May 1, 2017

Export Fund: FCMB shareholders kick against 5% deduction

Export Fund: FCMB shareholders kick against 5% deduction

•Jonathan D. Long, Chairman FCMB & •Ladi Balogun, MD/CEO

…Approve N1.98bn dividend

By Nkiruka Nnorom

SHAREHOLDERS of FCMB Group Plc have kicked against deduction of five per cent of banks’ net profit and crediting of same to the Export Fund of the Central Bank of Nigeria, CBN.

The Nigerian Bankers Committee, NBC, came to a decision in January, 2017 to have all banks operating in the country to pool five per cent of their net profit into the Export Fund, meant to finance export businesses and businesses with import substitution capabilities.

Speaking at the bank’s 4th  Annual General Meeting, AGM, in Lagos, the shareholders advised the CBN to look at alternative means of supporting the non-oil export businesses instead of creating holes in banks’ vaults that would result in erosion of shareholders’ value.

•Jonathan D. Long, Chairman FCMB & •Ladi Balogun, MD/CEO

Mr. Patrick Ajudua, National Chairman, New Dimension Shareholders Association, NDSA, and Heric Akinduro, Chairman, Ibadan Zone Shareholders Association, who spoke on behalf of other shareholders, said the directive betrays CBN’s insensitivity to shareholders welfare.

“What we are saying is that supporting export business is a good concept, but taxing banks to deduct five per cent of their distributable profit will short-change us in terms of our dividend and return-on-investment. Therefore, CBN is advised to look elsewhere, particularly into the reserve and restricted funds, which banks have with them. They should access that fund through that means and not deducting five per cent of banks’ profit,” said Ajudua.

Contributing, Akinduro argued that the action is disincentive to investment in the capital market and urged the CBN to withdraw the policy.

“When you look at the capital market, shareholders are being short-changed. Whenever you get your dividend, withholding tax of 10 per cent is deducted. Not only that, when you look at other markets like the bond market, recently, the Federal Government introduced savings bond for minority investors and that bond is tax free. So, when you are taking 10 per cent withholding tax from shareholders and still come back to take five per cent from the net   profit , definitely they are encouraging people   not to go into the stock   market,” Akinduro added.

Earlier in his address at the AGM, Jonathan Long, Chairman, FCMB Group,  represented by Mr. Bismarck Rewane, a Director, attributed the performance recorded last year to the professionalism and commitment the financial institution brought to bear in its business and operations.

He added that, ‘’the Group has shown itself, capable of weathering the storm and I am confident that the year ahead will prove to be no exception”.

Also speaking, Mr. Ladi Balogun, the Group Chief Executive of FCMB Group Plc and until recently the Group Managing Director of First City Monument Bank Limited, said that the realities of 2016 have been a good test of the resilience of the bank’s turnaround programme commenced in 2015, adding that, ‘’across most indices, we have recorded progress and we intend to stay this course in the coming year.”