- *Shareholder Wants Regular Forensic Audit Of Companies
There may be more troubles ahead for shareholders of Stanbic IBTC Holdings Plc, following the submission of the group’s un-audited accounts showing that nine-month profits fell by almost half, despite a 10 per cent rise in earnings income.
The group was heavily impacted by the huge 521.3 per cent increase in loan loss expenses, in what may mean that unless there is a miracle in the last quarter of the financial year, the directors may be unable to recommend a dividend at the next annual general meeting. The group’s chairman (Atedo Peterside) and chief executive (Sola David-Borha), as well as the external auditors- KPMG Professional Services are in the middle of a scandal, as a result of which the Financial Reporting Council has barred them from appending their signatures to any document for regulatory filing, pending the conclusion of ongoing investigations into allegations of failure to meet International Financial Reporting Standard (IFRS). The group was also ordered to withdraw and restate its 2013 and 2014 financials.
According to the nine-month results presented to the Nigerian Stock Exchange (NSE), gross earnings rose to N104.418 billion, from N94.637 billion, helped by the 19.8 per cent growth in interest income at N62.676 billion. Net interest income fell by 5.1 per cent from N43.712 billion. Operating income stood at N61.764 billion, down by 17.3 per cent, just as operating expenses rose to 46.397 billion to N44.7 billion.
With loan loss expenses at N12.489 billion, from N2.01 billion in the corresponding period of 2014, profit before tax dropped by 46.3 per cent from N30.01 billion to N15.397 billion; while after tax profit fell to N13.562 billion, r4om N25.476 billion, which translates to earnings per share of N1.10, from N2.32, a decline of about 52.6 per cent.
A further analysis of the result showed that net profit margin fell to 12.99 per cent from 26.69 per cent. In plane language, the management of Stanbic IBTC Holdings could only convert just 12.99 kobo of every Naira earned during the period to profit. Also, cost-to-income ratio rose to 75.12 per cent from 59.83 per cent.
The company’s loan and advances portfolio stood at N406.181 billion from N408.974 billion, just as deposit base closed 7.7 per cent higher at N592.508 billion, as against N550.137 billion, representing a loan to deposit ratio of 68.66 per cent from 74.34 per cent in the preceding nine-month period.
Total assets was 4 per cent better at N1.0 trillion from N962.488 billion and total liabilities of N883.068 bilion from N853.20 billion.
Meanwhile, reactions have continued to greet the allegations by the FRC, even as some stakeholders accuse the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC)of regulator complacency.
In an e-mailed response to Daily Independent on Thursday, Gbadebo Adetokunbo, an investor and founding member of the Nigerian Shareholders Solidarity Association (NSSA)suggested “that the investigators should look further into other transactions, including ‘the share merger of Stanbic IBTC Holdings minority-shareholders.”
He lamented that the revelations in Stanbic IBTC would have remained veiled, but for the whistle-blowers, just as there could be many more of such wrongdoings in other companies in Nigeria.
While calling for sanction and a policy that makes forensic audit compulsory every three to five years, Olatokunbo recalled that “IFRS was introduced into our system, due to some lapses in our financial reporting (especially following)the sad and terrible banking saga of 2008/2009 and surprisingly an institution like Stanbic IBTC Holdings could still dance round all the risk management (safeguards) introduced and beat the eagle-eyes of the regulators.”
The forensic investigation, he continued, should be carried out by independent external auditors and the outcome submitted to the regulators, who would then take appropriate actions if necessary.
