… as Tier II banks record N559bn retained deficits

A group of Tier II banks led by Wema Bank Plc, Union Bank Plc and others have reported negative retained earnings of N559 billion for the year ended 2016, to further diminish shareholders’ Return on Investment (ROI), this newspaper can report.

Investigation revealed that these Tier-II banks reported N394.65 billion in retained deficits in 2015 despite announcing significant increase in profitability.

The enormous macro economic challenges facing banks in the country have exposed these banks to high volatility in share prices over uncertainties.

Retained earnings refer to the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business, or to pay debt. It is recorded under shareholders’ equity on the balance sheet.

With a negative balance in retained earnings, companies also typically can’t make dividend payments to shareholders or owners. This means shareholders should not expect return on their investment.

Specifically, Union Bank of Nigeria in 2016 reported N244.18 billion from N242.06 billion retained earnings in 2015.

For the same year, Wema Bank retained deficit hits N38.45 billion in 2016, an increase of 8.9 per cent over N35.3billion recorded in 2015.

READ MORE HERE: http://witnessngr.com/dividend-retained-earnings-crisis-hits-wema-union-bank/

Is it possible to have a negative RE. Accountants in the house please help out.