Following last Friday’s release of the Financial Statement of the Asset Management Corporation of Nigeria (AMCON) for the year end December 31, 2016 by its Management led by Ahmed Kuru, reactions have continued to trial the release from those who should know.
Chief Executive Officer (CEO), Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has insisted and correctly so that; it is “practically impossible” for the corporation to make profit in a recession. He stated this in an analysis of AMCON’s financial statements disclosed to Newsbitsng.com in Lagos. The highly respected financial expert pointed out that 2016 was severely challenging for the country as it experienced a commodity, currency and market crisis altogether.
The analysis disclosed that 2016 was the year in which the country suffered its: “First recession in 25 years; unemployment plus underemployment (hit) 33.6per cent, inflation peaked at 18.55 per cent; stock market lost 6.17per cent, real estate vacancy increased 74per cent and naira lost 34.3per cent.” Financial highlights of its 2016 results released last Friday (May 26, 2017) show that while AMCON reduced its loss from N304.2 billion in 2015 to N254 billion in 2016, losses incurred from its subsidiaries pushed the group’s loss from N295.45 billion in 2015 to N352.15 billion in 2016.
Further analysis of the corporation’s results by Rewane and his firm shows that the bad bank’s 23.5per cent growth in operating expense in 2016 was 5per cent higher than headline inflation, even as its gross earnings were 46.9per cent lower at N74.8billion. He, however, noted that the corporation’s actions saved 100,000 jobs and “salvaged” the critical aviation sector thereby averting social unrest and protecting extended families. The FDC boss stated that given the rising volume of Non-Performing Loans (NPLs) in the banking industry, AMCON may need to review its decision to stop further purchase of bad loans, adding that the corporation’s, “Sunset clause (winding up) may not be cast in stone.”
Same day the result was released, AMCON told journalists that the corporation was facing challenges in trying to get its obligors to repay their loans. Kuru further explained that most of the debtors were not willing to pay and were resorting to court to seek redress, stressing that court cases were slowing down the corporation’s loan recovery drive. He said: “They are quite a lot of challenges we are facing in debt recovery; we are not under illusion that it is easy to recover bad loans. Loan recovery is a very unpleasant job. Somebody can engage us for 10 years to 20 years in court and this is slowing down our operations.”