Virtually all Nigerian banks have declared huge profits for 2012.
Finance Analysts have highlighted at least five reasons the banks declared the profits
1. Interest Rates: Interest rates were relatively high last year, serving as favourable income sources for the banks. The banks invested in treasury bills, Bonds and securities, which yielded them high income. These investments in fixed income securities helped them make more money
2. AMCON: The impact of Nigeria’s Asset Management Company of Nigeria was much. Experts say the company has helped clean up the banks’ books by bearing their bad loans, which hampered their welfare previously.
3.Tax: Tax rate has crashed as it were, according to analysts, as the banks are enjoying tax concessions on corporate bonds and other investments as well as the 10-year tax waiver they have, which they have already begun to benefit from. To some extent all banks were helped by the tax exemption on interest earned on their short-term securities and bonds and some had additional tax credits.
4. IFRS reporting: Analysts say reporting under the International Financial Reporting Standards (IFRS), the banks are not required to pay the 1 per cent on their total assets as they would under the previous GAAP reporting requirement.
5. Improved cautiousness: The banks appear to be learning their lessons gradually, after the era of losses birthed by the industry’s indifference to banking ethics a few years ago.