Access Bank yesterday said it had booked a N4 billion impairment on its loan to troubled telecoms firm 9mobile, formerly known as Etisalat Nigeria.
This is even as it hopes to recover the debt once the company is sold to new investors.
Managing Director and Chief Executive of the bank, Herbert Wigwe, on Wednesday said the bank had a direct exposure of N11 billion to 9mobile, as well as an exposure of between N35 billion and N39 billion to the telecoms firm’s suppliers.
Wigwe told an analysts during a conference call that Access hoped to recover the debt once 9mobile was sold to new investors.
Access Bank last week released its half year result posting a 18.3 per cent rise in its profit before tax and 44.2 per cent improvement in the group interest income.
Its impairments on loan losses was on the rise although at a much slower rate, having risen by 1.5 per cent to N10.36 billion at the end of the 2017 half year from N10.21 billion in the comparable period of 2016.
The bank which declared an interim dividend of 25 kobo per share to shareholders registered on its books as at September 7, 2017, had recorded an interest income of N161.9 billion in the first six months of the year as against N112.29 billion which was recorded in the comparable period of 2016.
Zenith Bank Plc had also earlier said it made a provision on 30 per cent of its loan to 9mobile, formerly known as Etisalat Nigeria, saying it would continue to seek opportunities to grow its risk assets while maintaining a low NPL ratio and sustaining its improved coverage ratio.
Managing Director and Chief Executive of the bank, Peter Amangbo, in a conference call with investors stated that the bank had taken about 30 per cent of the loan “as a provision which we believe is very prudent as the company is undergoing restructuring to prepare for a new investor.”
Regulators had stepped in last month to save Etisalat Nigeria from collapse and prevent lenders placing the country’s fourth biggest telecoms group into receivership, prompting a board, management and name change.
9Mobile had taken out a $1.2 billion loan four years ago from a consortium of banks but struggled to repay it due to a currency crisis and a recession in Nigeria.
Zenith Bank is the largest lender to 9Mobile, one source familiar with the matter said.
The bank has declined to disclose its total exposure to the telecoms group.
Zenith Bank had reported a pre-tax profit of N92.18 billion for its half year against N53.91 billion a year ago.
Amangbo noted that the bank’s creativity for market dominance and risk management for superior performance had helped it to build a shock-proof balance sheet with its Capital Adequacy Ratio at 21 per cent.
Its liquidity ratio at the end of the half year period stood at 61.1 per cent, non-performing loans ratio at 4.3 per cent, cost of risk at 3.6 per cent and coverage ratio at 117 per cent.
