Nigerian banks due to the large losses suffered on their investments in Ghanaian bonds, contributed to some of the delays we’ve seen in the release of their audited accounts.
The Nigerian Banks Saga
The audited earnings of some banks, including FBN Holdings and Fidelity Bank, have not yet been made public.
Lower commodity prices, which have decreased the country’s fiscal income buffers, are mostly to blame for the financial crisis the West African country is currently experiencing.
Additionally, the country’s current economic crisis has led to a sharp increase in inflation, rising discount rates, and a swift depreciation of the currency.
Inflation was 54% at the end of December 2022, and the value of the currency had declined relative to the US dollar.
In response, the Ghanaian government unveiled a debt swap scheme with the goal of reestablishing stable public finances and manageable debt levels.
As a result, Ghana loan coupon payments were stopped, which forced bondholders to accept a haircut (loss of bond value).
Ghana likewise made the bold decision to pay for oil with gold since it was having trouble finding foreign currency to cover essential imports.
The nation is currently talking with the IMF about requesting financing with concessions.
In its most recent economic projection, the IMF reduced Ghana’s economic growth to just 1.6% since it continues to anticipate that the nation will face economic challenges.
According to analyses, even taking into account potential losses from companies like FBNH and Fidelity Bank, Nigerian banks have reported a total of N284 billion.
Ghana’s debt situation
The recent unfavourable events in the world put stress on the Ghanaian economy, leading to a rise in inflation, an increase in discount rates, a swift devaluation of the currency, and a rising national debt.
Ghana’s inflation rate was 54% by the end of December 2022, and the local currency had depreciated against the US dollar.
Conclusion
In addition to the effects of the depreciation of the Nigerian Naira, rising domestic bad loans, and rapid credit and balance sheet growth, the debt restructuring has increased additional pressure points on these Nigerian banks.
Banks in Nigeria had to set aside billions of Naira for impairment losses as a result. Provisions have been made by Ecobank, GTCO, UBA, and Zenith Bank to cover their impairment losses.
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