…as operating expenditure mounts
By Mike Abbah
As Nigeria’s lingering electricity crisis persists and operating expenditure mounts, 11 deposit money banks (DMBs) coughed out a whopping N100.98 billion of shareholders’ fund to meet energy needs of their operations across the country.
The amount also includes expenditure related to the maintenance of their power generating facilities and, in most cases, the premises of their operations.
A peep into the 2017 annual reports of the surveyed banks showed that the expenditure is captured differently in their records.
Some of the DMBs captured the expenditure categorically as “electricity, “diesel” “power” and “energy”; while others presented it variously as “fuel, repairs and maintenance”, “power and security” or “power and maintenance”.
The item is also shown as “equipment maintenance and repairs”, “maintenance, security and power”, “power and premises maintenance”, “maintenance, diesel and power”, among other identifications with note to offer further detail in some cases.
Like their counterparts in other sectors, the DMBs have continued to experience mounting operating expenditure as cost of doing business in Nigeria remains one of the highest in the world mainly due to poor infrastructure.
Data gathered from the annual reports of the DMBs showed that the 11 financial institutions posted a total of N783.61 billion as operating expenditure in 2017 as against N629.83 billion in 2016 – an increase of N153.77 billion or 24.4 per cent.
A major component of the figure is expenditure on power and related activities as well as maintenance which spiked to N100.98 billion in 2017 from N81.92 billion recorded in the previous financial year – an increase of N19 billion or 23.3 per cent.
While the operating expenditure (captured as “Other Operating Expenditure”) rose by 24.4 per cent to N783.61 from N629.83, the total post-tax profit of the 11 concerned banks increased by mere 14.4 per cent with N75.78 billion: from N522.71 billion in 2016 to N598.49 billion in 2017.
The report further revealed that personnel expenditure of the 11 banks decreased by N11.5 billion to hit N429.28 billion in 2017 compared to 2016 figure of N440.83 billion.
Similarly, total penalties for regulatory infractions paid by the 11 DMBs, according to information in their respective 2017 annual reports decreased to N184 million from N569 million in 2016.
The rise in expenditure on power and related essentials is a source of worry to the DMBs as they lament over the continued infrastructure decay in the operating environment.
Lagos-based financial analyst and consultant to one of the Tier-1 new generation banks, Tony Agubor, decried the mounting expenditure in alternative source of electricity experienced by Nigerian DMBs.
The issue of epileptic power supply has thrown the banks into deep expenditure profile that worsens by the year. “A situation where a bank has to provide its own power, potable water, security, access road and communication amid a myriad of taxes and levies is injurious to business growth in Nigeria”, Agubor said.
Further analysis of the annual reports of the surveyed DMBs showed that the expenditure in fuel and related cost areas incurred by the 11 banks represent 16.8 per cent of their total profit after tax (PAT) in 2017 compared to 15.6 per cent in 2016.
The 11 concerned DMBs posted a total PAT of N598.4 billion and N522.7 billion in 2017 and 2016 financial years respectively.
There are little or no signs that the energy crisis crippling businesses in Nigeria will abate in the nearest future with power generation situation worsening by the day across the country.
Virtually every aspect of the power sector is facing remarkable challenge at present – a lingering situation that has lasted for decades.
Recently, Babatunde Fashola, Nigeria’s Power, Works and Housing minister, dampened the hope of Nigerians and the business community in what appears government’s inability in resolving the many decades of epileptic electricity supply.