Poor bankers and their Bankers Committee. Unfortunately, the support from KPMG, PwC, and Ndubuisi could not help them as the Nigerian Senate has retroactively changed the tax laws, to collect extra cash on those windfall Forex-related gains. Initially, the proposal was 50%, but the Senators updated it to 70%: “The Nigerian Senate has on Tuesday, passed the amendment bill to the 2023 Finance Act, significantly raising the windfall tax on banks’ foreign exchange revaluation gains from 50% to 70%.”
The government has a huge opportunity to pick more money from this policy: “Nigeria’s leading commercial banks recorded significant FX revaluation gains, estimated at a combined total of N3. 37 trillion in 2023 and Q1 2024, primarily due to the devaluation of the Naira last year. These FX gains include both realized and unrealized amounts, as reported by the banks” – Nairametrics.
GTCO – N844.450 billion FX Gains
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Zenith Bank Plc – N828.675 billion
Access Holdings – N748.159 billion FX gains
United Bank for Africa – N682.952 billion FX gains
First City Monument Bank (FCMB) – N116.443 billion FX Gains
While the one-time windfall tax could promote economic stability and social welfare, it will also reduce banks’ net profits, impacting their bottom lines and shareholders’ wealth.
The next 3 months will be tough for Nigerian bankers. I just hope those profits are not vapour profits, because if that should be the case, bad things will happen. More here
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