Nigeria’s Fidelity Bank takes charge on 9mobile loan after central bank request

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By Chijioke Ohuocha

LAGOS, Oct 25 – Nigeria’s Fidelity Bank has taken a 5 percent impairment charge on a 17.3 billion naira ($55 million) loan to Etisalat Nigeria, now called 9mobile, Fidelity Chief Executive Nnamdi Okonkwo said on Wednesday, in line with a central bank request.

Etisalat Nigeria took out a $1.2 billion syndicated loan from a group of 13 local banks four years ago but has defaulted on repayments this year due to a currency crisis and recession in Nigeria.

A banking source told Reuters last week that the central bank had asked lenders involved in the loan to take a 5 percent provision as part of their third-quarter results.

Okonkwo said Fidelity Bank was also raising provisions across its loan book. “We are revising (the non-performing loan ratio) from sub-5 percent to sub-6 percent by end of the year, due to currency conversion and some risk on the oil and gas book,” he told an analysts call held to discuss its nine-month results.

“We have seen some improvements in the transport sector and the consumer book.”

Net loans stood at 753.8 billion naira as of September, up 4.9 percent from a year earlier. The bank was targeting 7.5 percent loan growth this year, Okonkwo said.

Fidelity Bank on Monday posted a pretax profit of 16.24 billion naira for the nine months through September, up from 9.83 billion a year ago.

The Nigerian Senate on Tuesday voted in favour of launching an investigation into the default of Etisalat Nigeria and into how its funds were used.

Nigerian lenders have picked Barclays to try to find new investors for 9mobile, two banking sources told Reuters last week.

Okonkwo also said the bank had submitted details of personal and business accounts that lacked complete identification to the central bank following a court order. He declined to say how many accounts were involved.

A court has ordered a temporary freeze on millions of bank accounts with incomplete identification documents and the forfeiture of funds in those accounts as the government seeks to ensure compliance with money laundering rules.

The bank said it had notified customers about the court ruling and advised them to regularize their accounts.

Shares in Fidelity, which has gained 85 percent so far this year, rose 4.5 percent on Wednesday to 1.62 naira. ($1 = 315.00 naira) (Editing by Adrian Croft and David Holmes)

 

(Reuters)

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Godwin Okafor is a financial journalist, Internet Social Entrepreneur and the Founder Naija247news Media Ltd He has over 16 experiences in journalism, which cuts across traditional and digital media. He started his journalism career in Business Day, Where he was a senior editorial graphic artist, before he left to start Naija247news, An Online Financial Newspaper in 2010. He has won series of awards and he is the chairman of Emmerich Resources Limited, the publisher of Naija247news.com and also sits on the board of Students In Business Awards, (SIBA).

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