Nigeria: Sanusi gives banks some good news
Benefits from oil, rates, and stock market; Information awaited on financial results and state bad-debt plan
Lamido Sanusi: forcing Nigerian banks to clean up their act
In some ways things are looking up for Nigeria’s banks. Oil prices have recovered, central bank governor Lamido Sanusi has cut rates, and net interest margins are increasing. By the end of April the local stock market had risen 30% in 2010. There is hope banks might be able to write back margin loans made against stock investments. Banks wrote down many of these loans at the end of last year, some say aggressively. Loans were marked to market in line with collateral, after Sanusi enacted a sector-wide audit last summer. The stock market fell more than 60% in the 12 months from March 2008. But bank share prices are still low, at roughly eight times forward earnings and almost equal to book value.
More progress could be possible once banks’ 2009 results are released. The central bank said these results had to be published by March 31. But by mid-April, the only banks’ results available to the public were those of UBA, Guaranty Trust Bank and Zenith.