Business Maverick

Business Maverick

Top Nigerian Bank Sets Aside $267 Million as Ghana Revamps Debt

Top Nigerian Bank Sets Aside $267 Million as Ghana Revamps Debt
Customers queue to withdraw newly-designed Nigerian naira banknotes from automated teller machines (ATM) outside a Zenith Bank Plc branch in Lagos, Nigeria, on Saturday, Feb. 4, 2023. Central Bank Governor Godwin Emefiele has defended his decision to replace 2.7 trillion naira ($5.85 billion) of cash outside the banking system even as scenes of chaos have unfolded all over Nigeria, where the vast majority of transactions are still done in cash. Photographer: Benson Ibeabuchi/Bloomberg

Zenith Bank Plc, Nigeria’s biggest lender by market value, said it set aside 123.4 billion naira ($267 million) in part to account for its holdings of bonds in Ghana, as the nation restructures its debt. 

The bank’s impairments last year doubled from 59.9 billion naira in 2021, Zenith said in emailed statement. Ghana’s debt restructuring “resulted in a very significant impairment expense,” according to the statement. It increased the cost of risk to 3.2%, the lender said.

Ghana’s move to restructure most of its public debt, estimated at 576 billion cedis ($49 billion) is weighing on banks from the UK to South Africa. The West African nation exchanged 87.8 billion cedis of notes that paid an average of 19%, with bonds returning as little as 8.35% — resulting in losses for financial institutions.

President Nana Akufo-Addo’s government has also started discussions with international debt holders as it seeks to finalize a $3-billion bailout from the International Monetary Fund.

Four of Africa’s biggest lenders — Standard Bank Group Ltd., FirstRand Ltd., Absa Group Ltd., and Nedbank Group Ltd. — collectively set aside 4.87 billion rand ($267 million) to account for the losses, impairing as much as 57% of local and onshore dollar denominated debt holdings.

Read more:

Impairment losses at Societe Generale SA’s Ghana unit jumped more than eight-fold to 284.7 million cedis last year, according to unaudited annual accounts on its website. Meanwhile, Standard Chartered Plc set aside $160 million.

Zenith is the first Nigerian bank to announce provisions. The lender, which plans to transition into a holding company, is looking to diversify overseas this year to curb risks, it said.

The Lagos-based lender missed net income estimates as profit declined by 8.3% to 224.05 billion naira in 2022 on higher costs, it said in filing to the Nigerian stock exchange on Wednesday. The net income missed the average analyst estimate of 245.84 billion naira, according to data compiled by Bloomberg.


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

[%% img-description %%]

The Spy Bill: An autocratic roadmap to State Capture 2.0

Join Heidi Swart in conversation with Anton Harber and Marianne Merten as they discuss a concerning push to pass a controversial “Spy Bill” into law by May 2024. Tues 5 Dec at 12pm, live, online and free of charge.

A South African Hero: You

There’s a 99.8% chance that this isn’t for you. Only 0.2% of our readers have responded to this call for action.

Those 0.2% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.2%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options