Finance

SEC to Resume Oando Forensic Audit from Wednesday

Published

6 years ago

December 6, 2017

SEC to Resume Oando Forensic Audit from Wednesday

In a nod to the U-turn made by the Minister of Finance, Mrs Kemi Adeosun, to allow the forensic audit into the activities of Oando Plc to go ahead, the Securities and Exchange Commission (SEC) Tuesday said that the audit will resume from Wednesday in the company’s office.

SEC in a terse statement reiterated its commitment to go ahead with the forensic audit, saying: “This commitment is contained in a letter dated December 5, 2017, addressed to Oando Plc.”

The commission also assured the general public of its zero tolerance to infractions in the Nigerian capital market.

The letter, which was signed by the acting Director-General of SEC, Dr. Abdul Zubair, said the forensic auditors would be at the premises of Oando from Wednesday to undertake the audit.

Zubair was appointed by the federal government last Thursday, following the suspension of the DG of SEC, Mounir Gwarzo, the day before.

The Letter titled, “Re: Forensic Audit into the Affairs of Oando Plc,” read: “Further to our letter to you dated November 27, 2017 and another letter to your lawyers dated November 28, 2017, wherein the Commission had notified Oando Plc of its decision to go ahead with the Forensic Audit, the Commission in the light of recent developments wishes to reiterate the following:

• That the Commission is aware that Suit No: FHC/L/CS/1601/17: OANDO PLC V. SEC & ANOR was struck out on November 23, 2017 by his Lordship Hon. Justice Aikawa of the Lagos Division of the Federal High Court.

• That the Commission is not aware of the existence of any valid or subsisting Order of Court restraining the Commission from proceeding with the Forensic Audit.

“While we acknowledge that a Notice of Appeal has been filed to challenge the judgment of the Federal High Court, this notice does not serve as an Order of Court restraining the Commission from conducting the exercise.

“We wish to restate that our forensic auditors had been directed to commence work since November 27, 2017 and as a result shall be at your premises on any date from Wednesday, December 6, 2017.
“Kindly accord them the necessary assistance.”

But prior to SEC’s announcement Tuesday, its attempt to resume the forensic audit was interfered with by Adeosun last week, when she ordered Gwarzo to discontinue the audit, which he objected to.

Gwarzo’s refusal and subsequent letter that she put her verbal instruction in writing, in her capacity as the chairman of the board of SEC, led to his suspension exactly 48 hours after her meeting with him and 24 hours after being in receipt of his letter.

In announcing his suspension, Adeosun said Gwarzo had been asked to step aside to make room for a probe into allegations of financial impropriety levelled against him.

The forensic audit of Oando followed two petitions SEC received from a concerned shareholder, Dahiru Mangal, and an indirect shareholder, Ansbury Incorporated, over alleged mismanagement of the company’s financial affairs and distortion of its shareholding structure.

Following the petition, SEC said it conducted a comprehensive review, which revealed massive breaches of the provisions of the Investments & Securities Act and the SEC Code of Corporate Governance for Public Companies.

Consequently, the commission announced the appointment of a consortium of experts, consisting of auditors, lawyers, stockbrokers and registrars, to conduct the forensic audit, while the shares of Oando the Nigerian Stock Exchange (NSE) were placed on a technical suspension.

But even as SEC said the forensic audit on Oando would go ahead, the House of Representatives Tuesday passed a resolution directing the minister to reinstate the suspended SEC boss.

The House, in a motion, moved under matters of urgent public importance by Hon. Diri Douye (PDP, Bayelsa) on the need to intervene in the conflict between Adeosun and Gwarzo, directed its Committee on Capital Market and Institutions to probe the allegations and report to the House within two weeks.

It also directed all parties to maintain the status quo, pending the outcome of the investigation by the House.

It remains to be seen whether the House resolution is heeded, given that government agencies have a penchant for disregarding parliamentary motions that don’t have the backing of law, and given that an acting director-general has been appointed to superintend the commission, pending the findings of the administrative panel of inquiry set up by the minister to probe Gwarzo for alleged financial impropriety.

The House noted that the conflict between Adeosun and Gwarzo arose over the Oando forensic audit and the allegations of financial impropriety levelled against the latter.

It further noted that the conflict appeared to have been lingering for several months but was only brought to public light as a result of the disagreement on the Oando forensic audit.

Douye said there were further allegations of interference by the Ministry of Finance in the discharge of SEC’s mandate, particularly in the area of the Oando forensic audit, which he noted was largely the basis for Gwarzo’s suspension.

