So I read the report, then jumped down to the first few comments, and guess what? NL yoots are at it again. They will not read, They read they will not comprehend. Simple details they will not understand

In simplistic terms this is not a directive to give foreign loans, fools! Banks have been granting foreign loans since time immemorial
This is a directive to make full provision of the foreign loans and the consequences in the financial reports. This is a measure to prevent smart accountants from doctoring their financials

xukwaa:
The essence of the additional loan provisioning is to nil off the fictitious exchange gain arising from the increase in the Naira value of bad debts denominated in foreign currencies.

For example,

Bank A has $1,000 worth of bad loans. These bad loans were recognised in the books of Bank A as N198,000 (converted at the rate of N198 to $1)

Bank A provided for 100% of the bad loans. This reduced Bank A's profit before tax by N198,000

In July 2016, the exchange rate of the Naira to the Dollar depreciated to N320. As a result of this, Bank A recognised a fictitious exchange gain of N122,000 (N320,000 - N198,000) thereby increasing the profit before tax by N122,000.

However, the CBN directs Bank A to make an additional provision of N122,000. This will reduce the fictitious exchange gain initially recognised to nil (zero).


You can download the CBN circular from here: https://www.cbn.gov.ng/Out/2016/BSD/PROVISIONING%20FOR%20FOREIGN%20CURRENCY%20LOANS.pdf

Thanks Bros, I was trying to spin my head around this in simple terms. You've made it so comprehendable.........I will imagine sha!

Gentle2015:
This will further worsen the naira.


The simple solution is to get more inflows ($). All this trials will only ridicule the naira the more. It is a pity

Bros,

This is simply reporting adjustment and not a fiscal policy

fizzile:
Naira is falling like a pack of cards and these people are busy with their trial and error policies.
Nonsence

can u give us your own ideal approach?

It is indeed quite a pity that some forum members are either lazy to read or research. Focus is only on casting aspersions, playing the blame game or just being plain stupid. How on earth does provisioning for loans become giving loans? Read people! Life is not only about PDP/APC hit or miss, PMB/GEJ, etc. When there is a funny post people get active, but when something a bit technical or intellectual is posted, you see comments like "it is too long, please summarize" or " please who understands this".

Kudos to the good guys who took the pains to explain what the provisioning is all about.

HOTARIO:
It is indeed quite a pity that some forum members are either lazy to read or research. Focus is only on casting aspersions, playing the blame game or just being plain stupid. How on earth does provisioning for loans become giving loans? Read people! Life is not only about PDP/APC hit or miss, PMB/GEJ, etc. When there is a funny post people get active, but when something a bit technical or intellectual is posted, you see comments like "it is too long, please summarize" or " please who understands this".

Kudos to the good guys who took the pains to explain what the provisioning is all about.

Oga. not everyone is in d commercial field. I bet I can confuse u with a long medical essay.

@Yomi007k, I appreciate your angle. However, I am not in the commercial field as you put it. Walk me down the medical alley and i will not be in total darkness.

In today's world information is available at the push of a button. What I have said is people should at least try a little research for an insight into new information before delving into irrelevant matters.


cheers

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