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‘Customers’ debt profile affects our annual revenue base’


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Nigeria

IMAGE: CBN »

September.10.2014

How much has the bank disbursed to clients since inception?

The bank started as a community bank in 1994, and in 2007 was transformed to microfinance bank. One cannot really put the figures together, but I know every year we disbursed more than N250 million to the grassroots (micro, small, and medium enterprises). The area the Central Bank of Nigeria (CBN) is looking at the moment is mostly women, how to empower women because they believed that women pay more. That is where we are now, to see how we can assemble economically active poor, especially market women, and empower them.

What was the bank’s profit in the last two years, as the chairman said the bank will strive to generate about N30 million by the end of 2014 financial year?

In 2013, the bank made about N21 million net profits after tax, and because of the carrying over of bad loans from community bank, which we have been carrying in our financial books and the CBN said we must provide for, we have to make a huge provision that somehow affected our general reserves thereby putting it into negative. Before we can give out dividend, which has been our normal practice from the beginning, we have to ensure that general reserves is back to positive. That is why for this 2014, we are not declaring any dividend. The N21 million we will allow it to go to general reserves to boost the financial capacity of the bank to be able to do business.

It was in 2012 that we wrote off N71 million the CBN ordered, and it was after writing off the amount our general reserves was about N36 million deficit. As of 2013, we were able to bring it to about N13 million deficit, but at the moment we have already put the general reserves back to positive and we are working to ensuring that by the end of 2014 financial year our shareholders will get good dividends.

What measure is the bank putting in place to recover the debts and how much debt is the bank being owed?

Our total loan portfolio now is about N500 million. We have performing and non-performing loans. The non-performing loan is about N150 million and we have been going around persuading the debtors. Some we even give interest waivers to lure them while there are some we realised that they cannot even pay and we cannot continue to carry those bad debts in our books so we have to clean up, because this N220 billion the CBN is disbursing we are working towards it to ensure that we also benefit from it.

The N71 million the bank wrote off – was it the debt customers owe the bank?

The N71 million is the provisioning the CBN asked us to provide. As a going concern, everyday you give loans you cannot ensure 100 percent return. There must be some defaulters and based on that you cannot say that N71 million is total.

So, what is the actual total debt profile of the bank at the moment?

The total is about N500 million.

What is the customer base of the bank?

What we have in our records as of today is over 3000 customers

The bank chairman, board of directors earlier in his speech said the bank will invest in agricultural sector. How much is the management projecting to invest in the sector?

In time past, investing in agricultural sector was a very difficult task because you cannot actually predict from the beginning what the output of the produce would be. But the CBN has given us a boost by their guarantee of 70 percent of any disbursement to agriculture. Our investment in agriculture has not been more than N50 million, but with this guarantee and fund coming in we are already working to mobilise the active poor, women, especially who are into cultivation and production of different types of agricultural products such as rice, cassava, poultry, among others, to benefit from it.

How much is the bank earmarking for that?

Being the fact that it is one of the areas we are considering, we are looking at not less than N100 million to start with.

What are the challenges confronting the smooth operation of the bank?

One of our greatest challenges is loan recovery. It has been the culture in the country that most Nigerians borrow and don’t pay back. That is the truth, and that has given us much headache. That is why we are talking of this write-off.

Article Credit: Businessdayonline

Updated 4 Years ago
 

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