He said the intervention of the House was critical in putting the matter in proper perspective and the amicable resolution of the conflict in order to protect the image of the commission in the interest of both local and foreign investors.

He argued that neglecting the issues arising from the Oando forensic audit could have dire implications for the capital market going forward.

Also contributing to the debate, Hon. Tobi Okechukwu (PDP, Enugu) recalled the incident in the 7th Assembly when the House intervened in the probe of the near collapse of the capital market.
He said the suspension of Gwarzo had raised questions begging for answers.

He wondered why the alleged infraction by Oando should be swept under the carpet, adding that “Nigerians will want to know how the company has been run”.

According to him, a comprehensive inquiry was required to get to the root of the matter and queried why Adeosun did not allow the Oando forensic audit to go ahead?

Hon. Ahmad Babba Kaita (APC, Katsina) said it was worrisome that after the court had ruled against Oando, the minister still went ahead to suspend Gwarzo over the forensic audit of the company.

He warned that sweeping the alleged infractions committed by Oando under the carpet has the potential to eroding the confidence of both local and foreign investors in the capital market and the economy at large.

Hon. Karimi Sunday (PDP, Kogi) said the whole issue bordered on attempts by some highly placed people, who he did not name, to cover up the alleged fraud perpetrated by Oando.

He expressed concern that Gwarzo was suspended while doing his job, adding that he should be reinstated while the matter is investigated.

After debating the matter, the House passed the motion unanimously directing the finance minister to reinstate the suspended SEC DG, pending the investigation of all the issues pertaining to the Oando forensic audit and the allegations of financial impropriety levelled against him.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Fidelity Bank Grows Profit by 131.5% in FY 2023

Published

2 hours ago

April 16, 2024

Samed Olukoya

Mrs. Nneka Onyeali-Ikpe, MDCEO of Fidelity Bank Plc

Leading financial institution, Fidelity Bank Plc, has released its 2023 full year Audited Financial Statements, reporting a 131.5% growth in Profit Before Tax to N 124,26 billion.

According to the results, which was issued to the Nigerian Exchange (NGX) today, the bank grew Gross Earnings by 64.9% YoY to N555.83 billion, driven by 81.6% growth in Net interest income which increased from N152.7billion to N277.37 billion. This led to a Profit After Tax of N99.45 billion representing a 112.9% annual growth.

Commenting on the Bank’s commendable performance, Dr. Nneka Onyeali-Ikpe,OON, MD/CEO of Fidelity Bank Plc said, “We closed the financial year with strong double-digit growth across key income and balance-sheet lines. Our performance in 2023 is an attestation of our capacity to deliver superior returns to shareholders despite the difficulties in our operating environment. Profit before tax grew by 131.5% to N124.3bn from N53.7bn in 2022FY, leading to an increase in Return on Average Equity (RoAE) of 26.5% from 15.6% in 2022FY.”

A review of the financial performance showed that the bank grew Net interest income by 81.6% to N277.4bn driven by a 55.5% increase in interest income, thus reflecting a steady rise in asset yield throughout the year. The average funding cost dropped by 20bps to 4.4% due to increased low-cost funds that grew from 83.6% in 2022FY to 97.4% in 2023. The combination of higher asset yield and lower funding cost led to an increase in Net Interest Margin (NIM) of 8.1% from 6.3% in 2022FY.

Similarly, Total Customer Deposits crossed the N4tn mark as deposits grew by 55.6% from N2.6tn in 2022FY. The increase was driven by 81.1% growth in low-cost funds.

Despite the challenging operating environment, the bank reaffirmed its devotion to helping individuals grow, inspiring businesses to thrive and empowering economies to prosper by increasing Net Loans & Advances to N3.1tn from N2.1tn in 2022FY.

Despite the growth in its loan portfolio, Regulatory Ratios were maintained well above the required thresholds, with liquidity ratio at 45.3% from 39.6% in 2022FY and capital adequacy ratio (CAR) at 16.2% compared to the minimum requirement of 15.0%.

“We recognize the changing dynamics in the Nigerian banking space and the need to monitor and proactively manage evolving risks. The proposed final dividend of 60 kobo per share reflects our commitment to strong value creation and returns to our shareholders,” explained Onyeali-Ikpe.

Fidelity Bank has consistently paid dividend since 2006. With the proposed final dividend of 60 kobo per share, Fidelity Bank would be paying investors a total dividend of 85 kobo per share for the reporting period, a 70.0% increase compared to the 50 kobo per share paid to its shareholders in the previous year.

Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged customer commercial bank with over 8.3 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.

Finance

Financial Institutions Lost $12 Billion to Cyberattacks in 20 Years – Says IMF

Published

1 day ago

April 15, 2024

Samed Olukoya

The International Monetary Fund (IMF) has disclosed that financial institutions worldwide have lost to$12 billion due to cyberattacks over the past 20 years.

This revelation comes from the IMF’s recent report, Global Financial Stability Report, April 2024, which highlights the significant vulnerabilities faced by the financial sector in the realm of cybersecurity.

The report indicates that since 2020, financial institutions have incurred losses of $2.5 billion due to cyber incidents.

The IMF further underscores the high susceptibility of the financial sector to cyber risks, noting that approximately one-fifth of cyber incidents over the past two decades have impacted financial institutions, primarily targeting banks, insurers, and asset managers.

The United States, home to several major financial institutions, faces heightened exposure to cyber risks. For example, JP Morgan Chase, the largest US bank, experiences a staggering 45 billion cyber events daily and invests $15 billion annually in cybersecurity efforts, employing 62,000 technologists, many focused on security.

Cyber incidents are considered major operational risks that threaten the resilience of financial institutions and can have broader macroeconomic repercussions.

The IMF warned that these incidents could jeopardize financial stability through loss of confidence, disruptions in essential services, and the interconnectedness of the financial system.

To counter these risks, the IMF urges central banks and relevant authorities to develop comprehensive national cybersecurity strategies and establish effective regulations and supervisory measures.

As cyber threats continue to evolve, the need for robust cybersecurity infrastructure is paramount for the protection and stability of the global financial system.

Banking Sector

Zenith Bank Leads as Restricted Deposits Hit N17.1 Trillion

Published

1 day ago

April 15, 2024

Samed Olukoya

Zenith Bank Plc has emerged as a frontrunner among Nigerian banks as restricted deposits grew to N17.1 trillion.

This increase was propelled by Central Bank of Nigeria (CBN) regulations and represents 72.7% growth from the N9.91 trillion recorded in the previous year.

The Central Bank of Nigeria, in its effort to regulate the country’s money supply and manage inflation levels, has maintained the Cash Reserve Ratio (CRR) at 32.5%.

The CRR mandates banks to retain a certain percentage of their customer deposits with the CBN, thereby restricting access to these funds for day-to-day operations.

Zenith Bank, along with nine other major banks including Access Holdings Plc, Guaranty Trust Holdings Company Plc (GTCO), and United Bank for Africa (UBA) Plc, witnessed a substantial increase in their restricted deposits.

This surge underscores the impact of regulatory measures on the banking sector’s liquidity and operational dynamics.

The CBN’s decision to uphold the CRR at 32.5% and subsequently increase it to 45.0% reflects its commitment to curbing inflationary pressures and maintaining financial stability. While these measures aim to regulate money supply and inflation, they also pose challenges for banks and shareholders.

A member of the CBN’s Monetary Policy Committee (MPC), Aku Odinkemelu, emphasized the necessity of tightening monetary policy measures to address inflationary pressures effectively.

However, concerns linger regarding the adverse effects on borrowing costs for businesses and the banking sector’s profitability.

Philip Ikeazor, Director-General of Financial System Stability and MPC member, highlighted the pivotal role of complementary tools such as the CRR in taming inflation and managing liquidity.

Despite apprehensions from stakeholders, the CBN Governor, Mr. Olayemi Cardoso, reiterated the importance of assertive monetary policy measures to achieve the medium-term inflation target.

Zenith Bank’s noteworthy performance in managing restricted deposits underscores its resilience and strategic approach amidst regulatory challenges.

The bank’s 133.8% increase in mandatory reserve deposits with the CBN, reaching N3.9 trillion in 2023, demonstrates its ability to adapt to evolving market conditions.

Access Holdings, UBA, and other major banks also reported substantial growth in their restricted deposits, reflecting the broader impact of CBN policies on the banking sector’s liquidity and profitability.

Despite the surge in restricted deposits, concerns persist among shareholders regarding the profitability and operational constraints faced by banks.

Boniface Okezie, Chairman of the Progressive Shareholders Association of Nigeria (PSAN), advocated for CBN to consider paying interest on mandatory funds collected from banks, thereby enhancing their earnings and supporting the real sector of the economy.

As Nigerian banks navigate the intricacies of regulatory requirements and market dynamics, Zenith Bank’s leadership in managing restricted deposits underscores its resilience and strategic acumen in an evolving financial landscape.