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Concerns and worries are being expressed by stakeholders over the continued deferment of release of quarter three results by First City Monument Bank (FCMB).
The concerns in the financial market over the expected failure to release the unaudited result by October 30, 2022 stem from the fact that investors say it affects quick decisions on their holdings in the stock.
Besides, they argue that when a bank begins to issue advance notice of delay in filing its statutory financial result, and a pattern of consistency is being formed, it could raise all manner of speculations on the status of the results and that the bank may be trying to ‘wardoff or divert’ attention from deserved inquisitiveness that it would attract when released at the required time.
Companies listed on the local bourse are required to file in their results not more than 30 days after the end of the period under review.
More intriguing is the fact that the bank had offered almost consistent reasons, at least, for the past five years that metrobusinessnews.com (MBN) decided to limit is searchlight.
In fact, the Bank had in compliance with corporate governance principle, in March 2020 informed the Exchange that the board of directors of FCMB Group Plc has unanimously voted to replace Messrs KPMG Professional Services with Messrs Deloitte & Touche as its new auditors.
This was part of the decisions that were reached when the company’s board of directors met in Lagos the previous week then to deliberate on a number of important company issues.
In a public disclosure that was sent to the Nigerian Stock Exchange earlier on the same day, FCMB Group Plc informed the general public that the decision was still subject to the approval by its stakeholders.
The approval is expected to be given during the company’s next Annual General Meeting.
In its explanatory note that was later sent by FCMB Group, KPMG’s ten-year tenure expired, hence the replacement. Part of the statement said
“By virtue of the provision of section 5.2.12 of the CBN Code of Corporate Governance for Banks and Discount Houses, the tenure of the auditors in a given bank shall be for a maximum period of ten (10) cumulative years, after which the audit firm shall not be reappointed in the bank until after a period of another ten (10) consecutive years.
“Following the expiration of the 10-year tenure of Messrs KPMG Professional Services with First City Monument Bank Limited (the bank), the Board of the bank approved the appointment of Messrs Deloitte & Touche as its external auditors.
“With the bank being the largest subsidiary in the FCMB Group, to ensure timely conclusion of the Group’s audit, the Board of Directors of FCMB Group Plc has always adopted the strategy of appointing the same Audit firm to audit both the bank and the Group. This is to enhance easy coordination of the Group’s audit process and support quick review of the consolidated financial statements to meet regulatory guidelines on audit.”
Further investigations have proved contrary to the realization of the objectives of the group’ compliance with corporate governance principles.
For instance, details of the unaudited nine months results ended September 30, 2017 were announced on the floor of the Nigerian Stock Exchange, (NSE), on November 24, 2017.
Also, explaining the rationale behind the delay in 2018, the board said, “This is due to the commencement of the interim audit of the company’s commercial banking subsidiary, First City Monument Bank Limited, for the period ended September 30, 2018.”
Again, FCMB Group Plc announced that it would not file its third-quarter (Q3 2019) unaudited financial results for the period ended 30 September 2019 on the due date of 31 October 2019.
This was revealed by the Group in a statement made available to the investing public and the Nigerian Stock Exchange (NSE).
Reason Explained: FCMB said it would not file the results because the interim audit of the company’s commercial banking subsidiary, First City Monument Bank Limited had commenced for the period ended 30 September 2019.
Similarly, FCMB Plc announced that the group will not publish its unaudited financial statement for the financial year 2021 at the end of October as expected.
The management said this in a statement signed by the company’s secretary Olufunmilayo Adedibu, submitted to the Nigerian Exchange ahead of the deadline for listed banks on the local bourse.
It attributes the decision to the board of directors’ decision to audit the account.
“FCMB Group wishes to notify The Nigerian Exchange Group and the investing public that it will not file its nine months (Q3 2021) unaudited results for the period ended 30 September 2021 by the due date of 30 October 2021”.
“This is due to the commencement of the interim audit of the company’s largest subsidiary, First City Monument Bank Limited for the period ended 30 September 2021”, according to the statement.
On Friday, October 14, 2022, the bank informed the Nigerian Exchange Limited (NGX) that “it will not be able to file its nine months (Q3 2022) results for the period ended 30, September 2022 by the due date of 30, October, 2022.”
The notice which was signed by the Company Secretary, Mrs. Olufunmilayo Adedibu claimed that “the delay is due to the audit of the Company’s largest subsidiary, First City Monument Bank Limited (the Bank) for the. period ended 30 September, which accounts for 68% of its Group’s profitability and which results would have material impact on the Group’s consolidated accounts.
The Consolidated third quarter 2022 result of the Group will be published on or before 29 November 2022.”
But Victor Ogiemwonyi, financial analyst, speaking generally on the likely impact of such development says the postponement is capable of putting investors in a dilemma, particularly, if the results turn out to be bad.
In his response sent to MBN, Ogiemwonyi, a retired investment banker said:
“That is not good for investors, because they are unable to make any quick decision on their holdings in the Stock.
A company maybe doing badly and chose to extend its results reporting in the hope that things will improve and they can smoothen their earnings, this puts the investor in a dilemma if the postponed reports turns out bad.
The investor will suffer losses that could have been avoided by selling and getting out of the stock quickly.
This delays should not be allowed, without proper explanation to the market in a well regulated market.
There maybe exceptional cases, but when it becomes frequent and wide spread and no questions asked, there is a problem. “
John Agbo, Lagos based stockbroker and analyst sees the development as portending issues in an organization in the habit of serial postponements.
According to Agbo, “It means there are issues. The continued extension might mean that the information that forms the content of the report are always not ready as at when due or the resources at the disposal of the company as at the time the report is due are incompetent and their report cannot be relied on.
Another analyst who pleaded for anonymity said, “Where it becomes a regular practice on the part of a company, we can suspect a foul-play and such report may be suspect.
Besides, the onus is on the regulator, in this case, the Exchange to dispassionate look at the issue rather than allowing such trend for some years.
The danger in this kind of scenario is that some of the Nigerian quoted companies, prefer to have their way by flouting any rule and pay the consequences.
In most cases, the consequences are fines, which can never be compared to what they stand to gain from such disobedience.
Again, this shows you the kind of supervisory ineptitude and laxity, jeopardizing the interests of investors they claim to represent. “
Alleged liquidity squeeze has caused Fidelity bank Plc as it has been placed on DOWNGRADE by Moody’s Investors Service.
The development arose from from Nigeria’s unstable forex earnings, allocation and day-to-day operations.
The ugly situation, according to Business Journal also extends to the asset quality of Fidelity Bank Plc.
The Report by Moody’s states:
“Constraints on domestic oil production, capital outflows, and the increased cost of the country’s imported refined petroleum products, coupled with US dollar strengthening, have together weighed on the availability of foreign currency liquidity in the country despite higher oil prices and material discrepancies between official and parallel market exchange rates persist in the country.”
“Nigeria’s foreign exchange reserves have declined to $38 billion as of September 2022 from $40 billion as of January 2022 despite higher oil prices, and we understand that the central bank, which is the main provider of foreign exchange in the country, has consequently scaled down and become increasingly selective with its foreign currency allocations.”
In what observers see as an admittance of failure as well as government culpability in the current challenge that seems to have paralyzed businesses Yemi Osinbajo, Vice President on Monday also spoke on the need to ensure synergy between fiscal and monetary policy in order to better manage the economy and exchange rate concerns.
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He said: “The discussion that we must now have and going forward is how best to manage the situation by finding a mechanism for increasing supply and moderating demand which will be transparent and will boost confidence.“I think that a more market-driven approach will be best, some price discovery within the context of a managed float is certainly required.”