The Asset Management Corporation of Nigeria (AMCON) is considered to be on a sound financial footing, as cost to income ratio (CIR) for the financial year ended December 2015 reduced by 95.3 percent, from 618% 2014 to 29% last year.
Presenting the breakdown yesterday in Lagos, Bismarck Rewane, chief executive of Financial Derivatives Company (FDC) limited said that total operating expenses improved by 70.1 percent from N226.45 billion to N67.7 billion in the year under review.
CIR has to do with the efficiency of an institution as lower efficiency means that AMCON made considerably more than it spent for the year under review, an indication that it is on a sound fiscal footing.
“Total operating expenses improved by 70.1% from N226.45 billion to N67.7 billion due to the 25.8% and 76.4% reduction in personnel and other expenses respectively.” Rewane said.
Aminu Ismail, executive director of the coprporation said that AMCON is committed to its core responsibility, even as the corporation is also committed to the disposal of Keystone Bank, the last batch of the bridge institution.
“There are credible institutions bidding for the bank and I can assure you that in the next four weeks, we shall make pronouncement on the bank,” Ismail said.
The executive director also said that the corporation is currently discussing with the CBN on the possible review of the funding model through the sinking fund to enable it be in sync with the current economic realities.
He however acknowledged that current challenges in the banking industry are of great concern to the corporation.
The breakdown further showed that 57% achievement has been made so far on the restructuring volume of the total acquired EBAs of N3.7 trillion, with 56 percent, totaling N1.26 trillion fully settled.
Overall collections from inception to Dec. 2015 is N644 billion in cash and asset forfeiture
However, gross earnings in 2015 declined by 65.6% to N141.09 billion, with net trading loss of N10.7 billion.
Total assets of the corporation also declined by 18.1% to N1.23trn from N1.5trn, with accumulated loss of N4.5trn and negative equity of N3.78trn
“Cost efficiencies see total operating expenses decline by 70.1% to N67.7 billion,” he said
The FDC boss said that focus in the next few years will be on recoveries and de-emphasising new asset acquisition, while aggressive debt recovery strategies will be sustained.
“The future of AMCON is highly dependent on the performance of the economy. 2018 seems to be an inflection point of the economy and possibly the beginning of AMCON’s recovery story. However, there may be fears of further financial distress, following the recent recessionary trends in the economy .The greater part of the next few years will be devoted to recovering NPLs and further restructuring,” he added.
He expressed optimism that the devaluation of the naira will help enhance the value of collateral on existing risk assets, as exposure remains fixed, stressing that as the “naira finds its true value and commodity prices stabilise, it will lead to improved valuation on AMCON’s assets and enhanced marketability of the assets.”
The impact of the non-existence of AMCON on the general economy and in particular, the financial services industry, will have been widespread, emphasising an amplified disruptive effect of a likely disorderly systemic eruption
The non existence of AMCON, according to him would have led to higher unemployment, social and political crisis, a recession coinciding with a major meltdown and an erosion of domestic and international confidence
“The What If Analysis revealed that an estimate of N9.1trn of total assets would have been wiped out if AMCON had not intervened. The Nigerian stock market would not have been spared, as a crash would have been inevitable. Findings show that the social benefits of AMCON’s intervention were far in excess of financial losses,” he said.
John Omachonu
