“This Increase is Alarming": Shareholders of Access, GTCO, Other Banks Question N393bn Levy to AMCON

• Shareholders of Nigeria's leading banks are becoming increasingly worried as their contributions to AMCON soars
• The significant rise in AMCON levies has raised red flags about its potential impact on bank profitability and shareholder returns.
• Many investors are now voicing concerns over the sustainability of such payments, warning that the levies could continue to hurt the banks’ bottom lines

Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology, Banking and the Economy.

Shareholders of Nigeria's top banks are increasingly concerned as their contributions to the Asset Management Corporation of Nigeria (AMCON) have surged to N393.03 billion by the end of the 2024 financial year.

This sharp rise has raised alarms about its potential impact on bank profits and shareholder returns, despite the announcement of dividends by the banks.

AMCON levies on banks surge

Financial disclosures for the period ending December 31, 2024, show that banks such as Access Holdings Plc, FBN Holdings Plc, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), and Zenith Bank collectively contributed N393.03 billion, a significant increase from N244.98 billion in the same period in 2023.

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This marks a 292.7% rise in mandatory contributions, attributed to a revision of the AMCON levy formula, which is based on banks' total assets and off-balance-sheet exposures.

For instance, Access Holdings paid N112.23 billion, up from N68.81 billion the previous year, FBN Holdings contributed N80.03 billion, an increase from N51.12 billion, while GTCO paid N36.66 billion, compared to N27.31 billion in 2023.

UBA's contribution rose from N40.36 billion to N71.91 billion, and Zenith Bank's payment increased from N57.38 billion to N92.20 billion.

Even though banks made large profits from interest income in 2024, they lament the unfairness of AMCON levies

Shareholders lament impact of levies

According to The Sun, this development has sparked frustration among many investors, who warn that if these levies continue, banks' profits could be significantly reduced, leading to lower dividend payouts.

Boniface Okezie, Chairman of the Progressive Shareholders Association of Nigeria (PSAN), has strongly criticised the levies imposed by AMCON on banks.

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He argued that AMCON has outlived its purpose in the banking sector.

Okezie called for banks to stop funding AMCON, stating that the ongoing levies are harming shareholders’ profits and discouraging investment in bank stocks due to shrinking dividend payouts.

He said:

“This level of increase is alarming. We are effectively being penalized for the sector’s past inefficiencies, despite strong fundamentals and improved performance among tier-1 banks. If the federal government wishes to sustain AMCON, it should fund the corporation directly, not through levies on banks."

He also pointed out that despite collecting large amounts from banks, AMCON has been reporting losses in recent years and has struggled to sell recovered assets from debtors.

CBN silent on AMCON levies surge

AMCON was created in 2010 to manage non-performing loans and help stabilise Nigeria’s banking sector after the 2008 financial crisis.

While the agency has made strides in recovering debts and cleaning up bank balance sheets, it still depends heavily on contributions from the banking sector to fund its operations.

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The recent increase in bank levies has sparked renewed discussions about the fairness and long-term viability of this recovery approach.

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has not publicly addressed AMCON or the raised levies.

However, at the 2023 Bank Directors’ Summit in Abuja, Mustafa Chike-Obi, Chairman of the Bank Directors Association of Nigeria (BDAN), urged the federal government to stop the AMCON levy, highlighting its significant financial burden on the banking industry.

7 banks amass N4.2tn profit in 2024

In related news, Legit.ng reported that seven major Nigerian banks made a total profit of N4.2 trillion in the 2024 financial year.

Despite tough economic conditions, several top banks showed strong results in their 2024 financial reports, with notable increases in profits after tax.

Banks like Zenith Bank PLC, United Bank for Africa (UBA), Guaranty Trust Holding Company Plc (GTCO), First Bank, Fidelity Bank, Stanbic IBTC, and Wema Bank managed to earn this large amount.

Source: Legit.ng