The big boss of FCMB Group, Ladi Balogun, said only about 10% of the bank’s foreign exchange (FX) gains in 2023 are actually money they have in hand.
He said this during a meeting called “Facts Behind the Offer” at the NGX office on July 30.
Balogun mentioned a 70% tax on the bank’s FX gains from 2023. He said, though, this tax won’t hurt the bank’s money or profits too much.
He explained, “There is a bill not yet signed by the President. This bill will put a tax on the real revaluation gains, not imagined ones.”
“And only about 10% of our gains are real. So, the tax won’t hurt our money much,” he added.
Most of our FX gains are used for safety funds
Balogun said most of their FX gains are used as safety funds, called impairments. In 2023, their net FX gain was about N24.5 billion.
He said, “We saved a big part of our FX gains as safety funds in 2023. The net gain was about N20 billion. In 2024 so far, we saved almost all the gains, so the net gain is just about N2 billion.”
“Actually, these gains don’t really increase our earnings much. We use them to build safety funds to avoid bad loans in the future,” he added.
In 2023, FCMB Group had big FX gains of N84 billion, quite an increase from N4.3 billion in 2022. But, they also posted net impairment losses of N59.5 billion, leading to a net FX gain of N24.5 billion.
In the first half of 2024, FCMB’s FX gains were about N35.2 billion, with net impairments at about N33 billion, resulting in a net FX gain of N1.8 billion.
According to the CEO, their realized net FX gains for 2023 were about N2.5 billion, and a 70% tax would be around N1.75 billion.
70% windfall tax
- The 70% one-time tax on the realized FX gains of banks in 2023 has caused a lot of talk in Nigerian banks. No bank has released a statement about it since it was announced.
- Because of the tax news, people have sold off banking stocks. By July 26, banking stocks lost about N398 billion in market value.
- However, FCMB Group’s stock price went up from N7.70 to N7.90 between July 17 and July 26, even after the tax announcement.
- FCMB is also trying to raise N110.9 billion by selling 15.197 billion shares at N7.30 per share.