results also show it reported a profit after tax every year for the last 8 years consecutively despite facing currency depreciations and doling out intervention funds, and loans to the government amongst other development finance activities.

Until now, the results have been withheld from the public under Godwin Emefiele. However, the recent decision of President Tinubu to investigate the apex bank’s operations under the suspended CBN Governor may have triggered the release of the financial statements.

Details of the results

The latest result which was signed by Godwin Emefiele and audited by EY and KPMG shows the apex bank has relied on a combination of higher interest income, fees, and commissions to remain profitable.

A cursory analysis of the results shows the apex bank earned a net interest income of N1.8 trillion compared to N1 trillion a year earlier representing an 80% surge in net interest income.

Net operating income was N1.2 trillion compared to N1.1 trillion same period in 2021. Total operating expenses also rose from N1.1 trillion in 2021 compared to N1.2 trillion in 2022.

Ways and Means Income Surge: A major source of interest income was from loans and advances in the form of overdrafts given to the federal government.

The loans totaling N23 trillion and also known as “Ways and Means” generated interest of N1.9 trillion for the apex bank compared to N1.2 trillion in the prior year.
The controversial loan has been criticized for its size and flouting of the central bank act that only allows the apex bank to lend a maximum of 5% of prior year FG revenues to the government.

According to the audited accounts of the apex bank, the Ways and Means provision is priced at a whopping MPR+3%.

“Included in interest income on Loans and receivables is interest income on Overdraft facility granted to the Federal Government amounting to N1.9 trillion (2021: N1.2 trillion). The interest rate applied on this facility is MPR+3%.” CBN

The apex bank’s results also show it earned an additional N247 billion and N156 billion from AMCON and via FGN Securities respectively.

The apex bank also reported another N422.7 billion in income derived from “debt instruments measured at fair value through profit and loss (FVTL). FVTL is a way companies account for certain investments they own. Instead of noting the investment’s original cost, the company regularly updates the investment’s value to reflect its current market price.

This method ensures that the financial statements reflect the most up-to-date value of the investment.

Forex Income: Rounding up its major income sources was N104.5 billion income earned from commissions from the sale of foreign currency and other related transactions.

Another N15.9 billion was earned from processing currency, Bureau de Change application and registration, commission on fund transfers, and other banks and financial institutions’ application and licensing fees.

Expenses loaded intervention, fx, and credit-related losses

But as the apex bank’s income surged through the extension of loans to the federal government and from forex transactions, it also incurred huge expenses on forex and loan impairments.

A key feature of the expenses was N888.3 billion incurred by the apex bank as “other operating expenses” during the year (N884.2 billion in 2021).

A breakdown of the amount reveals closer to half of the expenses (N346.2 billion) were losses arising from foreign exchange revaluation losses.
Also included is another N155.5 billion incurred as “rebate expenses” which the apex bank explained was connected to RT 200 and Naira4Dollar, a policy under CBN led Godwin Emefiele to attract forex inflows.

For example, the RT 200 allowed the apex bank to pay exporters an incentive for repatriating their dollars.

“Rebate expenses represent expenses incurred by the CBN in connection with the RT200 and Naira 4 Dollar schemes which the Bank introduced to enhance foreign currency inflow, diversify the sources of FX inflow, increase the level of non-oil exports, ensure stability and sustainability of FX inflows, and support export-oriented companies to expand their export operations and capabilities.

The Bank stated it incurred N137 billion in 2022 on the RT200 scheme and In 2021 Naira 4 Dollar expense was N4 billion. This policy has since been dropped since the unification of the naira was announced.

FG Expenses: Another major expense item reported by the central bank and included in the “other operating expense” was N125 billion (N45 billion in 2021) which it incurred in connection to national security, the federal government, and security agencies. While the expenses are actually an extension of loans to the federal government, it is expensed on the FG repays the loans

intervention activities expenses represents expenses carried out by CBN in connection with national security, federal government, state securities, armed forces, financial sector capacity building where there is important need for the fund. All payments made in relation to intervention activities embarked on by the Group are expensed as incurred. However, payments made by the Group in relation to intervention activities on behalf of the Federal Government are recognized as receivables and are fully impaired after 12 months if the amount is not received from the Federal Government.

Credit Losses: The apex bank also reported a whopping N875.2 billion in credit losses almost double the N498.2 billion reported a year earlier.

This suggests most of the interest earned was dented by impairment on its loans.
The apex bank did not break down which of its borrowers have or are defaulting. However, its balance sheet shows a total loan of about N31.4 trillion.

The apex bank’s balance sheet expanded by about N22 trillion from N35.5 trillion in 2018 to about N57.9 trillion in 2022.

Business

NERC fines Abuja Disco N1.69bn for overbilling customers

Published

14 hours ago

September 13, 2024 12:31 pm

BodexNG

The Nigerian Electricity Regulatory Commission has imposed a fine of N1.69bn on Abuja Electricity Distribution Company for overbilling customers.

The penalty, documented in Order NERC/2024/114, was issued as part of the commission’s September 2024 Supplementary Order.

The regulatory document, ORDER/NERC/2024/114, which was dated August 30 and signed by Vice Chairman, Musiliu Oseni, and Commissioner, Legal, Licensing and Compliance, Dafe Akpeneye, was published on NERC’s website on Thursday.

According to NERC, the fine is based on AEDC’s non-compliance with the commission’s previous order on capping estimated billing for electricity consumers.

After investigating AEDC’s billing practices, NERC identified that the company had overcharged customers from January to September 2023, leading to the imposition of the fine which is equivalent to 10 per cent of the overbilled amount.

The regulatory document, titled September 2024 Supplementary Order to the Multi-Year Tariff Order 2024 for AEDC, outlined the reasons behind the fine and adjustments to AEDC’s revenue requirements and tariffs.

