STANBIC IBTC has explained the categorisation of N21.112 billion loans provided to customers as “lost” at the end of June 2023.
The lender said in response to Economy Post‘s enquiries that classifying those loans as lost would not preclude active remedial or recovery efforts.
The bank also said it would explore out-of-court settlement for 413 litigations from its customers at the end of June 2023.
Stanbic IBTC’s half-year (H1) 2023 financial statement shows that it categorised its non-performing loans (NPLs) into “substandard,” “doubtful” and “loss” in line with the Central Bank of Nigeria (CBN)’s prudential guidelines.
Its NPLs grew 35.4 percent to N39.843 billion in H1 of 2023 from N29.437 billion in the corresponding period of 2022. However, the substandard category fell from N9.596 billion reported in the H1 of 2022 to N4.463 billion in the corresponding period of 2023.
But doubtful loans rose from N6.005 billion in the H1 of 2022 to N14.268 billion in the same period of 2023.
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The bank said it would make efforts to recover the loans from its debtors.
“When a loan is deemed uncollectible, it is written off against the related provision for impairments. Subsequent recoveries are credited to the provision for loan losses in the profit and loss account,” the bank said in the financial statement.
“If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release of the provision is credited as a reduction of the provision for impairment in the statement of profit or loss,” the lender said in its financial statement.
Litigations from customers
Stanbic IBTC’s third-quarter (Q3) financial statement shows that there were 413 cases from customers against the lender by September 2023.
Aggregate value of monetary claims against the Stanbic IBTC Group was N272.390 billion; $4.469 million, and £74,284.64.
While 356 cases were at magistrate courts, high courts and the National Industrial Court, 47 matters were at the court of appeal. Ten cases, however, were at at the Supreme Court.
The bank said the resolution of the cases would not have negative effects on its financials.
“The claims against the group are generally considered to have a low likelihood of success and the group is actively defending same.
“Management believes that the ultimate resolution of any of the proceedings will not have a significantly adverse effect on the group. Where the group envisages that there is a more than average chance that a claim against it will succeed, adequate provisions are raised in respect of such claim,” the bank noted.
Stanbic vs AMCON
The bank also has a litigation against the Asset Management Corporation of Nigeria (AMCON) over an issue relating to the NPL of a client.
“The Bank had in December 2012 entered into an agreement with AMCON to purchase the Eligible Assets (nonperforming loan) of a client, which the Bank had classified as ‘doubtful.’ AMCON confirmed its willingness to purchase the proposed Eligible Assets at a total consideration of about N10 billion, which sale/purchase was concluded in December of 2012.
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“As a precondition for the sale, AMCON unequivocally stated that the pricing of the Eligible Bank Assets was subject to adjustment within twelve (12) months in line with AMCON guidelines after due diligence on information the Bank had supplied to AMCON.
AMCON by a letter dated October 4, 2017 informed the Bank of its intention to reprice the loan and claw back the sum of N5.7bn, being what was alleged to be excess overpaid consideration, as a result of what was felt was an overvaluation.
“The Bank in its response to the allegation, emphatically denied the allegations and provided evidence to AMCON to the contrary. The Bank noted that AMCON’s attempt to reprice the sold Assets, were outside the 12-month claw-back period provided in AMCON’s guidelines. Notwithstanding all the clarifications made by the Bank, AMCON proceeded to apply to the Central Bank of Nigeria (CBN) to debit the Bank’s account with the sum requested to be clawed back, plus possible accrued interest. Sequel to this, the
CBN wrote to Stanbic IBTC on 31 July 2019, informing the Bank of AMCON’s request to debit the Bank’s account.
“Accordingly, the Bank instructed its lawyers to institute a Legal action against AMCON, pursuant to which it obtained an interim injunction (ex-parte), restraining AMCON and the CBN from debiting its Account for the alleged claw-back sum. However, the Bank subsequently discovered that AMCON had earlier filed a suit at the Federal High Court, Lagos Division on the same subject matter. Consequently, the Bank discontinued its suit against AMCON and filed a CounterClaim against AMCON in its suit. The case is currently adjourned to 18 December 2023 for settlement of issues for determination,” Stanbic IBTC noted.
Bank responds
In response to Economy Post‘s enquiries regarding 413 litigations, Stanbic IBTC’s Head of Marketing and Communications, Ms Bridget Oyefeso- Odusami, said “there are appropriate strategies in place to address the risks inherent in litigation portfolios and one of them is out-of-court settlement.”
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On the loan classified as lost, she replied that “the categorisation is in compliance with CBN prudential guidelines where outstanding obligations over 360days are categorised as lost but that does not preclude active remedial efforts by the Bank.”
When asked to provide details of the debtors, she said the bank was not allowed to reveal such personal details of customers to the public.
“We cannot accede to your request of disclosing customers’ names to you. As well known, Banks are not allowed to disclose customers details without clients’ authorisation or a court order,” she noted.
