Access Bank managing Director Herbert Wigwe has said the bank has made a loan loss provision of N4 billion on its loan to troubled telecoms firm 9mobile, formerly known as Etisalat Nigeria. The provision is in line with the prudential guideline which requires banks to make a provision of two per cent of their loan portfolio against non performing loans.
Wigwe said that Access bank had a direct exposure of N11 billion to 9mobile, as well as an exposure of N35-39 billion to the telecoms firm’s suppliers. Wigwe told an analysts’ call that Access hoped to recover the debt once 9mobile was sold to new investors.
Nigerian banks have agreed an extension to a $1.2 billion loan made to 9mobile, pending the mobile operator finding new investors. However, some banks outside the syndicated facility are making provisions. “We have downgraded the risk of Etisalat and have taken increased collective impairments,” Wigwe said.
Access Bank said non-performing loans rose to 2.5 per cent by the half-year from 2.1 per cent as at December, though it posted an 18.4 per cent rise in half-year pretax profit to N52.08 billion last week.
Regulators stepped in last month to save Etisalat Nigeria from collapse and prevent banks placing it on receivership, prompting a board, management and name change. Wigwe said 9mobile has received significant interest from local and international investors after banks appointed advisers to find new investors. It expected a sale to close within six months. banks have appointed Citigroup and Standard Bank to manage the sale.
Wigwe said Access Bank has sufficient reserves to cushion losses that could arise from the sale. But added that the bank was far from that scenario because 9mobile had a stable subscriber base and that the business had experienced stress due to the way the previous owners managed it.
“It is extremely unlikely for anybody to say that we would find ourselves at a 50 per cent impairment level. We may see 30 per cent impairment level perhaps because we want to sell it very quickly,” he said. Access shares, which have gained 70.4 per cent so far this year, dipped 3.9 percent to N9.59.
