| Access Bank’s
Aig-Imoukhuede
...No problem with common end-of-year
By SEUN ADESIDA (seun@sunnewsonline)
Saturday, March
15, 2008
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Aigboje Aig-Imokhuede
Photo: Sun News Publishing |
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One of the latest policies by the Central Bank of Nigeria
(CBN) is the adoption of a common end of the year financial
report by all banks. This the apex bank said would enable
it carry out its statutory functions with more precision and
would allow rating agencies to have a common base for ranking
of the banks.
The common year end according to the Group Managing Director
of Access Bank Plc, Aigboje Aig-Imokhuede would ensure a tidier
macroeconomic planning processes, and would allow a common
way of assessing the banks and to align the financial reports
of Nigerian banks with international best practices and not
to rank the banks as being speculated in some quarters.
Aig-Imokhuede told Saturday Sun that there
was nowhere in the agreement reached with the CBN, Nigeria
Deposit Insurance Corporation (NDIC) and other banks that
the new common year end policy would in any way affect the
rating or risk ratings of the banks.
Common year end for banks
Subsequent to the decision reached at the last Bankers Committee
meeting that banks should now have a common year end - a lot
of issues where thrown up. Many have the view that: “It
does not have any impact on whether banks are going to have
more or less money, it is not going to have any effect on
share price, it does not have any implication on customers,
it won’t have effect on bank services.
It has no impact on risk rating or any rating of the bank,
in terms of risk practices or management of any bank. It is
simply a more efficient way of monitoring the performance
of the banks.”
There are no special issues around the common year end accounting
period for the banks, at no time was it communicated to any
party that it is going to affect risk rating. The fact that
a bank’s year end moves from March to December does
not have any effect on the risk rating such a bank.
Operational pressure
Other issues, are about tax implication of a common year-end
for banks, capacity of auditing firms, CBN and Nigeria Deposit
Insurance Corporation (NDIC) to cope with volume of auditing
around the Christmas period as well as the impact of the common
year end on risk ratings of the banks.
It is important for the auditing firms to put a strategy in
place that would allow their staff to operate optimally within
this period without recourse to the excuse that the period
is a festive season.
Most of the banks use almost the same auditors, so the auditors
would be very busy around this period of the year but banks
have been assured that there is no cause for alarm.
It’s important for the CBN to relate with Federal Inland
Revenue Service (FIRS) on ways of improving the tax regime
for the banks presently. There are various tax issues which
needed to be sorted out for the new arrangement to work. This
is important because tax payment is part of the report to
be presented in the financials of the banks.
The FIRS should produce a tax regulation for all the banks
operating in the country. We would be looking for understanding
and cooperation within the ambit of tax laws in the country.
Audit processes
Still on the auditors, there is an arrangement to see that
the auditors deliver on time to enable the banks publish their
audited accounts at the end of the year. Though we are confident
that the auditors can deliver on this aspect but we urge them
to take into cognizance the festivities that greet that period
of the year”.
The benefits
The income audit is in the purview of CBN and the NDIC, the
two agencies must be able to review the income report of the
banks within a given time frame for the banks to meet their
deadline for publishing their annual reports at the same period.
The agencies have reassured the banks that they would cope
with the increase in the volume of work to be handled before
the year runs out. The common year end is for tidier macroeconomic
planning processes, and it is to have common way of assessing
the banks and to align the financial reports of Nigerian banks
with international best practices.
SMEEIS contribution
The CBN and the banks decided to reduce the minimum contributory
rate toward the SMEEIS fund from 10 per cent to 5 per cent
because of the feedback from the beneficiaries. The contribution
is voluntary and most banks are free to partner with any existing
microfinance institution, to disburse this fund.
Unlike before when it used to be an equity contribution, now,
it is purely a loan to the beneficiaries, who are the Small
and Medium Scale Enterprises (SMEs). In the five years of
the existence of SMEEIS at 10 per cent the banks were only
able to generate a total of N37 billion.
But with the reduction in percentage contribution the banks
are now targeting N50 billion from the onset and may actually
hit the N100 billion target. In the long run, various guidelines
and framework for the new initiative would soon be communicated
to the banks.
States, banks and micro financing
The microfinance guideline stipulates that the 36 States of
the federation are to open a micro finance outfit with 1 per
cent of their annual budget or such funds could be channeled
into any existing microfinance institution.
The commercial banks are equally free to open their own microfinance
banks. This is because fund to be generated towards the Small
and Medium Enterprises Equity Investment Scheme (SMEEIS) fund
would be better managed and disbursed through the micro credit
institutions.
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