Protracted forex crisis may collapse some banks from 2017 Q1—Report
Latest report from Bloomberg has raised fears of another banking disclosure crisis, saying poorly capitalized Nigerian banks may start losing money from the next quarter following the protracted forex issues in the country.
However, the report was quick to say that “While other sectors have been hit by a substantial loss in income and profit, banks had been faring okay”.
Ronak Gadhia, an equity analyst at London-based Exotix Partners LLP was of the believe that some of the banks benefited from the last naira devaluation because they had more dollar-denominated assets than liabilities, allowing them to book gains.
He added that the last part of the year would be tougher, especially if the country continues to hold the naira, noting that “I think we’ll see a weaker quarter for the banks”.
“It seems that after making positive moves on the currency in June, the central bank has gone back on that, so the revaluation gains probably won’t recur in the fourth quarter.