Following massive impairments that have
prompted several banks to issue profit warnings and the general downturn
in the Nigerian economy, the FSDH Merchant Bank Limited (FMBL) has
warned that 2016 will be a very challenging year for banking business in
Nigeria.
The bank noted that the federal
government’s pronouncement that it intended to run a fiscal deficit in
excess of N2.2 trillion this year to revive the struggling economy to
ensure a sustainable growth path remained one of the factors that would
pose challenge to banks.
Speaking at the bank’s annual general
meeting (AGM) held in Lagos,
Chairman of FMBL, Osaro Isokpan, noted
that the government’s expectation to raise funds in addition to the N900
billion it planned to borrow from the domestic market, has the
implication of further toughening the banking environment.
Speaking in the same vein, a
representative of an institutional investor in FSDH, Oyinkan Adewale,
admitted that the economic situation in the country and the persisted
bear market have affected shareholders investments, especially in
equities. He, however, expressed optimism that with the measures put in
place so far by the regulator especially the Corporate Governance Index,
the investments were protected.
He said: “For the equities market, if we
can just hold on, it will grow. Presently, we are not seeing inflows
from outside the market. What has been growing every economy even the
equities market in the western world has been new capital injected into
the system; but I am not seeing much of capital from foreigners. It’s
barely one year, the new administration came on board, and investors are
still waiting, they want to know which direction the economy is going
before we will start seeing inflows.”
In spite of the challenges in the
economy and in the financial markets in 2016, the FMBL Chairman, Osaro
said: “We will continue to explore and expand relationships with our
esteemed customers in carefully selected industries and to offer our
tailor-made solutions. We see increased need in the economy for
financial advisory services and are poised to exploit this opportunity.
We have reviewed our lending to the sectors that are considered to be
most vulnerable to the current economic challenges. It’s pertinent to
note, however, that no sector is entirely immune to the current
challenges.”
The Managing Director and Chief
Executive Officer of FMBL Mr. Rilwan Belo-Osagie had told THISDAY at
the bank’s pre-AGM press briefing that the volume of businesses that
commercial banks do often expose them to risks.
He said the sad thing about the Nigerian
economic situation was the repeating of what had happened in the past
and the government’s inability to diversify the economy.
He however expressed optimism that the
oil prices will go up again, adding government will take advantage of a
likely rise in oil price to save and diversify the economy.
“The new year 2016 marks the fourth
year of our operations as a merchant bank. In spite of the challenges in
the economy and in the financial markets, we intend to continue to
harness the opportunities we identify in carefully selected industries
while continuing with our conservative approach of building a portfolio
of risk assets that will be enduring. We will continue to maximise
shareholder value by constantly realigning our operations and also
harnessing business opportunities as they arise,” he said.
By Eromosele Abiodun/Thisday
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