How N700bn exposure costs Skye Bank management, board

The ousted management and board of Skye Bank plc got their hands burnt due to the bank’s huge non-performing loans (NPLs) exposure in excess of N28billion.

Skye Bank loan exposure is in excess of N700billion out of which 50 percent are with Corporates, Commercial (28%), and SME/Retail businesses (22%).

The bank’s sectorial breakdown of loan portfolio for the nine-month period to September 30, 2015 shows Oil & Gas Upstream (17%), Oil & Gas Engineering Services (9%), Power (10%), Real Estate (8%), Manufacturing (7%), and Telecommunication (5%).

The bank also has exposures in General Commerce, Retail Building & Construction, Maritime, Hospitality, Public Sector, and Oil& Gas Downstream.

Skye Bank is one of the financial institutions yet to release their full year results to shareholders at the Nigerian Stock Exchange (NSE).

In the nine-month period, Skye Bank plc had N718.8billion in gross loans (N589.9billion: 9M’14) and loan growth of 21% year-on-year (YoY) and 5.3% quarter-on-quarter (QoQ).

Skye Bank is among the banks that are yet to release their result for the full year period to December 31, 2015. The bank’s loan to deposit ratio was high at 79.7%.

Out of the N28.58 billion in non-performing loans, a sectoral distribution shows 28 percent in Oil & Gas Downstream, an increase from 21% in the corresponding period of 2014.  Also, its Cost-to-Income Ratio (CIR) in the nine-month period stood high at 74.8%.

The bank had told analysts and investors that its Opex which increased YoY by 39% as at the nine-month period to September 2015 (9M15) was majorly driven by regulatory payments, personnel, integration expenses and upgrading of acquired Legacy Mainstreet Bank Limited (MBL) branches for effective operations.

Skye Bank’s total deposits declined by 13% YtD and 1% QoQ due to regulatory initiatives -Treasury Single Account (TSA); while its customer’s deposits represents 63% of total funding in nine months to September 2015.

Stock investors at the Nigerian Stock Exchange yesterday routed massively to sell their shares in Skye Bank plc after the Central Bank of Nigeria (CBN) replaced the chairman and chief executive of Skye Bank, as it failed to meet minimum capital ratios.

In 80 deals, stock traders exchanged N10.832million units of Skye Bank plc shares, which made it the second highest traded stocks in the financial services counters in terms of volume. The bank’s market capitalisation stood at N13.186billion yesterday.

The central bank said Skye Bank’s non-performing loan ratio has been above the regulatory limit for a while and it had met with Skye’s board to resolve the issue, governor Godwin Emefiele told a briefing.

As Skye Bank stocks extended a losing streak, its shares topped the basket of losers on sell-off, closing at 95kobo from a week-open level of N1.05, losing 10kobo or 9.52 percent.

Skye Bank is designated as one of Nigeria’s systemically important banks due to the size of total sector deposits it holds after the acquisition of Mainstreet Bank –which means it has to hold more capital.

Iheanyi Nwachukwu