AMCON narrowed losses despite surge in Opex

Nigeria’s bad bank, the Asset Management Corporation of Nigeria  (AMCON) narrowed its losses to N275 billion in the Full Year 2014 period despite an alarming surge in operating expenses.

The Group results which were prepared according to IFRS and posted on the website of the firm, shows 2014 losses declining from the loss recorded in 2011, 2012 and 2013 of N2.4 trillion, N702 billion, N627.5 billion respectively.

 

AMCON’s group operating expenses however rose by 97 percent in 2014 led by an increase in personnel and other operating expenses.

BusinessDay calculates that employees of the AMCON parent company earned an average of N23 million per head as personnel expense surged 159 percent in the period to N7 billion for an estimated 300 staff.

This compares to personnel expenses of N6.28 million per head for Guaranty Trust Bank (Parent), Nigeria’s largest bank by market value.

The rise in the group’s other operating expenses to N199.6 billion in 2014 from N76.8 billion in 2013, were fuelled by impairment of goodwill of N148.9 billion and aircraft fuel expense of N11.1 billion.

The remuneration paid to AMCONs directors jumped 87.5 percent to N829 million in 2014 from N442 million in 2013.

AMCON also owned 0.43 percent of the Nigerian equity market at the end of 2014.

“At the reporting date, the Group’s exposure to listed equity securities at fair value was N50.49 billion,” the report said.

AMCON for the first time included in its results, the operations of its subsidiaries, which include Aero Contractors (60 % ownership), Peugeot Automobile Nigeria (PAN) Kaduna (79 %) , and Consolidated Discounts Limited (100 %).

The firm booked revenue of N19.6.billion from operations of Aero Contractors in the period.

PAN operations contributed N1.87 billion in revenues to AMCON; however the firm made a loss of N6.06 billion on the statement of profit or loss.

Rental revenue of N4.8 billion was earned from investment properties surrendered by debtors for the settlement of their outstanding loan balances with AMCON during the year.

AMCON which had a 20 percent ownership in Union Bank of Nigeria, disposed of its stake entirely in December and booked N17.1 billion as gains in its disposal in the period.

During the year, AMCON disposed of its 100 percent holdings in Mainstreet Bank Limited and Enterprise Bank Limited and its 85 percent stake in Ascot Offshore Limited.

AMCON group made a total of N132.2 billion from the disposal of the three subsidiaries with Enterprise netting N21.5 billion, Mainstreet N44.6 billion and Ascot N66.1 billion.

AMCONs debt issued was equivalent to N3.4 trillion at the end of 2014 made up of various issues including AMCON CBN loan Note, CBN, and Bank of Industry on lending facility.

AMCON has purchased a total of N1.75 trillion of nonperforming loans to date, with the cost of negotiated loans as at year end equivalent to N754 billion. The cost of non negotiated loan as at year end 2014 was N754 billion, while N1 trillion has either been restructured with an outstanding amount of N403 billion.

Non-performing loans stood at 2.9 percent at the end of December and are rising, the Central Bank said in April.

“The ratio will climb to between 5 percent and 10 percent by the end of 2015,” Fitch Ratings said last year.

The group had a negative liquidity gap of N4.37 trillion at the end of 2014.

Nigerian President Muhammadu Buhari replaced Mustafa Chike-Obi, former chief executive officer of AMCON, with Ahmed Lawan Kuru, last month.

PATRICK ATUANYA