The commission stated that it had “approved the deduction of N1.69bn from the total annual OpEx of AEDC effective September 2024, being 10 per cent of the overbilled amount by AEDC for the period covering January-September 2023.”

The fine was levied in response to complaints by consumers and subsequent investigations that revealed AEDC had not adhered to the regulatory guidelines on estimated billing.

NERC’s order emphasised, “The commission has approved the deduction of N1.69bn from AEDC’s annual operating expenditure as a penalty for non-compliance with the order on capping estimated bills.”

In addition to the fine, NERC also issued directives aimed at improving service delivery and monitoring compliance with service-based tariffs.

AEDC is required to ensure the continuous monitoring of its service levels, particularly regarding electricity supply to Band A feeders.

“Where AEDC fails to deliver on the committed level of service on a Band A feeder for consecutive two days, AEDC shall on the next day by 10am publish on its website an explanation of the reasons for the failure,” the order specified.

The Supplementary Order also mandated AEDC to procure a minimum of 61MW of embedded generation, with at least 30MW sourced from renewable energy, to improve the reliability of electricity supply within its franchise area.

The procurement of this capacity must be completed by April 2025.

NERC emphasised that this measure was necessary to meet AEDC’s service delivery commitments under its Service-Based Tariff framework.

Regarding the adjustments to AEDC’s tariffs, NERC noted that the commission had approved new tariffs effective from September 1, 2024.

NERC also made provisions for compensating customers for service failures, particularly for those on Band A feeders.

“AEDC shall make appropriate compensation to the affected customers in Band A feeders listed in Appendix 3 for failure to deliver up to 20 hours of average supply but more than 18 hours of average supply,” the order stated.

The Supplementary Order, which will remain in effect until a new tariff review is issued, underscores NERC’s commitment to ensuring that electricity distribution companies adhere to regulatory guidelines while protecting consumers from unfair billing practices.

Business

Naira depreciates to N1,655/$ in parallel market

Published

18 hours ago

September 13, 2024 8:04 am

BodexNG

Naira appreciates to N1,419/$ at official market

The Naira yesterday depreciated to N1,655 per dollar in the parallel market from N1,645 per
dollar traded on Wednesday.

Similarly, the Naira yesterday depreciated to N1,649.76 per dollar in the Nigerian Autonomous Foreign Exchange Market, NAFEM.

Data from FMDQ showed that the indicative exchange rate for NAFEM rose to N1,649.76 per dollar from N1,558.75 per dollar on Wednesday, indicating N91.01 depreciation for the naira.

Consequently, the margin between the parallel market and NAFEM rate narrowed to N5.24 per dollar from N86.25 per dollar the previous day.

Business

CBN gives PoS operators one month to use aggregators

Published

18 hours ago

September 13, 2024 7:54 am

BodexNG

The Central Bank of Nigeria has directed that all Point of Sale operators must route transactions through licensed payment terminal service aggregators.

A circular posted on the CBN’s website on Thursday stated that the move was aimed at enhancing the tracking and management of electronic transactions in the country.

“As part of efforts to mitigate the concerns regarding channelling all Point of Sale transactions through a single aggregator, the CBN on April 19, 2024, granted a second PTSA licence to Unified Payment Services Limited.

“In furtherance of the above, the CBN hereby directs as follows: 1 Acquirers are henceforth required to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator PTSAs are required to send PoS transactions to only Processors certified by the relevant Payment Scheme, nominated by the Acquirer and licensed by CBN,” the apex bank noted.

It noted that the Nigeria Interbank Settlement System Plc was granted a PTSA licence in 2011 to handle the aggregation of PoS transactions.

However, to address concerns about routing all transactions through one aggregator, the CBN granted a second PTSA licence to Unified Payment Services Limited earlier this year in April.

“To achieve the objective of tracking electronic transactions in Nigeria, the Central Bank of Nigeria in August 2011, granted a Payment Terminal Service Aggregator licence to Nigeria Interbank Settlement System Plc. As part of efforts to mitigate the concerns regarding channelling all Point of Sale transactions through a single aggregator, the CBN on April 19, 2024, granted a second PTSA licence to Unified Payment Services Limited.”

The CBN has instructed that all acquirers, the institutions responsible for processing payments from PoS terminals, must channel transactions through any of the two licensed aggregators.

In addition, licensed processors are required to integrate with both PTSAs to give acquirers the flexibility to choose their preferred service providers.

It noted that payment terminal service providers, responsible for deploying and managing PoS terminals, must ensure their devices and applications are configured to work with any PTSA chosen by the acquirers.

According to the CBN, PTSPs are also required to submit monthly reports to the CBN, detailing the number of merchants and agents they manage, as well as the PTSA services used.

Similarly, the CBN has mandated that each PTSA submit monthly reports of all transactions processed through their platforms.

According to the apex bank, the reports must be submitted to the director of the Payments System Management Department within seven days after the end of each month.

The CBN urged all PSPs to regularise their operations with the PTSAs within 30 days, warning that non-compliance with the directive would attract appropriate sanctions.

Recall that the Corporate Affairs Commission announced on July 7 that all Point of Sale operators in the country must register with it before September 5.

Bodex F. Hungbo, SPMIIM is a multiple award-winning Nigerian Digital Media Practitioner, Digital Strategist, PR consultant, Brand and Event Expert, Tv Presenter, Tier-A Blogger/Influencer, and a top cobbler in Nigeria.

She has widespread experiences across different professions and skills, which includes experiences in; Marketing, Media, Broadcasting, Brand and Event Management, Administration and Management with prior stints at MTN, NAPIMS-NNPC, GLOBAL FLEET OIL AND GAS, LTV, Silverbird and a host of others