AMCON declares N630bn loss 'As OPEX compresses by 159.1%

THE Asset Management Corporation of Nigeria (AMCON) has declared a total of N630 billion loss for the Financial Year (FY): December 2013 audited results.The Corporation managed to tame its operating expense (OPEX) at N121.2 billion in FY:2013, a 159.1per cent decline from N205 billion in FY:2012.Industry watchers are convinced that this underscores the corporation's commitment towards ensuring that AMCON recovered the cost of its intervention over time.The result, released on Friday, September 12, 2014, was the corporation's first publication under the International Financial Reporting Standard (IFRS), accounting reporting format.The result indicates that AMCON's top line (Gross Revenue) grew by a significant 50 per cent from N182.7 billion in FY:2012 to N274.9 billion in FY:2013. However, bottom line (Loss after Tax) improved only 10.3 per cent from negative N702.4 billion in FY:2012 to negative N630 billion in FY:2013.The improvement in top and bottom lines, as shown in the 'bad bank's' financials, were both driven by 21.9 per cent increase in interest income to N181.3 billion in FY:2013 from N148.7 billion in FY:2012. Non-interest income also contributed to the growth in top line, increasing 15.9 per cent to N16.3 billion in FY:2013 from N14 billion in FY:2012.Interest expense came in at N556.8 billion in FY:2013, 1.9 per cent higher than N546.3 billion sustained by the inclusion of financing cost, which constitutes 65.2 per cent of the total cost.AMCON's asset quality deteriorated in 2013 evidenced by a 200 per cent increase in impairment charges from N113.4 billion in FY:2012 to N226.5 billion in FY:2013 despite a mild 1.3 per cent increase in loans and advances. This was linked primarily to the N100 billion capital injection in Consolidated Discount House Limited (CDL), in order to settle its deposits liabilities to customers.The Corporation strategically restructure loans in the Eligible Bank Assets (EBAs) annually and re-classify as loans and advances. This buttressed the modest 1.3 per cent growth recorded in loans.Stakeholders saw this as an improvement, indicating the Corporation was achieving the objective of easing the volume of toxic assets in the system.Management had previously indicated that it fully intends to pursue avenues that support the viability of debtors businesses to facilitate the recovery process. This includes the evaluation and restructuring of loans to ease the payment burdens that fit into AMCON's timelines. As such, liquidation is considered as a last resort.In their assessment of the result, analysts at an investment bank, Afrinvest West Africa Limited believe that the result revealed improvements across both top and bottom lines, despite AMCON's role as an intervention vehicle to absorb Non Performing Loans (NPLs) from banks and recapitalise weak banks.They agreed that AMCON has continued to chart its course with vigor in 2013, growing its top line impressively although bottom line is still deep in negative territory as expected.
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