By Nwadigwe Nitzack with agency report
Nigeria’s Fidelity Bank has taken a 5 percent impairment charge on a N17.3 billion ($55 million) loan to Etisalat Nigeria, now called 9mobile, Fidelity Chief Executive Nnamdi Okonkwo said on Wednesday, in line with a Central Bank of Nigeria (CBN) request.
Etisalat Nigeria took out a $1.2 billion syndicated loan from a group of 13 local banks four years ago but has defaulted on repayments this year due to a currency crisis and Nigeria’s economic recession.
The decision came after the nation’s apex banking regulator asked lenders involved in the loan to take a 5 percent provision as part of their third-quarter results.
Okonkwo said Fidelity Bank was also raising provisions across its loan book. “We are revising (the non-performing loan ratio) from sub-5 percent to sub-6 percent by end of the year, due to currency conversion and some risk on the oil and gas book,” he told an analysts call held to discuss its nine-month results. “We have seen some improvements in the transport sector and the consumer book.”
Net loans stood at N753.8 billion as of September, up 4.9 percent from a year earlier. The bank was targeting 7.5 percent loan growth this year, Okonkwo said.
Fidelity Bank on Monday posted a pretax profit of N16.24 billion for the nine months through September, up from N9.83 billion a year ago.
The Nigerian Senate on Tuesday voted in favour of launching an investigation into the default of Etisalat Nigeria and into how its funds were used.
Recall that the 13 banks exposed to 9mobile have had picked Barclays to help them find new investors.
Meanwhile Fidelity Bank boss has also said the bank had submitted details of personal and business accounts that lacked complete identification to the central bank following a court order. He declined to say how many accounts were involved.
A court has ordered a temporary freeze on millions of bank accounts with incomplete identification documents and the forfeiture of funds in those accounts as the government seeks to ensure compliance with money laundering rules.
The bank said it had notified customers about the court ruling and advised them to regularise their accounts.
Shares in Fidelity, which have gained 85 percent so far this year, rose 4.5 percent on Wednesday to N1.62 .